- Do I have to register my business under GST?
- Should I take burden of GST compliance right away?
- What is the ideal time to get registered under GST?
- What documents are required for getting GST number?
These are few common questions faced by many budding entrepreneurs. Under the GST law, business can register either voluntarily or mandatorily.
Voluntary Registration
Since, there is no much choice involved in case of mandatory registration, let’s focus on pros and cons that a business must evaluate for voluntary registration.
Disadvantages of obtaining GST registration –
- Cost of professional service for obtaining registration
- Compliance cost on monthly/quarterly basis
- Burden on cashflow – Compulsory payment of GST amount to government before its recovery from customer.
- Risk of interest, late fees, penalty in case of lapse in proper compliance.
Advantages of obtaining GST registration –
- Preference over unregistered dealers in Business-2-Business (B2B) transactions because only a registered business can pass on GST credit to its customer.
- Reduces cost of purchase because GST paid on purchase can be taken as GST credit.
- Enables to sell on e-commerce platform.
- Required for vendor registration if the business wishes to supply goods or services to large companies, government companies.
- Can claim refund of GST in case goods are exported on supplied to SEZ unit.
Mandatory Registration
Apart from above, it is mandatory to obtain registration under GST law in certain cases, some of which are:
- If turnover limit is crosses following limits:
- For Sale of Goods – Rs. 40 lakhs in most states
- For Supply of Service – Rs. 20 lakhs in most states
- Person making inter-state supply of taxable goods.
- Casual taxable persons making taxable supply.
- Persons who are required to pay tax under reverse charge.
- Persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise.
Documents Required for GST Registration
- PAN and Aadhaar card of the Applicant
- Proof of business registration or Incorporation certificate
- Address proof of Promoters/Director/Owner with Photographs
- Address proof of the place of business
- Cancelled cheque
- Digital Signature in case of Company/LLP/Partnership
- Letter of Authorization/Board Resolution for Authorized Signatory
We hope this article helps entrepreneurs to take well-considered decision about obtaining GST registration. For deeper discussion or queries, feel free to reach us at cakevalm@gmail.com.
GST Clinic is a modest initiative by Bhaskara Consulting Group to help entrepreneurs get practical understanding of GST law and its impact on business processes.