GST Registration: Eligibility, Documents

GST stands for Goods and Services Tax and is a comprehensive, indirect tax imposed on the supply of goods and services in India. It was introduced in 2017, replacing multiple indirect taxes such as VAT, Excise, and Service Tax. GST is a destination-based tax, meaning the tax is imposed at the place where the goods or services are consumed. It is levied on the value added to goods and services at every stage of production and distribution. The final consumer bears the GST charged by the last dealer in the supply chain. GST is a indirect tax that is collected by the government from the consumers and paid by businesses, who can claim input tax credits for the taxes paid on inputs (goods and services used to make their products).

Importance of GST registration

GST registration is a legal requirement for businesses operating in India, and failing to register for GST can result in penalties and legal action. The following are some of the important reasons why GST registration is crucial for businesses:

1. Legal Compliance: GST registration is mandatory for businesses whose annual turnover exceeds the prescribed limit as per GST laws. Failing to register for GST can result in legal penalties and fines.
2. Input Tax Credit: GST registered businesses can claim Input Tax Credit (ITC) for the taxes paid on inputs (goods and services used to produce their products), which can significantly reduce their tax liability.
3. Better Credibility: GST registration helps to establish a business’s credibility and legitimacy, making it easier to attract customers, partners, and investors.
4. Easy Compliance with Tax Regulations: GST registered businesses are required to file regular returns and maintain proper records, which makes it easier to comply with tax regulations and avoid penalties.
5. Improved Cash Flow: Input Tax Credits can help to improve a business’s cash flow by reducing the amount of taxes paid, leaving more funds available for business operations.

Overall, GST registration is important for businesses operating in India as it helps them to comply with the tax laws, reduce their tax liability, and improve their credibility and cash flow.

Who can register for GST

A business is eligible to register for GST if it is engaged in the supply of goods or services, including imports and exports, in India. The following entities are eligible to register for GST:

1. Sole proprietorships – A sole proprietorship is a type of business structure where a single individual owns and operates the business, and is personally responsible for its debts and liabilities.
2. Partnerships – A partnership is a type of business structure where two or more individuals own and operate the business together. In a partnership, the partners share the profits and losses of the business and are personally responsible for its debts and liabilities. Partnerships are eligible to register for GST in India if they are engaged in the supply of goods or services and if their annual turnover exceeds the prescribed limit as per GST laws.
3. Limited Liability Partnerships (LLPs) – A Limited Liability Partnership (LLP) is a type of business structure that combines the features of a partnership and a limited liability company. In an LLP, the partners have limited liability for the debts and liabilities of the business, meaning their personal assets are protected in the event of the business’s insolvency. LLPs are eligible to register for GST in India if they are engaged in the supply of goods or services and if their annual turnover exceeds the prescribed limit as per GST laws.
4. Private Limited Companies – A Private Limited Company is a type of business structure where the ownership is held by a small group of shareholders and the shares are not publicly traded. In a Private Limited Company, the shareholders have limited liability, meaning their personal assets are protected in the event of the business’s insolvency. Private Limited Companies are eligible to register for GST in India if they are engaged in the supply of goods or services and if their annual turnover exceeds the prescribed limit as per GST laws.
5. Public Limited Companies – A Public Limited Company is a type of business structure where ownership is held by a large number of shareholders and the shares are publicly traded. In a Public Limited Company, the shareholders have limited liability, meaning their personal assets are protected in the event of the business’s insolvency. Public Limited Companies are eligible to register for GST in India if they are engaged in the supply of goods or services and if their annual turnover exceeds the prescribed limit as per GST laws.
6. Hindu Undivided Families (HUFs) – A Hindu Undivided Family (HUF) is a type of joint family structure that is recognized under Hindu law in India. In an HUF, the family members pool their resources and own the property together, with the eldest male member acting as the head of the family. HUFs are eligible to register for GST in India if they are engaged in the supply of goods or services and if their annual turnover exceeds the prescribed limit as per GST laws.
7. Trusts – A trust is a legal arrangement where a trustee holds and manages property or assets on behalf of beneficiaries. In a trust, the trustee is responsible for managing the trust property and distributing the income or assets to the beneficiaries as per the terms of the trust agreement. Trusts are eligible to register for GST in India if they are engaged in the supply of goods or services and if their annual turnover exceeds the prescribed limit as per GST laws.
8. Society – A society is a type of non-profit organization that is formed for a common purpose, such as social welfare, education, religion, or culture. In a society, the members pool their resources and work together towards a common goal. Societies are eligible to register for GST in India if they are engaged in the supply of goods or services and if their annual turnover exceeds the prescribed limit as per GST laws.

In addition, entities that are required to obtain a license or registration under any law, such as manufacturers, traders, service providers, etc., are also eligible to register for GST. Businesses whose annual turnover exceeds the prescribed limit as per GST laws are required to register for GST, even if they are not engaged in the supply of goods or services.

Steps to Apply for GST Registration

Steps to fill Part-A

STEP 1 –

1. Visit the GST portal (gst.gov.in)
2. Click on “Services”
3. Select the “Registration” tab
4. Choose “New Registration”
5. Select the “New Registration” radio button
6. In the drop-down menu under “I am a”, choose “Taxpayer”
7. Select the state and district from the drop-down menu
8. Enter the name of the business and PAN of the business
9. Enter the email address and mobile number (Note: If your contact details are linked with PAN, this step may not be necessary)
10. Receive the OTPs on the registered email id and mobile number or PAN-linked contact details
11. Click “Proceed”

This should take you to the next step in the GST registration process.

STEP 2 –

1. Enter the two OTPs received on the email and mobile or the PAN-linked contact details.
2. Click “Continue”.
3. If the OTPs are not received, click “Resend OTP”.

This should take you to the next step of the GST registration process, where you will be asked to provide additional information and documentation.

STEP 3 –

1. Receive a 15-digit Temporary Reference Number (TRN). This number will be sent to your email and mobile or PAN-linked contact details.
2. Make a note of the TRN.
3. Complete filling in the Part-B details within the next 15 days.

STEP 4 –

1. Go back to the GST portal.
2. Select the “New Registration” tab.
3. Choose “Temporary Reference Number (TRN)”.
4. Enter the TRN and the captcha code.
5. Click “Proceed”.

STEP 5 –

1. Receive an OTP on your registered mobile and email or PAN-linked contact details.
2. Enter the OTP.
3. Click “Proceed”.

STEP 6 –

1. Observe that the status of your application is shown as “draft”.
2. Click on the “Edit Icon”.

Steps to fill Part-B

STEP – 1

The Part B of the GST registration process comprises of 10 sections which must be filled in with the required details and necessary supporting documents. In 2020, the Aadhaar authentication section was added to the application process and the requirement for bank account details became optional.

STEP – 2

Next, in the Business Details section, provide the trade name, type of business constitution, and district where the business is located.

It is important to note that the trade name is distinct from the legal name of the business.

Then, for the “Option for Composition” field, choose “Yes” or “No” to indicate whether or not you wish to participate in the composition scheme. If you choose “Yes,” select the type of registered person you are, such as manufacturer, service provider, or eligible composition scheme participant.

After filling in the date of business commencement and date of liability, choose “Yes” or “No” to indicate whether or not you are a casual taxable person. If you choose “Yes,” you must pay advance tax in accordance with the GST law for casual taxable persons by generating a challan.

Under the “Reason to obtain registration” section, select the reason for obtaining registration, such as “Input service distributor.” Enter the relevant details based on your selection. For example, if you select “SEZ unit,” provide the name of the SEZ, designation of the approving authority, approval order number, and upload supporting documents.

In the “Indicate Existing Registrations” section, choose the type of existing registration you have, such as Central Sales Tax or Excise, and enter the registration number and date. Click “Add” to complete this section.

Once all the details have been entered, the section will be marked as complete, indicated by the blue color of the tile.

STEP – 3

Under the Promoters/Partners section, enter details of up to 10 promoters or partners.

The personal information to be entered includes the name, address, mobile number, date of birth, email address, and gender. In addition, for identity purposes, you may also need to enter the designation/status, Director Identification Number (for companies), whether or not the taxpayer is an Indian citizen, PAN, and Aadhaar numbers.

It’s also important to provide the residential address and upload a photograph of the stakeholder. The acceptable file formats for the photograph are PNG or JPEG, with a maximum file size of 1 MB.

If the promoter is also the primary authorized signatory, make the necessary selection. Finally, click the “SAVE & CONTINUE” button to proceed to the next step.

STEP – 4

The Authorized signatory should be entered in a similar manner as the details entered for Promoters/Partners. Fill in the personal information such as name, address, mobile number, date of birth, email address and gender, as well as identity details such as designation/status, Director Identification Number (for companies), PAN and Aadhaar numbers.

In addition, enter the residential address and upload a photograph of the Authorized signatory. You can upload files in PDF or JPEG format, with a maximum file size of 1 MB.

If the Authorized signatory is also the primary authorized signatory, make sure to select the appropriate option. After entering all the required information, click on the “SAVE & CONTINUE” button to move on to the next step.

STEP – 5

Enter the information for the Principal Place of Business.

The primary location within the state where the taxpayer carries out their business is referred to as the Principal Place of Business. This is typically where the company’s books of accounts, documents and top management is located.

Provide the address, district, sector/circle/ward/charge/unit, commissionerate code, division code, and range code. Also, give the official contact number of the taxpayer and indicate the nature of the possession of the premises such as rented, owned, shared, etc.

Upload relevant supporting documents, including a consent letter or NOC for business on rented premises, and proof of SEZ Unit/SEZ Developer approval if applicable. Mark the type of business activities carried out at the premises and add any additional places of business. Finally, click the ‘SAVE & CONTINUE’ button.

Note: To determine the jurisdiction, click on the hyperlink available in the section. For instructions on how to check the jurisdiction, refer to the page “Steps to Find GST Jurisdiction”. If you are applying for registration as the IRP for the CIRP of the taxpayer company, provide details of the original registration of the taxpayer (known as the corporate debtor). For multiple document uploads, combine all the documents into a single file, with a maximum size of 1 MB in either PDF or JPEG format. A maximum of two files can be submitted.

STEP – 6

In the next step, provide details of your primary goods and services along with their corresponding HSN (Harmonized System of Nomenclature) codes or SAC (Service Accounting Code) in the Goods and Services tab. You can enter details for up to 5 goods and 5 services that are most important to your business. Ensure to accurately enter this information as it will be used for tax calculation and compliance purposes.

STEP – 7

In the next step, provide the bank details of the taxpayer for up to 10 bank accounts. Note that the submission of bank account information is no longer mandatory as of December 27th, 2018. However, if you do not report these details during the GST registration process, you will receive a notification after your GSTIN has been granted, requesting you to file a non-core amendment application to submit the bank details.

Be sure to attach any necessary supporting documents along with the bank details.

STEP – 8

In the State Specific Information section, provide the Professional Tax Employee Code Number, Professional Tax Registration Certificate Number, and State Excise License Number along with the name of the license holder. Then, click the “SAVE & CONTINUE” button.

STEP – 9

Under the next step, select whether or not you want to undergo Aadhaar authentication. Keep in mind that if the authorized signatory opts for Aadhaar authentication, physical verification of the premise or site may not be necessary, except in certain cases. In such scenarios, the ARN (Application Reference Number) will be generated immediately after the authentication process is completed.

STEP – 10

Go to the Verification page after completing all the details. Check the declaration and submit the application using either of the following methods:

• Companies and LLPs must submit the application with a DSC
• Utilize e-Sign, where an OTP will be sent to the Aadhaar registered number
• Utilize EVC, where an OTP will be sent to the registered mobile number

STEP – 11

After successful submission of the application, a confirmation message will be displayed and an Application Reference Number (ARN) will be sent to the email and mobile number registered in the application. To check the status of the ARN, simply enter the ARN in the GST Portal.

Criteria for registration

The criteria for registration under GST in India are critical and must be fulfilled in order to be eligible to register for GST. Let’s elaborate on each of the criteria:

1. Place of Business: The business must have a permanent place of business in India. This can be a physical location where the business is operating or a registered office address.
2. Threshold Limit: The annual turnover of the business must exceed the prescribed threshold limit as per GST laws. The threshold limit for registration is currently set at INR 40 lakhs for most of the states in India, except for special category states where the limit is INR 20 lakhs.
3. Nature of Business: The business must be engaged in the supply of goods or services, including imports and exports. This means that the business must be involved in the sale, transfer, barter, exchange, licensing, rental, lease or disposal of goods or services.
4. Taxable Status: The business must be engaged in taxable supply of goods or services. Taxable supply means any supply of goods or services that is chargeable to GST.
5. Documentary Evidence: The business must provide certain documents, such as PAN card, Aadhar card, business proof, and bank account details, to complete the registration process. These documents serve as proof of the business’s identity and help establish the business’s eligibility for GST registration.

It is important to note that different types of businesses, such as sole proprietorships, partnerships, limited liability partnerships (LLPs), private limited companies, public limited companies, Hindu Undivided Families (HUFs), trusts, and societies, may have different criteria for registration under GST. Hence, it is advisable to seek professional help or consult with a tax expert to determine the specific criteria that apply to your business.

Documents Required for GST Registration

A. PAN card

The PAN card (Permanent Account Number) is a unique 10-digit identification number issued by the Income Tax Department of India to individuals, companies, and other entities. The PAN card serves as a proof of identity and is a mandatory document required for GST registration in India. The PAN card must be provided in the name of the business entity that is applying for GST registration.

In the case of a partnership firm, the PAN card of the firm must be provided. In the case of a company, the PAN card of the company must be provided. In the case of a sole proprietorship, the PAN card of the proprietor must be provided. In the case of an HUF, the PAN card of the Karta must be provided. And in the case of trusts, the PAN card of the trust must be provided.

B. ID Proof

ID proof refers to a document that serves as a valid proof of identity for an individual. Some of the commonly accepted ID proofs for GST registration in India include:

1. Aadhaar card
2. PAN card
3. Passport
4. Voter ID card
5. Driving license

It is important to note that the ID proof must be provided in the name of the authorized signatory of the business who will be responsible for completing the GST registration process. This person can be a director, partner, proprietor, or authorized representative of the business.

In addition to the ID proof, the business may also be required to provide other documents such as bank statements, utility bills, and lease agreements as proof of the business’s place of operation. These documents serve as additional evidence of the business’s identity and eligibility for GST registration.

C. Business proof

Business proof refers to a document that serves as evidence of the existence of a business. Some of the commonly accepted business proofs for GST registration in India include:

1. Incorporation certificate: For companies and LLPs.
2. Partnership deed: For partnership firms.
3. Shop and Establishment registration certificate: For sole proprietorships and partnerships.
4. Trust deed: For trusts.
5. Society registration certificate: For societies.
6. PAN card of the business entity.

It is important to note that the business proof must be provided in the name of the business entity that is applying for GST registration. The business proof serves as evidence of the existence and type of business, and is a key component of the GST registration process.

D. Bank account details

Bank account details refer to the information related to the bank account of the business entity that is applying for GST registration. This information includes the name of the bank, account number, type of account (e.g. savings or current), and IFSC code.

Having a valid bank account is a mandatory requirement for GST registration, as all GST transactions such as payment of taxes and receipt of refunds must be made through the registered bank account. It is important to note that the bank account must be in the name of the business entity that is applying for GST registration.

In addition to the bank account details, the business may also be required to provide a cancelled cheque or a bank statement as proof of the bank account. These documents serve as additional evidence of the business’s bank account and eligibility for GST registration.

Explanation of GSTIN

GSTIN, which stands for Goods and Services Tax Identification Number, is a unique 15-digit number assigned to each registered taxpayer under the Goods and Services Tax (GST) regime in India. This number acts as an identification for the taxpayer for all GST-related transactions and communications with the government.

GSTIN consists of three parts:

1. Two-digit state code, which indicates the state in which the taxpayer is registered
2. Ten-digit PAN (Permanent Account Number) of the taxpayer, which acts as a unique identifier for the taxpayer
3. Three-digit code, which acts as a serial number for the taxpayer within the state.

Benefits of having a GSTIN

Having a GSTIN brings several benefits to businesses in India, including:

1. Legal Compliance: GSTIN is mandatory for businesses with an annual turnover exceeding a certain threshold, as per the Indian GST laws. Having a GSTIN ensures legal compliance with the GST regime and helps businesses avoid penalties and legal consequences.
2. Input Tax Credit: GSTIN is a pre-requisite for claiming Input Tax Credit (ITC), which is a key aspect of the GST regime in India. ITC refers to the credit received by a taxpayer for the GST paid on inputs (goods or services used in the production of taxable goods or services). By having a GSTIN, businesses can claim ITC, which can significantly reduce the overall tax burden.
3. Increased Credibility: GSTIN is a formal registration under the GST regime and acts as a certificate of compliance with Indian tax laws. By having a GSTIN, businesses can demonstrate their compliance with the GST regime and improve their credibility with customers, suppliers, and other stakeholders.
4. Improved Record Keeping: GSTIN is linked to all GST-related transactions and is used to track the movement of goods and services. This facilitates the maintenance of accurate records of all GST-related transactions, improving the overall record-keeping process and reducing the risk of errors.
5. Better Tax Planning: GSTIN enables businesses to monitor and manage their tax liability more effectively, which can help in better tax planning and optimization.

Types of GST Returns

GST Returns refer to the periodic reports that businesses registered under the GST regime in India are required to file with the government. The purpose of filing GST returns is to provide the government with information on the GST paid and collected by businesses, and to enable the government to track the movement of goods and services and ensure tax compliance.

There are several types of GST returns, including:

1. GSTR-1: This return is filed by businesses registered under GST and contains details of all outward supplies (sales) made during a given tax period.
2. GSTR-2: This return is filed by businesses registered under GST and contains details of all inward supplies (purchases) received during a given tax period.
3. GSTR-3: This return is the consolidated return filed by businesses registered under GST, which summarizes the details of both outward and inward supplies, and includes the total GST liability and payment.
4. GSTR-3B: This is a simplified return filed by businesses registered under GST, which summarizes the details of outward supplies, inward supplies, and the total GST liability.
5. GSTR-4: This return is filed by businesses registered under the GST Composition Scheme, which is a simplified scheme for small businesses with an annual turnover below a certain threshold.
6. GSTR-5: This return is filed by non-resident taxable persons (NRTPs) who are registered under GST in India.
7. GSTR-6: This return is filed by Input Service Distributors (ISDs), who distribute credit of GST paid on inputs to their branches.
8. GSTR-7: This return is filed by authorities who are required to deduct tax at source under the GST regime.
9. GSTR-8: This return is filed by e-commerce operators who are required to collect tax at source under the GST regime.

In conclusion, GST returns are a crucial aspect of the GST regime in India and are used by the government to track the movement of goods and services and ensure tax compliance. Businesses registered under GST are required to file different types of GST returns, depending on their type of business and the nature of their supplies.