Thoroughly De-mystifying of GST Registration and Compliance for Businesses - Business consulting services

Introduction

The Goods and Services Tax (GST) is a destination-based, comprehensive, multi-stage tax levied on every value addition. It has subsumed a plethora of indirect taxes previously existing in India. For any business concern, understanding GST registration and compliance is very necessary for operating within the limits of the law and to enjoy the benefit provisions under the GST regime.

Understanding GST Registration

Who Must Apply for Registration under GST?

Not all businesses are compulsorily required to register for GST. The requirement for registration is mainly dependent upon the turnover threshold. Businesses whose annual turnover is more than ₹40 lakhs (₹20 lakhs for special category states) are required to register for GST. Besides, some categories of businesses, such as those dealing in inter-state supply or e-commerce, are liable for compulsory registration irrespective of their turnover.

Benefits of GST Registration

Some of the benefits that registration under GST confers on businesses include the following: It enables them to collect legally GST from customers and pass on to them the credit of the taxes paid on the supplies of goods and services purchased. This mechanism is popularly called the ITC mechanism. The registration under GST gives business people an official recognition, which adds to their credibility and expands the scope for new business opportunities.

How to Register for GST

The process of registration under GST is online, and it literally does not create much hassle while getting it done. The steps involved in the process are as follows:

1. Log in to www.gst.gov.in

2. Click the 'Services' tab and click 'Registration' under the 'New Registration' drop-down menu.

3. Fill out the application with all the required information and submit it.

• Receive OTP for Verification:

• Enter the OTP sent to your registered email and mobile number.

• Click ‘Proceed’ to continue.
  

• Temporary Reference Number (TRN):

• After verification, you will receive a Temporary Reference Number (TRN).

• Note this number for future reference.
  

• Continue Registration:

• Return to the GST portal.

• Click on ‘Services’ > ‘Registration’ > ‘New Registration’.

• Select ‘Temporary Reference Number (TRN)’.

• Enter the TRN and captcha code.

• Click on ‘Proceed’.
  

• OTP Verification:

• Enter the OTP sent to your registered email and mobile number again.

• Click ‘Proceed’ to continue.
  

• Business Information:

• Fill in the required details about your business, such as trade name, constitution of business, and district.

• Enter your PAN, business name, and the date of commencement of business.
  

• Promoter/Partners Information:

• Provide details of up to 10 promoters/partners.

• Information needed includes name, date of birth, mobile number, email address, address, and identity information such as PAN and Aadhaar.
  

• Authorized Signatory:

• Nominate a primary authorized signatory.

• This person will manage GST compliance on behalf of your business.

• Fill in their details and upload the necessary documents.
  

• Principal Place of Business:

• Enter the address of the principal place of business.

• Provide details such as the nature of possession of premises, official contact number, and email address.
  

• Additional Places of Business:

• If your business has additional places, provide their addresses and other necessary details.
  

• Goods and Services Details:

• Specify the goods and services your business deals with.

• Use the HSN (Harmonized System of Nomenclature) code for goods and the SAC (Service Accounting Code) for services.
  

• State-Specific Information:

• Enter details specific to your state such as professional tax employee code (if applicable).
  

• Aadhaar Authentication:

• Complete the Aadhaar authentication process for the primary authorized signatory and promoters/partners.
  

• Verification:

• Select the verification checkbox and the authorized signatory from the drop-down list.

• Enter the name of the place and click on ‘Submit with DSC’ or ‘Submit with E-Sign’ or ‘Submit with EVC’.
  

• Submission:

• After successful submission, you will receive an Application Reference Number (ARN) via email and SMS.
  

• Approval:

• The GST officer will review your application.

• If all information and documents are correct, you will receive your GSTIN (GST Identification Number) and GST registration certificate.

Documents Required for GST Registration

For completing the GST registration, following documents are required to be furnished for the process

• Business PAN Card

• Proof of business registration or Incorporation certificate

• Identity and Address proof of Promoters/ Directors with photographs

• Address proof of the Business Premises

• Bank account statement or a cancelled Cheque

GST Compliance Requirements

GST Returns

At the time of registration, businesses have to comply with several GST return filing requirements. The returns differ based on the type of taxpayer, amongst others. In the case of regular taxpayers, there are GSTR-1, details of outward supplies; GSTR-2A consisting of the details of inward supplies auto-populated from the supplier's GSTR-1; GSTR-3B summary return; and an annual return in GSTR-9.

Proper Records

Proper record-keeping is obligatory for this regime. Proper record of all sales and purchases, production and services, inventory, and any other financial transactions should be maintained. Such records should be retained at least for six years from the last date of filing the annual return for that particular year. Proper management of invoices is very important since invoices are the basic documents for returns under GST.

GST Payments

Businesses must pay GST every month. The last date for the payment of GST shall always be the 20th of the following month. One can pay GST through the online-generated challan at the portal of GST using various options like internet banking, debit/credit cards, NEFT/RTGS, etc. It should be kept in mind that all the taxpayers have to ensure timely payment to avoid interest and penalties.

E-Way Bill System

What is an E-Way Bill?

An e-way bill is an automatically generated document through the GST portal, for the movement of goods. It contains information about the consignor, the consignee, the transporter, and the goods in transportation. The e-way bill is mandatory for the movement of goods of more than ₹50,000 in value, moving inter-state or intra-state, except where exempted under the conditions provided therein.

When and How to Generate an E-Way Bill

The E-Way Bill has to be generated prior to the commencement of movement of goods. It may be generated on the GST portal or even by SMS. In this process, the following are to be provided: details such as the recipient's GSTIN, the place of delivery, invoice or challan number and date, value of goods, HSN code, and transport details. Once generated, the E-Way Bill number (EBN) will be available to the supplier, the recipient, and the transporter.

Problems and Solutions

General Issues on GST Compliance

The businesses are generally seen struggling over the compliance regime of the GST. One of the common issues that first arises is filing numerous returns among constantly changing provisions under the act. Businesses have to constantly update their platform to counter technological glitches on the GST portal. Besides this is also the heavy task of reconciling mismatched invoices.

Solution to Compliance Issues of GST

The following are some of the strategies that the businesses can use to overcome these challenges. Return filing can be made easier and automated with the calculations handled through the usage of GST software that provides compliance on time. Businesses may also seek professional help from tax consultants or advisors in understanding the loopholes of the GST regulations and changes therein.

Penalties for Non-Compliance

Consequences of Not Registering for GST

The consequence of not registering for GST, when required, may be very stiff. Any business that fails to register will be liable to a penalty extending to 10% of the tax due or, even, ₹10,000, whichever is higher. This may go up to 100% in cases of deliberate evasion. Another implication for a non-registered person is that he cannot collect GST from customers, and will also not be eligible for input tax credit.

Late Filing and Payment Penalties.

In the case of GST, timely filing and payment are very vital to avoid penalties. If the business entity fails to file returns within the specified due date, a late fee of ₹ 50 per day is charged; ₹ 20 per day in the case of nil returns, subject to a maximum of ₹ 5,000. Other than this, 18% per annum of the outstanding tax amount is charged as an interest rate. This additional cost can be avoided if one makes sure there is compliance on time.

Recent Updates and Future Trends

Recent Changes in GST Regulations

The GST regulations are dynamic and are continuously changing to remove many anomalies and to make compliance easy. The recent changes relate to the roll-out of a new return filing system, extending e-invoicing to more businesses, and modification in composition scheme. All these changes are aimed at making the GST system more efficient and friendly for the taxpayer.

Future Trends in GST Compliance

Therefore, heavy digital transformation and use of technology is the future of compliance. The government is automating and integrating different processes so that the intervention of humans is minimal, hence reducing errors. Trends that will set the landscape of GST in the times ahead are simplification of return filing, enhanced analytics for better compliance, and adoption of blockchain technology. Conclusion Summary of Key Points

Proper understanding and compliance with conditions of registration and compliance under GST are the key to running a legal business and claiming benefits under the GST system. Apart from the facilitation in tax collections, businesses would also benefit from registering for GST to claim input tax credits. Proper maintenance of records, timely and accurate filing of GST returns, and keeping up with the dynamic changes in regulations—these, among others, are the basic steps to be followed by an entity for smooth management of GST working.

Conclusion

Though compliance with the regulations under the regime of GST may seem daunting, proper tools and help along one's side make things much easier. Embracing digital solutions and staying updated on new changes certainly makes compliance relatively easy. Businesses may find more information and help on the official portal of GST or by seeking professional advice.

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Frequently Asked Questions

1. What is the prescribed turnover for registration under GST?

a.     Turnover: Any business whose turnover exceeds ₹40 lakhs annually (₹20 lakhs for special category states) must compulsorily register for GST.

2. What are the advantages of GST registration?

a.      The advantages include that the person can collect GST, claim input tax credit, and increase business credibility.

3. How frequently should a business file GST returns?

a.      The frequency of return filing depends on the nature of the taxpayer, but in most cases, regular taxpayers file returns on a monthly and annual basis.

4. What is an e-way Bill, and when is it required?

a.      It is an electronic document required during the movement of goods for consignment values more than ₹50,000.

5. What are the penalties for late filing of GST returns?

a.      A late fee of ₹50 per day (₹20 per day for nil returns) is charged, up to a maximum of ₹5,000, along with an interest rate of 18% per annum on the outstanding tax amount.