When a company's total revenue exceeds a certain threshold, it is subject to GST. The entire sales value of taxable and exempt goods and services, as defined by Section 22 of the CGST Act, is aggregate turnover.
GST Turnover Threshold
If your total turnover exceeds ₹40 lakh (₹20 lakh for special category states) for sales of goods or ₹20 lakh (₹ 10 lakh for special category states) for sales of services, you must register for GST.
Following is a list of the levies that were replaced by GST:
- Value-added tax (VAT) or sales tax
- Octroi
- Entertainment tax
- Tax on lottery or betting or gambling
- Purchase tax
- Luxury tax
- Service tax
- Additional excise duty
- Central excise duty and so on
GST Tax Slabs
The GST rate for various products and services in India is divided into five slabs: 0% GST, 5% GST, 12% GST, 18% GST, and 28% GST. On a regular basis, the GST Council examines the items covered in each slab rate to ensure that they remain relevant to industry demands and market trends. Basic commodities are taxed at lower rates under the existing regime, whereas luxury products and services are taxed at higher rates.
| Farmers and entities engaged only in the business of supplying goods or services that are not subject to tax or fully exempt from tax, as well as entities engaged solely in the business of selling and distributing agricultural products, are not required to register under GST. |
Wondering how to calculate GST percentage? Use our online GST calculator India for accurate results.
In India, the following persons and organizations are mandatory required to undergo GST registration:
- Businesses involved in inter-state supply of goods and services
- Non-resident taxable person
- Casual taxable person
- Taxpayers under the reverse charge mechanism
- Businesses registered under old tax services, such as VAT, excise, and service tax
- Any business engaged in the supply of goods whose turnover in a fiscal year exceeds ₹40 lakhs for states in the normal category who have opted for the new threshold (₹20 lakhs for special category states and those in states which have not opted for the new threshold, for example, the state of Telangana)
- Any business engaged in the rendering of services whose turnover in a fiscal year surpasses ₹20 lakhs in normal category states (₹10 lakhs for special category states)
- Agents of a supplier
- Input service distributors
- Businesses that supply online information, database access, and/or retrieval services from outside India to a person/business within the country
- E-commerce aggregators
- Businesses that supply through an e-commerce aggregator
- Other individuals and businesses as notified by the central/state govt, on recommendation by the GST Council.
Benefits of Compulsory GST Registration
Compulsory GST registration ensures businesses avoid multiple indirect taxes and allows them to claim input tax credits, reducing overall tax burdens. Here is a detail benefits of the same:
Avoidance of Multiple Taxes
GST registration helps businesses avoid paying multiple taxes. It replaces most indirect taxes levied by the central and state governments, meaning businesses only have to pay one tax instead of several.
Input Tax Credit
Businesses registered for GST can claim input tax credits on the taxes paid for inputs. This reduces the overall tax burden on their outputs.
Increased Profits
By reducing tax expenses through input tax credits, businesses can boost their income and profits.
Transparency
GST registration enhances transparency in the tax system. It helps the government track all taxes paid by businesses, making it easier to identify and prevent tax evasion.
Easy Compliance
GST registration simplifies tax filing. Businesses only need to file one return instead of multiple returns each month or quarter.
One of the crucial steps toward an integrated tax system in India is mandatory GST registration. This requirement ensures businesses comply with GST rules and regulations, enabling the government to collect taxes more efficiently. Moreover, it enhances system transparency and reduces tax evasion.
Necessary Documents for GST Registration
For Proprietor:
- PAN
- Aadhaar
- Photograph
- Electricity Bill
- Rent Agreement (if rented)
- Bank Statement/Cancelled Cheque (after registration)
For Partnership Firm:
- PAN of the Entity
- PAN, Aadhaar, Photo of the Partners
- Authorised Signatory Letter
- Electricity Bill
- Rent Agreement (if rented)
- Bank Statement/Cancelled Cheque (after registration)
For Private Limited Companies/LLP:
- PAN of the Entity
- Certificate of Incorporation
- PAN, Aadhaar, and Photo of the Directors/Partners
- Authorised Signatory Letter
- Electricity Bill
- Rent Agreement (if rented)
- Digital Signature Certificate
- Bank Statement/Cancelled Cheque (after registration)
Make Mandatory GST Registration Easy With Vakilsearch
The procedure to apply for GST number: https://www.gst.gov.in/ requires candidates to complete a number of steps. Additionally, users must ensure that they follow the steps with tedious care in order to avoid further delays in the application’s processing.
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