GST Registration

India has a Dual GST Model. Under this tax maybe levied simultaneously by both Central and State governments on certain taxable supplies. Such as on inter-state supplies, tax is levied by Central Government.

Features	Central GST – CGST	State GST – SGST	Integrated GST – IGST
Tax Levied By	Central Government on Intra-State supplies of Goods and/or Services	State Government, on Intra-State supplies	Central Government, on Inter-State supplies
Applicability	Supplies inside a state	Supplies inside a state	Interstate supplies and import
Input Tax Credit	Against CGST and IGST	Against SGST and IGST	Against CGST, SGST, and IGST
Tax Revenue Sharing	Central Government	State Government	Shared between State and Central governments
Free Supplies	Applicable	Applicable	Applicable

All businesses involved in buying or selling goods or providing services, or both, should register for GST. But for below-listed persons, GST Registration is compulsory.

The Special Category States under GST Act are:

(a) Arunachal Pradesh, (b) Assam, (c) Sikkim, (d) Meghalaya, (e) Tripura, (f) Mizoram, (g) Manipur, (h) Nagaland, and (i) Himachal Pradesh. These states can opt for tax payable at a concessional rate.

To register for GST on the Government site, you need to follow the below steps. Cautiously & Accurately.

The Special Category States under GST Act are:

(a) Arunachal Pradesh, (b) Assam, (c) Sikkim, (d) Meghalaya, (e) Tripura, (f) Mizoram, (g) Manipur, (h) Nagaland, and (i) Himachal Pradesh. These states can opt for tax payable at a concessional rate.

All GST Returns must be filed by the 20th of the following month. There are strict laws under the GST Act for non-compliance with the Rules & Regulations.

Penalty for Not Getting GST Registration, when a business is coming under the purview. The penalty is 100% of the tax amount if the offender has not filed for GST registration and intends to purposefully avoid it. The amount is the tax as applicable. Or Rs. 10,000, whichever is higher.

A penalty of 100% tax due or Rs. 10,000, whichever is higher, is also applicable to those who choose Composition Scheme despite not being eligible to it.

Any offender not paying his due tax or making short payments (genuine errors) is liable to pay a penalty of 10% of the tax amount. This amount cannot be less than Rs 10,000.

A person guilty of not providing the GST invoice is liable to be charged 100% tax due or Rs. 10,000. Whichever is higher.

An offender will be charged a fine of Rs. 25,000 for incorrect invoicing.

If a person has not filed for unpaid tax, there is a penalty of Rs. 50 per day. Rs. 20 per day if he was to file for NIL returns. And the maximum amount must not exceed Rs. 5,000.

There is also a provision of the penalty by a jail term for tax offenders to commit fraud.

Elimination of Multiple Taxes
One of the benefits of GST is the elimination of multiple indirect taxes that existed earlier. So many taxes have been replaced. Taxes like excise, octroi, sales tax, Service tax, CENVAT, turnover tax, etc are not applicable anymore and all those have come under common tax called GST.

Saving More Money
GST applicability has resulted in the elimination of double charging in the system for a common man. Through this, the price of goods and services has reduced & helping the common man saving more money.

Ease of business
GST brought the concept of “One Nation One Tax”. That unhealthy competition that existed earlier among the States has benefited businesses wishing to do interstate business.

Cascading Effect Reduction
From manufacturing to consumption, GST is applicable at all stages. It is providing tax credit benefits at every stage in the chain. In the earlier scenario, at every stage, the margin used to get added and tax was paid on the whole amount. Under GST the businesses are taking benefit of Input Tax Credit and tax is being paid on the amount of value addition only. GST has reduced the cascading effect of tax thereby reducing the cost of the product.

More Employment
Because GST has reduced the cost of products, the demand, for some – if not all, products have increased. With the increase in demand, to meet the increase in supply, the employment graph has started going up.

Increase in GDP
The higher the demand, the higher will be the production. This results in a higher Gross Domestic Product (GDP).

Reduction in Tax Evasion
Goods and services tax is a single tax that includes various earlier taxes and has made the system efficient with fewer chances of corruption and Tax Evasion.

More Competitive Product
Manufacturing has become more competitive with GST eliminating the cascading effect of the tax, inter-state tax, high logistics cost. Bringing competitiveness as GST will address the cascading effect of the tax, inter-state tax, high log benefits to the businessman and consumer.

Increase in Revenue
Under the GST regime, 17 indirect taxes have been replaced into a single tax. The increase in product demand means higher tax revenue for state and central government.

A person who is not liable, still files for GST application, can get registered. However, then, it becomes essential for him to file Returns, after getting a GST number. Else, he will have to pay a penalty, as applicable. You can choose to register for GST voluntarily too. Especially if you are wishing to claim Input Tax Credit. Even if you are not liable to be registered, you can be registered voluntarily. After registration, you will also have to comply with regulations as applicable to those required to be registered.

Benefits of registering voluntarily under GST

• Take Input Tax Credit
• Operate interstate without restrictions
• Have the option to register on e-commerce websites
• Have a competitive advantage compared to other rival businesses
• Fewer hassles and better compliance with government licensing agencies
• Focus on Your Business Growth

Inputs are all those goods that went into creating the finished products provided to the final consumer. Businesses are charged GST on goods/services that are used as inputs. The ITC mechanism allows GST registered businesses to receive refunds on the GST paid for purchasing all inputs. This helps prevent the cascading taxation effect, which was the primary reason behind the introduction of the GST.

For instance: GST payable on the supply of the final product of a manufacturer is Rs. 850 and the GST paid on inputs is Rs. 725. The manufacturer can claim the Rs. 725 as ITC. This brings the net tax payable at the time of supply to Rs. 125 only (Rs. 850 – Rs. 725).

Under the previous indirect tax regime of levy of Service Tax, VAT, and Excise – a lot of input tax credit was not properly utilized.

Who are eligible to claim Input Tax Credit?

ITC is available only to those entities who have registered under the GST Act. Only GST registered businesses can claim ITC on the tax paid for the purchase of any business relevant inputs.

Who cannot claim ITC?
Input Tax Credit can be claimed only for business purposes. It is not available for goods or services exclusively used for:

• Personal use
• Exempt supplies
• Supplies for which ITC is specifically not available.

Apart from the above, there are some other cases where ITC will be reversed. Such as Credit Note issued to ISD, Non-payment of invoices within 180 days, assets bought partly or wholly for exempted supplies or personal use, etc.

Conditions for claiming Input Tax Credit

• GST invoice showing details of tax paid is necessary
• The goods on which GST has been paid have been received by the consumer
• The applicant has filed the relevant tax returns
• The supplier had paid the due tax to the government
• The ITC applicant is registered under GST
• If goods were received in installments, ITC can be claimed only after the final lot has been received

ITC cannot be claimed if:

• Composition tax registered entities paying GST on inputs
• If depreciation has been claimed on the tax part of a capital good
• On goods not used as inputs such as supplies for personal use
• On goods on which ITC is not applicable under the GST Act (exempted goods)

Input tax credits can be used as:

• CGST input tax credits are allowed to be used to pay CGST and IGST
• SGST input tax credits are allowed to be used to pay SGST and IGST
• IGST input tax credits are allowed to be used to pay CGST, SGST, and IGST

Small businesses with an annual turnover of less than Rs. 1.5 crore (Rs. 75 Lakhs for the Special Category States) can opt for the Composition scheme.

• Composition dealers need to pay nominal tax rates based on the type of business. (a maximum of 2% for manufacturers, 5% for the restaurant service sector and 1% for other suppliers.)
• Composition dealers are required to file only a single quarterly return (instead of the monthly returns filed by normal taxpayers).
• They cannot issue tax invoices. That is, they cannot collect tax from customers and they are to pay the tax out of their own pocket.
• Entities that have opted for the Composition Scheme cannot claim any Input Tax Credit.

Who can opt for the Composition scheme?

• All SMEs looking for lower compliance and lower rates of taxes under GST.
• A GST taxpayer, whose turnover is below Rs 1.5 crore, can opt for the Composition Scheme. (In the case of Special Category States, the present limit is Rs 75 lakh.)
• The Aggregate Turnover of all businesses registered under the same PAN would be taken into consideration to calculate turnover.
• Shall pay tax at normal rates in case he is liable under the reverse charge mechanism.
• Dealers of intra-state supply of goods (or service of only the restaurant sector).

Which businesses are not eligible to apply for the Composition Scheme?
Composition scheme does not apply to:

• Service providers
• Inter-state sellers
• E-commerce sellers
• Supplier of non-taxable goods
• Manufacturer of Notified Goods
• All the suppliers of services except those providing restaurant services (not serving alcohol)
• Suppliers of – ice cream, pan masala or tobacco (and its substitutes)
• Casual Taxable Person
• Non-resident Taxable Person
• Supplier of exempted goods or services

How to apply for the Composition Scheme?

• In case of new registration, you can opt for the scheme at the time of GST Registration.
• If you are already registered you can file for it by submitting GST CMP-02 online.

• GSTIN is a unique 15-digit alphanumeric code that is allotted to each Firm/Company/Individual, who are registered under GST.
• The government has ensured that everything under GST is digital so that there is maximum transparency with minimum corruption.
• The first 2 digits of the GSTIN represent the state code which is given as per the 2011 census.
• The next 10 digits are the PAN number of the entity.
• The 14th digit is Z by default.
• The 15th or the last digit is the Checksum digit. It comes, automatically, as a result of the calculation of the other 14 digits.