Benefits of GST Registration
The Parliament of India adopted the Goods and Services Tax Act in March 2017 and was introduced into the Indian economy in July of the same year. Throughout the country, all other indirect taxes were discontinued under one unified act. The change caused considerable confusion and a sense of unfamiliarity, which made it difficult for many people to adjust. In the past four years, individuals have realised the value of paying GST online, and have become accustomed to the process. It is, therefore, necessary to be aware of the benefits of GST Registration and how it works.
What is GST in India?
The Goods and Services Tax (GST) is a national indirect tax paid on goods and services. GST, as an umbrella tax, superseded central taxes such as central excise, service tax, excise and customs extra duties, special additional duty of customs, and cesses and surcharges on the supply of goods and services.
The GST system allows for auto-populated monthly and annual returns. It is mostly driven by technology and, to a significant measure, eliminates the need for human interaction. GST is thought to have made doing business in India easier.
What are the types of GST?
To fully understand the benefits of GST, one must know its types:
1. Central Goods and Services Tax (CGST)
a)It is applied to the supplies made inside the State.
b)The tax collected is divided by the Centre.
2. State Goods and Services Tax (SGST)
a)It is applied to materials manufactured in a state that is within its scope.
b)The tax collected is divided by the State.
3. Integrated Goods and Services Tax (IGST)
a)It is applied to interstate and import transactions.
b)The tax collected is split between the Centre and States.
Before delving into the various GST registration methods, here is a primer on the four categories of GST and their respective significance:
1. The CGST is an excise tax levied by the Central Government on exchanges between states of goods and services. It is intended to replace all other taxes imposed by the Centre, including the CST, SAD, and others.
2. The SGST is applied by each state government. All previous state-imposed taxes such as the Entertainment Tax, Entry Tax, and VAT have been replaced with this new tax. SGST income belongs solely to the state.
3. The IGST is the tax imposed on interstate transactions of goods and services. A tax is levied on the movement of goods and services between states.
4. The UTGST only applies to India’s five Union Territories. The SGST provides the same benefits and serves the same purpose, but it is only applicable to Chandigarh, Daman and Diu, the Andaman and Nicobar Islands, Lakshadweep, and Dadra and Nagar Haveli.
Benefits of GST include the following:
- The GST avoids the tax’s cascading effect.
- Small business composition scheme.
- Simple online procedure.
- Defined treatment for online merchants.
- The compliance rate is lower.
- Increased logistical efficiency.
- GST regulates the unorganised sector.
What are the various Procedures & Advantages of Registration under GST?
Applicable GST Rates
|Traders & Manufacturers (Goods)|| |
|Restaurants (not serving alcohol)|| |
|Service Providers are not eligible for Composition Scheme|
In every instance, regardless of annual turnover, each business that provides particular services is required to register for GST online. Furthermore, any business with a revenue of Rs. 20 lakhs (Rs. 40 lakhs or Rs. 10 lakhs in special category states) must register under the GST law. A normal taxpayer, on the other hand, is required to register for GST regardless of his yearly income under Section 24 of the CGST Act 2017.
There are essentially two types of GST registration processes used throughout the country:
What is the regular GST scheme?
The normal kind of GST registration requires a legalised taxpayer to collect a specified amount of tax from purchasers of goods and services. This tax is then remitted to the government after the amount paid as GST on the input value of goods and services is adjusted. Under normal GST registration, tax is applied immediately, which means that the consumer must pay the GST at the time of purchase and it must be collected from the client at the moment of sale.
It’s also worth noting that anyone who falls under the normal system is required to file monthly GST returns and pay the collected tax. Additionally, this scheme enables the scheme holder to sell his products outside of his state’s borders, and clients from other states can purchase his items without restriction.
What is the composition scheme under GST?
- The Government may notify the manufacturers of goods such as Ice cream, Pan Masala, Tobacco products, etc.: 2% (1% Central tax plus 1% State tax) of turnover.
- Tax on Restaurant Services: 5% (2.5 % Central Tax plus 2.5 % SGST).
- Composition levy for traders or any supplier: 1% (0.5% Central tax plus 0.5% State tax) of the turnover.
Now, there are a few things to consider before applying for the GST composition scheme.
- It is only applicable to enterprises with annual revenue of less than Rs 1.5 crore (Rs. 75 lacs in the case of Himachal Pradesh and the states in the North East).
- While this scheme is beneficial for Small and Medium-Sized Enterprises (SMEs), several criteria distinguish it from the standard GST Registration scheme.
What are the benefits of GST registration through the composition scheme?
- The Composition Scheme is beneficial for intrastate transfers of commodities and services. Suppliers operating within a state will benefit. Dealers, on the other hand, whose activity involves interstate transactions must choose the regular plan.
- If a taxpayer wishes to apply for this particular program, they must do so voluntarily. However, if their annual income exceeds Rs 1.5 crore or Rs 75 lacs after registration, they will be immediately switched to the regular scheme since they will no longer be eligible for composition one.
- Under the composition model, GST is payable on taxable products solely. Before January 1, 2018, it was mandatory to pay Composite GST on all items, even those that were excluded.
- The authorities reserve the right to penalise anyone who provides false information to register under this scheme. No unethical behaviour is accepted, as this program is intended to improve the state of small enterprises.
- Taxpayers are not required to raise any invoices in this case. Rather, they need merely to present the authorities with their supply bill.
What are the benefits of GST registrations?
With all the points above, it’s reasonable to say that registering as a GST payer comes with a plethora of benefits.
Here are a few reasons why we must focus on the benefits of GST Registration:
- It is a type of legal documentation that certifies an individual as a licensed provider of goods and services.
- It automatically qualifies the individual for all additional perks and advantages covered by the GST law.
- Individuals get the legal authority to collect taxes from their customers and to carry on the credit for taxes paid to their customers or suppliers.
- It is a unified tax applied across the country on products and services, which simplifies the indirect tax system significantly.
What is the process for GST registration?
Online GST registration is a straightforward process that requires only a few easy steps to be performed.
- When visiting the GST website, an individual must first select the services option, then the registration option, and finally the ‘new registration’ option.
- From that point forward, everything will be straightforward. A few documents will be requested during the GST registration process.
- Individuals must submit documents such as their PAN card, bank account statements, a photograph, an AADHAR card, and proof of address.
- In the case of a partnership business, the same documents will be required of all partners, in addition to extra documents such as a partnership deed, proof of LLP registration, and proof of the business principal’s residence.
Registering for GST and paying GST online puts you in a highly beneficial position. It is a process through which a common market is developed throughout the country, ensuring the economy’s seamless operation. Additionally, it has halted the process of ‘cascading taxes’ by establishing a rule requiring the imposition of a single tax on all goods and services transactions. It can be inferred that the government used considerable caution in deciding to implement GST into the economy. It was done for the sake of the economy, as imposing a single standard indirect tax across the country would result in a more stable financial condition.