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GST Registration Threshold Limits

Eligibility to Register for GST​​ registration online must be verified before registration. Individuals registered under the Pre-GST law should also opt for online GST registration. It is mandatory for businesses that have a turnover of ₹40 lakhs for the sale of goods in normal category states and ₹20 lakhs for the sale of goods in special category states. A company must register as a regular taxable entity under GST law if its annual threshold limit exceeds ₹40 lakhs. The GST council recommends GST rates, tax exemptions, and other tax-related policies. Here is a complete outline for the same

GST Registration Doesn’t Have to Be Complicated.

Turnover Limits for GST Registration

GST registration is optional and can be obtained voluntarily by any person or entity, regardless of turnover. However, it becomes mandatory when aggregate turnover exceeds ₹20 lakh for service providers or ₹40 lakh for goods suppliers in most states. For special category states, the limit is ₹10 lakh. Aggregate turnover includes all taxable supplies, exempt supplies, exports, and inter-state supplies calculated on a PAN-India basis. Businesses that need to register can GST apply online through the official portal for a quick and convenient process. To clarify the GST registration thresholds based on sectors and states, here is an overview of the

Mandatory GST Registration for Specific Businesses

Irrespective of the threshold limit GST registration is mandatory for the following:

• Individuals engaging in interstate taxable supply (with a threshold of ₹20 lakhs/₹10 lakhs applicable for interstate supply of taxable services, specified handicraft goods, and handmade goods)
• Casual taxable persons involved in taxable supply
• Individuals obligated to pay tax under reverse charge for received inward supplies
• Non-resident taxable persons engaged in taxable supply
• E-commerce entities (inclusive of every e-commerce operator and individuals supplying goods and/or services)
• Individuals required to deduct tax under Section 51
• Input service distributor
• Individuals making taxable supply of goods or services on behalf of other taxable persons, whether as an agent or otherwise
• Individuals required to pay tax under Section 9(5)
• Any other individuals or categories notified by the government.

Benefits of Registering for GST

Registration under GST is an important step towards a unified tax system in India. It offers many advantages to registered businesses. A taxpayer who registers under the GST Act of 2017 will receive the following benefits:

Legal Recognition

A firm can obtain legal recognition as a supplier of goods or services by registering for GST. This validates the company’s legal status as an official entity.

Input Tax Credit (ITC)

Businesses that are registered can deduct the GST they pay on purchases from the GST they collect on sales by claiming the Input Tax Credit. Consequently, the entire tax liability is decreased.

Simplified Process

The GST system has reduced the complexity and time needed for compliance by streamlining the process for submitting taxes and making payments. With the help of a single online platform, businesses can more effectively manage their tax obligations.

Composition Scheme

Composition Scheme Under GST for Small Businesses allows them to pay tax at a lower, fixed rate. This reduces their tax burden and compliance requirements, making it easier to manage their finances.

Higher Threshold for Online GST Registration

With a higher registration threshold, only businesses with an annual turnover above ₹40 lakh are required to register for GST. This excludes many small businesses from mandatory registration, easing their operational processes.

Eliminates the Cascading Effect of Taxes

GST eliminates the cascading effect of taxes by allowing input tax credit across the supply chain. This means that businesses can claim credit for the taxes paid on purchases, reducing the overall tax burden on end consumers.

Documents Required for GST Registration

The table below outlines the GST registration documents required for different types of entities. Ensuring that all necessary documents are submitted correctly can help speed up the registration process and avoid delays.

Not Sure If You Need to Register for GST?

Step-by-Step GST Registration Process

Here are 4 steps to complete your online GST registration process:

What is Form GST Reg 01?

Form GST REG-01 is an application form for obtaining Goods and Services Tax (GST) registration. Anyone who wants to get a GST registration should file it. The form is submitted by taxpayers who have just registered under GST5 in order to obtain the input tax credit (ITC). This form must be submitted in order to receive ITC on such stock.

[See rule 8(1)] Application for Registration. (Other than a non-resident taxable person, a person is required to deduct tax at source under Section 51, a person is required to collect tax at source under Section 52, and a person is required to supply online.

GSTIN and It’s Significance

A GSTIN number is a 15-digit code that identifies a registered taxpayer (mainly dealers, suppliers, or any business entity across India) registered under the GST regime. GSTIN is an abbreviation for Goods and Services Tax Identification Number. This provides greater transparency in the GST system, helps in collecting all the GST-related data from the vendors, and prevents tax evasion. Having a GST number provides many advantages for small enterprises. It gives businesses access to different government assistance and relief programs, allows them to claim input tax credit on their purchases, and increases their credibility with suppliers and consumers.

You will receive a GSTIN after successfully submitting the application through the GST apply online portal. The GSTIN plays a crucial role in activities such as availing loans, claiming refunds, simplifying verification processes, making corrections, and understanding one’s GST identification number.

Understanding Your GST Identification Number

A GSTIN (Goods and Services Tax Identification Number) is a unique 15-digit alphanumeric code assigned to businesses registered under the GST system in India. Here is an example of a GSTIN:

• Let’s break down the structure of a GSTIN:
• First two digits (State Code): 22 – Represents the state code where the business is registered
• Next ten digits (PAN): ABCDE1234F – PAN (Permanent Account Number) of the business
• Next one digit (Entity Code): 1 – Represents the entity code for the PAN holder
• Next one digit (Blank): Z – Currently kept blank for future use
• Last one digit (Check Code): 5 – A check code for verification purposes

GST Compliance Rating

The GST compliance rating is a score given by the government to a business based on parameters such as timely filing of monthly and annual returns, furnishing details of input credits used, and taxes paid. This compliance rating shows customers and other firms how compliant they are with the tax department. Businesses with high compliance ratings are bound to receive Input Tax Credit (ITC) and refunds in a timely manner. The GST authorities prioritise processing ITC claims and refund requests from high-rated businesses, ensuring swift disbursement of credits and funds.

GST Certificate

A GST certificate is a legal document issued to businesses registered under the Goods and Services Tax (GST) regime. It serves as proof of GST registration and includes essential details such as the GSTIN (Goods and Services Tax Identification Number), legal name, trade name (if applicable), type of registration, principal place of business, and any additional places of business.

The certificate ensures compliance with GST laws, enabling businesses to operate legally while enhancing their credibility in the market. It is mandatory for businesses exceeding the prescribed turnover threshold or engaged in interstate supply of goods or services.

Importance of GST Certificate:

• Legal authority to collect GST.
• Enables claiming input tax credit.
• Builds trust and market reputation.
• Required for government tenders and contracts.

Penalties for Non-Compliance

It’s important to note that while there are no GST registration fees, penalties for non-compliance can be significant. Here are the penalties for failing to comply with GST regulations:

• Filing GST returns beyond the deadline incurs a late filing penalty
• Interest is assessed on the outstanding tax amount when GST liabilities are not paid on time
• Failure to comply with GST regulations may result in the suspension or cancellation of your GST registration
• If an offender fails to pay tax or makes a short payment, they must pay a penalty of 10% of the tax due, with a minimum penalty of ₹10,000
• The maximum penalty for breaking the GST is 10% of the total tax amount due. However, there may be a penalty for each non-compliance. Apart from this, the taxpayer is also be responsible for paying interest on any overdue taxes

Consequences of Not Registering for GST

Here are some consequences for not registering for GST. The Goods and Service Tax Act of 2017 states that failure to obtain GST registration in India carries a direct penalty that applies even in cases where the registration is submitted after the deadline:

• Any taxable person who neglects to obtain GST registration despite being required to do so by the act faces a penalty of ₹10,000 or the amount of tax evaded or any short tax due, whichever is greater as per Section 122 of the CGST Act
• The penalty for not registering for GST is ₹2 lakh or ₹10,000, whichever is higher
• ₹2 lakh is assessed if an individual does not register for GST.