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What all do you get when you get a registration under GST

4-minute lesson By Mary James
GST on real estate How will it impact home buyers and the industry evhe1Zz
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Under GST law, it is mandatory for anyone whose turnover is Rs. 40 lakhs or above to register as a normal taxable entity. For Northeastern states like Arunachal Pradesh, Mizoram, etc. and hill states like Himachal Pradesh, the turnover limit is Rs. 10 Lakhs. This provision of GST registration is prescribed under chapter 6 of the CGST Act of 2017. It is an offence to not register under GST if you fall under the taxable category. A 33 member GST council regulates the GST. The union finance minister is a GST council member as chairperson, other members being union minister of states in charge of revenue and state ministers in charge of taxation. It is a governing body that regulates and directs every step on implementation of GST tax in the country about tax rates and other implementation measures.  Anyone who registers under GST gets a 15 digit unique number that becomes their identity as far as filing tax is concerned.

The importance of GST number is not just about being under the legal fold and avoiding penalties, but it also has a significant effect on how much you are trusted with other businesses and government. It also helps in filing returns which could help you save taxes.

Types of Registrations:

Under the GST Act, there are various types of GST registrations. It is important that you are aware of different types of registrations as this will help you conduct business appropriately.

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Casual Taxable individual: Someone who wants to set up a seasonal store or a stall should opt for this category. You are required to deposit an advance amount that is equal to expected GST liability during the tenure of the seasonal store or stall. The duration is of 3 months for anyone who registers under this category, and it can be renewed or extended.

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Normal Taxpayer: There is no requirement to pay any deposit under this category. There is no expiry date for individuals who come under this category. It is the most common category as most business comes under this category.

Composition Taxpayer: You should apply for this category if you wish to obtain the GST composition scheme. You will have to pay at a fixed rate on the turnover. This scheme is for small taxpayers whose turnover is less than Rs. 1 crore.

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Non-Resident Taxable individuals: If you are a non-resident but supply goods within the country you should opt for this type of category. You are required to pay a deposit of expected GST liability similar to the Casual Taxable individual until the GST registration is active. The duration of your registration being active is 3 months and it can be extended and renewed.

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Benefits and Advantages for you as a registered individual/business under GST

First and foremost, The benefit of getting yourself registered is avoiding penalties that could be levied on you. You will also be legally recognized as a supplier making it beneficial for your business on many levels.

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  • You will be able to avoid a penalty, which could be either of Rs. 10,000 or the tax due on goods and services, whichever is higher.
  •  You will be eligible for the input tax credit.
  •  You will be able to issue a tax invoice which will help in gaining more trust in your supply chain.
  •  You will be able to transfer input tax credit again helping supply chain.
  • You will be able to avoid the detention of goods that can otherwise be confiscated.

Input tax credit as a normal taxpayer: You will be able to take the input tax credit. You can reduce the tax you previously paid on inputs. You can claim input credit of Rs. 300 and you only need to deposit Rs.150 as taxes. You will be able to make inter-state sale and supply without any restrictions.

Prevent Cascading of taxes: You will be able to operate seamlessly in a streamlined manner as the whole supply chain will get an all-inclusive input tax credit mechanism. This also helps in claiming returns.

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Registering under Composition Scheme: Under this scheme, you will be able to avail of prominent benefits. There will be limited compliance. Taxpayers will be required to furnish returns quarterly only. It will help in ease of doing business. You will not have to worry about keeping records or paying taxes frequently and will be able to focus better on business. There will also be limited tax liability where the tax rate will be nominal because a supplier cannot collect tax separately in an invoice. This will help sell goods and services to customers at affordable rates as well as earn more profit. As the profit margin of a supplier under the composition scheme is higher than a larger taxpayer, chances of competing with bigger businesses get higher and they will be able to supply goods and services at competitive prices.

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A normal taxpayer will be required to pay output tax on his supplies at a standard rate, and any input credit will only be available only when his own supplier files a return which should match with his return. This will always keep a larger chunk of working capital blocked. However, someone registered under the composition scheme will have nominal output liability, and they will not have to worry about.

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