GST or Goods and Services Tax is the most significant indirect tax reform of India. It is an indirect tax which is the reason of replacement of many other indirect taxes. The Goods and Services Act was passed in the parliament on 29th of March 2017 and the Act officially came into effect on 1st of July 2017. GST is basically imposed on supply of goods and services in India. GST has absorbed various taxes like Central Excise Law, Service Tax Law, VAT, Entry Tax, Octroi etc.
So, GST is One Prominent Tax for the whole country.
In GST system, businesses whose annual turnover is more than Rs 20 lakhs needs to register as a normal taxable person. This process is known as GST registration. The rule is slightly different for North Eastern and Hilly states, there the businesses whose annual turnover cross Rs 10 lakhs needs to be GST registered.
But a more feasible option is to register for GST, even if your annual turnover is less than Rs 20 lakhs because:
- That would allow you to sell outside your state also.
- You will get Tax Refunds on purchases.
When does an entity need to be GST registered?
For an entity registration under GST becomes necessary, once it crosses minimum threshold turnover after it starts a new business that was expected to cross a prescribed turnover. Also, there are various other criterias other than annual turnover that can make it necessary for the entity to obtain a GST registration. According to GST regulations, businesses required to register for GST must file a GST application within a period of 30 days after it became liable for GST registration.
Who needs to register for GST?
- Enterprises having an annual turnover more than Rs 20 lakhs (Rs 10 lakhs for North Eastern and hilly states).
- Businesses with branches in multiple states or multiple verticals in a single state.
- Enterprises registered under any of the earlier indirect Tax regime (VAT, Excise Law, Service Tax Laws) irrespective of the threshold limit.
- Entities managing businesses through E-commerce.
- Entities making any sort of supply to other states.
- Aggregator supplying goods and services under his brand name.
- Agents of a supplier.
- Enterprises required to deduct tax at source or an input service distributor.
- Entities required to pay tax under reverse charge (In case the supplier is not registered under GST).
- Entities supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered taxable person.
Benefits of registering under GST
GST registration will let you enjoy the following advantages:
- You can collect taxes from your customers and pass on the credit of the taxes paid to them.
- Seamless flow of Input Tax credit from supplier to receiver at national level.
- You can claim Input Tax Credit of taxes paid to your suppliers and can utilize the same for payment of taxes due.
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