GST is the form of indirect tax collected in India, which is levied on the supply of good and services. It is calculated on the sum of reverse charge, inward supplies and outward supplies. It has replaced VAT; a tax collection system which was cumbersome in nature, the tax was collected by laws laid out by each state differently, VAT was collected by each state and the centre at every point of economic activity. The occurrence of double was too frequent. Varied taxes posed many challenges to the taxpayers, the introduction of GST has liberalized the tax ecosystem in the country. It has boosted the tax collection, more and more individuals and companies are coming under the umbrella of GST, the government of the is also incentivising honest taxpayers, urging them to make white transaction, use digital mediums of transaction, uniformity of the new tax ecosystem makes it easier for the taxpayer also to devise a tax strategy. The aim is to provide a simplified tax ecosystem to the taxpayer, for both consumers as well as suppliers, a uniform tax system governed by uniform tax laws. The new system has made the whole ecosystem of indirect tax collection efficient at the same time consistent. To get in the ecosystem first step is gst registration, after the registration process, every business gets its unique GSTIN number that will reflect all its financial transactions.
Ellegibity criteria for the businesses
If a business has a turnover exceeding 40 lakhs, then it mandatory to come under the umbrella of GST. The provisions are the same for all the states excluding a few like J&K, HP etc. In the above-mentioned states, the limit to register for GST is just 20 lakhs. If a business doesn’t fall in the any of the above categories but has a platform business, like an e-commerce website or deals in interstate business activity, still the business has to register for GST.
The initial dilemma
For every which is transitioning to formal taxation setup, it gets a bit difficult at the start, because the business is not used to deal with all the paperwork and fillings, but eventually it helps in the long run, when the business is trying to scale its operations without fearing any law of the land or tax officers, but at the start, there’s always a doubt that crepes in the mind of owners and partners, whether to go for gst registrationor not. To avoid such evasions, there’s a penalty of 10 % per cent of the total taxable amount, and if the tax officials find that a particular business is deliberately trying to evade GST, the penalty could be 100% of the total taxable amount. So, it’s always good for such businesses which are an initial dilemma to think about the long run, how the sync with law of the land will benefit them in the long run. The trade-off is never bad!
The paperwork and ahead
For gst registration five basic documents have to be provided; the documents are as follows:
- Permanent account number issued against the name of the business.
- Proof of business registration, sole owners don’t need to provide this.
- Address for the business, where the office of operation is located.
- Identity certificates of all the owners and partners.
Bank account statement of the business should be a current account.
Once the paper is successfully completed, the business entity will get a unique GSTIN number post gst registration the obtained code is goods and services identification number, the number is critical to obtain tax benefits offered by the government in the different sectors. Also, GSTN helps the business to fetch the required funding from various credit providers!