Your Guide to How to Apply for GST for Your Business

What is GST?

The Goods and Services Tax (GST) is one of the biggest changes that was brought about in the taxation system of India, and currently,  it is the only tax system in India.  Large and small scale businesses have to get a GST identification number to get registered and start operating. The GST is implied in the supply of goods and services in India.

GST is a single indirect taxation system in India, which has replaced all the previous indirect taxes like Entry tax, Octroi, VAT, and Central Excise Duty. The Centre passed the GST in 2017, and it was approved on March 29,  2017 It was launched into operation on July 1, 2017. GST includes five different types of tax rates, which are 0%, 5%, 12%, 18% and 28%. Some selected products are not charged with GST tax such as petroleum, alcoholic drinks, and electricity. Taxes on these products are imposed by the state governments based on the previous tax regime. If any kind of sale is done inter-state, then integrated GST is charged, but if the sales are done intra-state, then both State GST and Central GST is imposed.

Tax Heads Under GST

The Government has categorised GST into four heads and further collects the GST from them. The four heads are:

1. Central GST(CGST) - Tax collected by Central Government
2. State GST(SGST) - Tax collected by State Government
3. Union Territory GST(UTGST) - Tax collected by Union Territory Government
4. Integrated GST(IGST) - Tax  collected by the Central Government for imports and inter-state transactions.

The Integrated goods and services tax is imposed in interstate transactions where the supplier is in a different state compared to the place of supply. For intrastate supplies where the location of the supplier and the place of supply is in the same state, an equal amount of SGST and CGST is imposed as IGST, which is the half rate of the GST.

The old regime of VAT + Central Excise/Service Tax imposed on the sales within the state is replaced with CGST and SGST tax. Here the revenue is shared equally between the central and state government.

The old regime of Central Sales Tax + Excise/Service Tax imposed on sales to another state is replaced with the IGST tax. The centre will share the revenue of the tax based on the destination of the goods.

How to Apply for GST?

A dealer whose annual turnover is over ₹20 lakhs has to apply for GST. The annual turnover may vary across states, according to the state and on the kind of supplies. The benefit of applying GST is that it is done online,

Step 1:

Visit the GST portal. Click on Services, then click on registration, and after that, select the option of “New Registration”.

Step 2:

Enter the following details in Part A -

• Select the New Registration button
• In the drop-down option of ‘I am a’ select Tax Payer
• Select your State and District
• Enter your business name and the PAN of business
• Put in the email id and mobile number. OTPs will be received on the registered email id and mobile number
• Click on proceed.

Step 3:

Enter two OTPs that you will receive on email and your phone. If you haven’t got the OTPs, click on the resend button.

Step 4:

A 15digit Temporary Reference Number (TRN) will be sent on your email address and mobile number. Note down the TRN number.  yYou will have to fill Part B of the registration within the next 15 days.

Step 5:

Visit the GST portal again, and select the ‘New Registration’ tab.

Step 6:

Select the Temporary Reference Number (TRN). Enter your TRN, enter the captcha code displayed, and then, click on the Proceed button.

Step 7:

You will receive an OTP on the registered email address and mobile number. Enter the OTP and click on Proceed.

Step 8:

It will show you the status of your application. The status will be shown as a draft and you will have to click on the edit button.

Step 9:

Part B of the GST registration has 10 sections under it. You have to fill in all the details and submit the required documents. Recently, the government has added Aadhaar authentication on the portal and the section for bank account details is not mandatory anymore. . Since 27 December 27, 2018, bank account details are not mandatory

List of some documents which you need to submit during the GST registration:

• Photographs
• Constitution of the taxpayer
• Bank account details
• Verification and Aadhaar authentication, if chosen.

Step 10:

Once you are done filling in all the details, go to the Verification page, and tick on the declaration, and you can apply. The application can be submitted through:

• Companies and LLPs have to submit the application using DSC
• Using e-Sign - You will get an OTP to your Aadhaar registered number
• Using EVC - You will receive an OTP on your registered mobile.

Step 11:

Once the process is done, a a message on the successful application will be displayed. An Application Reference Number (ARN) will be sent to the registered email address and mobile number.  If the author signatory has chosen to go for Aadhaar authentication, then a physical verification of the premise or site of the business will not be done by the government officials. The verification can be done in some exceptional cases, and in such cases, the ARN is generated after the completion of the application process.

You can check the ARN status of your GST registration by entering the ARN on the GST portal.

Benefits of GST

1. Eliminates Tax on Tax

GST was introduced to bring all taxations under one umbrella, and eliminate the cascading effect of taxation. But under the regime of GST, the cascading tax on tax has been eliminated effectively.

2. High Amount for Registration

GST has been imposed to help small scale businesses grow more. Previously, a business with a turnover of ₹ 5 lakh had to pay VAT. This limit was deferred state-wise. Service providers with a turnover of more than ₹ 10 lakhs were liable for Service Tax.

But under the regime of GST, this threshold limit has been increased to ₹ 20 lakh, which has provided relief to small scale businesses and service providers.

3. The Procedure is Online and Simple

The procedure of GST has been made online, which not only makes it easy but helps start-ups during the pandemic. From doing GST registration to filing returns, every procedure is done online. It also helps start-ups, as they do not have to run from one registration to another. All taxes such as VAT, Service Tax, and Excise will be done at one place, making it less time-consuming.

4. Composition Scheme for Small Businesses

A taxpayer with an annual turnover below Rs. 1.5 crore can apply for the Composition scheme, and under Rs. 75 lakh for the business owners in North-Eastern states and Himachal Pradesh. The composition scheme gives the option of lowering the tax rates under GST for small businesses. This step has helped many small businesses lower the burden of tax and compliance.

5. Unorganised Sectors are Regulated

Certain industries like construction and textile were not organised and regulated, but after imposing GST, regulation and accountability has been brought about in these industries. Under GST, some provisions have been imposed for compliances and payments, and to avail the input credit only when the amount is accepted by the supplier.

The government is trying everything to make GST easier for businesses to run smoothly. GST was implemented by the government to help all small businesses.

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