It is high time you get yourself a GST registration number to save your start-up from a penalty in case of a default. If you are not in a position to pay the professional fees to a chartered accountant or a consultant, read this blog further to know how you can do it yourself.

What is GST?

Goods and Services Tax (GST) is an indirect tax in India levied on the supply of goods and services. Before 2017, there were different indirect taxes including central excise, VAT (Value Added Tax), service tax, and so on. GST replaced multiple indirect taxes and therefore, prevented double taxation.

Types of GST registration

Under the GST Act, the different types of GST Registration are provided, which are as follows:

i) Normal Taxpayer

ii) Casual Taxable person

iii) Composition Taxpayer

iv) Non-resident Taxable person

v) Agents of a supplier & Input Service distributor

vi) Those paying tax under Reverse Charge Mechanism.

Who Should Obtain the GST Registration?

1. Business registered under Pre GST Law (VAT/ Excise/ Service Tax)
2. Any business entity having a turnover of more than ₹40,00,000/ ₹20,00,000 or ₹10,00,000 as the case may be
3. Agents of a supplier & Input Service distributor
4. Those paying tax under Reverse Charge Mechanism.
5. A person who supplies via an e-commerce aggregator
6. Every e-commerce aggregator
7. Non-Resident taxable person

Advantages of GST registration

The GST regime has several advantages, including the following:

i) Prevention of double taxation/ Elimination of cascading effect of tax

ii) Higher turnover for registration as compared to VAT

iii) Get GST Input tax Credit on your expenses

iv) Efficient online procedure

v) Eligible for various Government contracts/GEM/ MSME registration

vi) Covers e-commerce operators/service providers

vii) Registration of unorganized sector

Disadvantages of GST registration

Just like every other thing, GST also has its pros and cons. Following are the disadvantages of GST registration:

i) Increased costs due to software purchase

ii) Hefty penalties for non-compliance

iii) GST came into effect in the middle of the year

iv) High fees charged by Chartered Accountants and Consultants

v) Complex online filing system

vi) Increased compliance burden on small businesses

Documents needed for GST registration

For obtaining a valid GSTIN, the applicant must have the following documents:

i) Aadhar Card

ii) PAN Card

iii) Business address proof

iv) Bank Statement/ Cancelled Cheque

v) Incorporation certificate of business

vi) Digital Signature for companies and LLP

vii) Director’s/Promoter’s ID proof (in case of a company)

viii) Board Resolution from the authorized signatory

The process of GST registration is complex and involves multiple steps. It is hard for a layman to do it by himself/herself as any technical error committed during the registration process might lead to penalties.

It is, therefore, advisable to take all the above mentioned documents and go to a Chartered Accountant or Consultant to obtain GSTIN. The fee charged by him might be a bit high but it will save you from the hefty penalties.

Consequences of non-compliance

If in case, a business does not obtain its GSTIN, to evade tax, 100% of the due amount is levied as a penalty. Moreover, if after obtaining GST registration, a business pays lesser GST than what is due, then 10% of the due amount is levied as a penalty. The penalty will at 100% of the tax amount due when the offender has deliberately evaded paying taxes

Conclusion

GST regime was introduced in the year 2017 to bring indirect tax under a single umbrella. It replaced multiple indirect taxes including VAT, Sales tax, Central excise, and so on. There are different types of GST Registration based on the conditions of the taxpayer. The GST regime has its own set of pros and cons including the prevention of double taxation and a complex online filing system.

However, non-compliance of the same would attract penalties, and therefore, one should always hire a professional to handle the GST compliances.