Goods and Service Tax (GST) in India marked an important phase of the Indian economic horizon. Announced to be effective on July 1, 2017, the GST replaced a conglomeration of central and state taxes with one single new integrated levy, which simplified the fiscal structure. The much-awaited move to quash the tax cascading, kick-start economic activity in force and make Indian goods to be sold in national and international markets equally competitive. GST (Goods and Service Tax), which encompasses numerous indirect taxes, has not only streamlined taxation but has also improved compliance and transparency.
Starting a business can be a challenging and exciting process, especially for the startup. A significant factor for startups to be able to navigate is through the Goods and Service Tax (GST) registration. Every business needs GST registration for tax compliance and running their trade according to the law.
In this article, we will discuss step by step guide to doing GST Registration. Read on eligibility criteria and what documents will be required to apply for GST as well the benefits of registration, we will delve into everything related to registering your startup for GST correctly. Hence, we are diving deeper and bestowing thorough information on how to ideally book your GST registration without any hitches.
Overview of Startup
A startup is a venture or company targeted at a single product or service the founder seeks to launch in the market. Startups usually do not feature a wholly developed business framework and even lack adequate capital required to transit to the next business level. Most startups are financed by their founders at first and then run through funding from family, friends, and separate venture capitalists. Startups usually utilize seed capital for development and research plans that aid in ascertaining the demand for their services or goods in the market.
These companies are still to be registered or incorporated and exist to promote innovation in specific fields or for the exclusive profit of the owners. Startups have various business registration alternatives, which comprise:
- LLP Registration
- Partnership Firm Registration
- One-Person Company Registration
- Private Limited Company Registration
- Sole Proprietorship Registration
Individuals seeking to create a startup must apply for a Startup India Certificate, which provides various benefits to such companies.
Is GST Registration Mandatory for Startups?
Yes, startups must obtain GST Registration in India in the specified instances:
- Business people who register for taxes like VAT, excise, and service tax.
- A non-resident who is amenable to paying tax
- Data access provider
- Business engaged in vending services and products via E-commerce portals
- Companies that have an annual turnover of INR 40 lakhs and above and INR 20 lakhs in the North-Eastern states of Jammu & Kashmir, Uttarakhand and Himachal Pradesh.
- Startups paying taxes under Reverse Change Mechanism or RCM
- Startups that sell goods and services at events and exhibitions without the need for any permanent business location. Such dealers should pay GST related to a 90-day sales estimate.
- TDS/TCS deductors
- Casual taxable individuals
- GST registration is mandatory for supplier agents and input service providers looking to carry over the benefit of ITC or input tax credit.
Stepwise Guide to Online GST Registration
1. Go to the GST Portal
Visit the official GST portal at gst.gov.in
2. Complete the Application Form
Select ‘Services’>’Registration’>’New Registration.’
Choose ‘Taxpayer’ and key in details like mobile number, PAN, and email ID.
3. Get OTP Verification
Verify your email address and mobile number utilizing OTPs sent to subscribed contacts.
4. Deposit Business Details
Furnish information regarding your business, like business address, trade name, and constitution (e.g., proprietorship, partnership).
5. Upload Necessary Documents
- Proof of business address.
- PAN Card.
- Address proof and Identity of directors/promoters.
- Bank account details
- Digital Signature (if relevant).
6. Get Application Reference Number (ARN)
Upon submission, you’ll get an ARN to monitor your application status.
7. GST Identification Number (GSTIN)
Once authenticated, you’ll get your GSTIN (Goods and Services Tax Identification Number) and Certificate of Registration. This certificate endorses your legal registration under GST and permits you to carry on business compliantly.
Benefits of GST Registration for Startups
- Credibility and Legitimacy – Registering for GST offers startups a sense of credibility and legitimacy in the eyes of partners and customers. It shows that the business follows tax regulations and functions transparently.
- Reach to a Wider Market – GST registration allows startups to take part in interstate trade without any limitations. Enter this, and they make opportunities to broaden their geographical reach and cater to customers in different states. It eliminates the need for separate registration in each of the states and also simplifies compliance with interstate transactions.
- Can Claim Input Tax Credit – GST registration is great as it gives you the ability to input tax credits. It means startups can deduct the tax that they pay on purchases from the taxes they collect on sales. Reduces the burden of double taxation and improves the cash flow of business.
- Compliance with the Law on Taxes – Enrolling on GST enforces compliance with tax compliance and reduces the risk of any legal hassles in the future for startups. It assists in fostering an excellent reputation and prevents fines or penalties that may crop up from non-compliance.
- Convenient to start any new Business – If you wish to start a new company, GST registration will aid you immensely. You can obtain a speedy one-person company Registration after enrolling for Goods and Services Tax. GST also helps maintain a centralized registration and lower procedural charges. You can begin a new business conveniently after finishing all the GST formalities.
Comprehending Complex GST Regulations
The complicated nature of GST regulations can be overwhelming for startups. Take time to learn the rules, compliance and tax rates to being penalty-free or making a mistake.
1. Classifying Proper Goods and Services
Ensuring Good grouping of Goods and services under appropriate GST tax has to be done correctly for the exact computation of tax. To avoid the mismatch in their returns from the GST angle, startups must also work out what the individual rules are on how goods and services can be grouped together.
2. Manage GST Record-keeping and Compliance
GST compliance is about filing quarterly returns, maintaining due records of purchase and sale invoices and watching out for Input Tax and Output Tax. Startups have to put in place robust processes and systems to ensure that these activities are executed correctly.
3. Managing GST Record-keeping and Compliance
GST audits are difficult when it comes to startups. Considering the records that are needed for GST audits can make audits easier, so you will be able to take a relaxing ride on the way.
Final Reflections
Conclusively, it is necessary for the business to have a GST registration in order to comply with tax laws and qualify for things such as input tax credits. This framework in understanding the enrolling process would enable startups and small businesses to build robust, authentic processes related to operations. Later on, from a business perspective, businesses have to be updated with the GST compliance needs and take the help of professionals if required for optimal execution. However, in the changing tax landscape, online GST registration will result in more effective operations and access for businesses to available growth avenues.
Despite the challenges that come, getting professional help and staying focused can aid in overcoming them.