GST Registration

GST Registration- An Overview

Under section 279A of the Constitution of India, the GST council is formed. The GST council comprises of the Union Finance Minister, Union Minister of the State Revenue Minister and the Union Minister of Finance and Tax for the respective state councils. All the respective laws and rules which apply to GST registration for a business would be in the respective central and state websites. GST is an abbreviation for Goods and Services Tax.

This law was brought in 01 July 2017 with a view of removing all the other forms of indirect taxes in the country. GST applies to any form of service or products which are produced and manufactured in India. This would also apply to freelancers as per the new labour law amendments.

As a result of GST other forms of taxes such as VAT, Entertainment Tax, Sales Tax, Octroi have been combined and incorporated into one law. For every step in the supply chain, a specific amount of rate of GST is charged. The procedure for GST registration is completely an online process. Hence businesses would not have to go offline to carry out this form of registration.

Seamlessly Navigating Your GST Registration

Cycle of GST

The following cycle is utilised in GST. As mentioned earlier GST is levied on every stage of the process. The following figure shows how GST would be levied:

  • GST Registration

    Businesses exceeding the threshold turnover must register for GST, obtaining a unique GSTIN (Goods and Services Tax Identification Number). Registration allows businesses to legally collect GST from customers and claim Input Tax Credit (ITC) on their purchases, enabling them to comply with the GST framework.

  • Invoicing

    Businesses issue GST-compliant invoices for every sale, clearly stating the GST charged and relevant HSN/SAC codes. Accurate invoicing ensures proper tax collection and compliance with GST regulations. These invoices also facilitate claiming Input Tax Credit (ITC) during tax payments, making them an integral part of the GST cycle.

  • GST Returns Filing

    Periodic filing of GST returns, such as GSTR-1, GSTR-3B, and GSTR-9, is required to report sales, purchases, tax payments, and Input Tax Credit (ITC) claims. These returns ensure compliance with GST regulations, and timely submissions help avoid penalties, making accurate filing a crucial part of the GST cycle.

  • Tax Payment and Reconciliation

    After calculating GST liabilities, businesses pay the tax due, adjusted with Input Tax Credit (ITC). Regular reconciliation of returns with financial records is essential to avoid discrepancies. Proper tax payment and reconciliation ensure smooth GST compliance, preventing audits, disputes, and penalties from tax authorities.

What are the benefits of GST Registration?

A business would get multiple benefits for registering under GST

  • Recognition

    Businesses that have registered themselves with the requirements of GST would be recognised in the eyes of the law. Public and consumers will recognise businesses that have registered as per the requirements of the government.

  • Appropriate Accounting

    Appropriate accounting cycles can be followed up by registering with GST authorities.

  • Benefits and Government Incentives

    There are different forms of benefits and government incentives offered for businesses that consider GST registration.

  • Lower Tax Rates

    If a taxpayer is having a turnover of lesser than Rs 1.5 crore per annum, then the taxpayer can choose for composition tax scheme. Under the composition tax scheme, there is an incentive to pay a lesser amount of tax.

What are the Elements of GST?

There are three components of GST which are predominantly called:

  • Central Goods and Services Tax (CGST)

    CGST is the amount of tax charged on the intrastate supply of different forms of goods and services. This is usually charged and levied by the Central Government. As per this, both the Central Governments and State Governments would combine their GST collections and share the revenue equally.

  • State Goods and Services Tax (SGST)

    This is the amount of tax charged on the intrastate supply of different forms of goods and services. One of the key indicators is that the State Government charges this tax.

  • Integrated Goods and Services Tax (IGST)

    The amount of tax which is charged on the interstate supply of different forms of goods and services is understood as integrated goods and services tax. Here again, the amount of IGST is collected and shared between the respective Central government and the State Government.