India’s introduction of the Goods and Services Tax (GST) has drastically affected the way new businesses are established and managed. GST registration is only available to companies with annual sales over *40/20 lakhs. Eligibility for GST registration requires providing products and services across state lines or on an e-commerce platform. Starting a business requires GST registration.
With the Goods and Services Tax (GST), certain indirect taxes have been eliminated, aggregating everything under a single, broader roof. The initiative was introduced under the slogan “One Nation, One Tax” to simplify compliance procedures for enterprises, particularly startups.
Examine how the Goods and Services Tax (GST) has affected startups and if any new GST status requirements have arisen as a result. Tax rates vary from 0% to 28% based on the nature of the goods and services sold.
GST registration in India becomes mandatory when?
In the following situations, GST registration becomes mandatory in India;
- All taxpayers with annual sales of more than ₹40 lakhs must register for GST again
- If you are planning on selling goods and services at events or exhibitions that do not require a fixed location, you must register for GST. Accordingly, such dealers are required to pay GST based on a 90-day estimate of sales. Temporary GST registration lasts for 90 days.
- If a non-resident Indian (NRI) wants to establish a business in India, they need to obtain a GST registration. New GST registrations are valid for 90 days.
- The GST registration requirement for all input service distributors is applicable to suppliers and agents who wish to carry forward the input tax credit.
- GST registration is required for businesses that use the reverse charge method
GST Registration Barriers Have Increased
Businesses that made more than *5 lakhs in a year used to be subject to tax before Goods and Services Tax (GST) was introduced. Those companies with revenue over *40 lakhs yearly are required to register for the Goods and Services Tax (GST). A maximum of *20 lakhs applies to service providers.
The increased GST threshold has benefited many small and medium-sized enterprises, particularly startups, in India.
Additionally, GST has established a composition system for Indian small businesses. Businesses with a sales volume under *1.5 crores are eligible for a lower tax rate.
You can claim a tax credit for purchases
Service companies account for a large share of Indian startups. The Government had to collect and pay service tax before introducing the GST. There was a concern that the VAT paid on corporate purchases would be wasted. It was not possible to deduct state VAT paid from the service tax.
GST (Goods and Services Tax) has rectified this issue. A startup can, for instance, deduct the GST tax they pay on their purchases (such as office supplies) from their sales taxes.
Is GST Registration Necessary?
A company that registers for GST benefits in many ways, including the fact that it is recognized as being a legitimate business entity, and this status keeps the company up-to-date legally. A few of the benefits include:
- With your tax registration, you’ll be able to compete more successfully with unregistered rivals
- Flipkart, Amazon, Paytm, Shopify, or even your website requires GST registration before you can sell products. If you don’t have a GSTIN number, you can’t sell.
- Input tax credits can only be claimed by registered GST holders.
- In India, there are no restrictions on where you can sell
- When you do not have a GSTIN, you can’t trade over state lines. You can only do this if you are GST-registered. To apply for some government tenders that require a GSTIN number, you must have one. If you do not have GST in India, you could miss out on lucrative business opportunities
What is the purpose of a GSTIN number?
Abbreviated GSTIN stands for Goods and Service Tax Identification Number. The number is made up of 15 letters and numbers. The Government issues this document after GST registration is complete.
How to Register and File a Tax Return
There is no longer a rush to rush from one tax office to another to submit paperwork and obtain identification numbers. GST returns can now be filed online, making the process faster and simpler. Obtaining a registration number is a simple process if you have all the necessary paperwork at hand.
With the Goods and Services Tax (GST), cash-strapped startups can expect a windfall of benefits. Startups and small businesses in India have benefited from the Goods and Services Tax (GST).
Documents Needed for GST Registration
GST registration requires the following documents.
- In order to obtain a loan, the person or business must have a PAN number – The GSTIN is the same as the PAN number. GST certificates require a PAN number
- Persons who start a business need to provide proof of their identity, such as a PAN card, passport, driver’s license, or voter ID card
- Address Proof: If you’re applying for GST, you must provide proof that your address is where your business will be located. You could provide a rental agreement, a sale agreement, copies of your electricity bill, your latest tax receipt, or a municipal khata
- You will need to prove your bank account if you wish to open a business. You must send a scan of the first page of the bank passbook, which includes a few transactions and your business’s address.
What can small businesses do to streamline the billing process?
An innovative product that enables you to create GST-compliant invoices in minutes
- Because the platform’s intuitive design makes creating multiple invoices easy, creating an invoice is simple. Upon entering the value and GST applicable, the information of products or services is given. You will receive an invoice once you click “Create Invoice”
- It is possible to send a message to your clients with a link to your GST-compliant invoice via SMS or email
- Your clients can then proceed to make the payment immediately after receiving it to your account. As an additional convenience for your customers, you are providing them with the opportunity to download and save their invoices. To make sure that your business procedures are being followed appropriately, you can make partial payments on invoices in a transparent manner.
The site includes several helpful features for consumers, such as how quickly clients’ bills are paid and the GST status of their bills.