The Goods and Services Tax is an indirect tax levied on the sale of goods and services. This tax system lays down five different tax slabs including 0%, 5%,12%, 18%, and 28%. This system of taxation provides that petroleum products and alcoholic drinks would be taxed separately by the State Governments. The tax rate on rough precious and semi-precious stones is 0.25% and on gold, the tax levied is 3%.
This tax system came into force from July 2017. GST was enacted by the 101 Amendment of the Constitution of India. It is said to replace existing multiple taxes which are levied by the central and the state government. The tax rules are governed by the Goods and Services Tax Council.
The GST registration can be done easily through an online portal maintained by the Central Government. This facility minimizes the technicalities involved in the registration and excludes the burden of hiring best lawyers in India for understanding the process of registration. The Central Government may also appoint GST Suvidha Providers which would help the businesses in the process of registration. People often ask free legal questions about the registration of businesses. The GST law provides a simple 5 step process of registration.
The process involves the following 5 steps:
- Applicant has to fill a form GST REG-01 either on the GSTN portal or through a facilitation center
- This step is followed by the verification of the PAN. Also, the mobile number and email are verified which is followed by receiving an application number on the registered mobile number.
- After this step, an electronically generated acknowledgment under FORM GST REG-02 is issued to the applicant.
- When any sort of additional information is required then FORM GST REG-03 is issued.
- Once all information as required under FORM GST REG-01 or FORM GST REG-04 is furnished then a registration certificate in FORM GST REG-06 for the principal place of business and all other additional places of business is issued to the applicant.
Where a person has multiple business setups in a State then such a person may apply for each of them individually and if it is concluded that the information and the details submitted are not satisfactory then the registration application may even be rejected.
The documents required for registration of a business include the following:
- PAN Card of the Company
- Proof of constitution which includes partnership deed, memorandum of association or Articles of association and may also include a certificate of incorporation.
- Proof of place of business
- A canceled cheque of a bank account which displays the IFSC Code, MICR Code, Account holders name and other details of the Bank.
- List of partners if any and their identity and residential proof.
The effective date of registration is the date of his liability for registration when the application is submitted within 30 days from the date on which the person became liable to registration. In case the application is submitted within 30 days then the effective date of registration will be the date on which the registration is granted.
Compulsory registration under GST is for the following:
- Casual taxable persons
- Non-Resident taxable persons
- Input service distributors
- Taxpayers under Reverse charge
- E-Commerce operators
- Persons supplying through e-commerce
- Suppliers of OIDAR
- Collectors and deductors of tax at source
- The person making inter-state tax supply.
Registration of GST is not only compulsory under the law its also attaches with itself various benefits including:
- A legal recognition is allotted to person as a supplier
- A person is thereafter authorized to collect taxes from customs
- A person is authorized to pass on Input Tax Credit
It enables a person to claim ITC and also to utilize it to pay outstanding taxes