How to register your business under GST?-Types of GST, Advantages, Exemptions

Do you want to register your business under GST (Goods & Service Tax) but are clueless about where to start? Don’t worry! we’ve got you covered. Read on to know more about GST, its registration process, and tax exemptions for Startups or Small & Medium Businesses.

All you need to know about GST

1.What is Good & Services Tax (GST)?
2.Types of GST
3.Advantages of GST for Startups or Small & Medium Businesses
4.Exemptions for Startups or Small & Medium Businesses under GST
5.How to Register a Startup or Small & Medium Business under GST?

What is Goods & Services Tax (GST)?

It is a tax reform which is also known as Goods & Services Tax that came into existence on 29th March 2017 by an act of parliament. It has replaced many indirect taxes such as VAT, excise, service tax, etc.

It is a comprehensive destination-based tax that is levied on the supply of goods and services at every point of sale. For e.x. if you are a wholesaler and sell goods to Mr X – a retailer who further sells to Mr Y (Consumer). Then, at first, the tax will be levied on the purchase made by Mr X from you. Secondly, the tax will further be levied on the purchase made by Mr Y from Mr X.

Even, every business registered under GST is allotted a unique number which is called GST Registration Number.

Types of GST

In India, there’s a dual GST system that is being followed in which central and state governments levy tax simultaneously with a common tax slab. However, the GST is mainly categorized in 3 simpler terms:

State Good & Services Tax (SGST)- It is the tax that is levied by the state government or union territory (UT) on goods/services manufactured or sold within state/UT boundaries.

Central Goods & Services Tax (CGST)- It is the tax that is levied by the Central government on any intra-state transaction of goods or services.

Integrated Goods & Services Tax (IGST) – This tax is levied by the central government when a transaction of goods or services takes place within two different states. The tax levied is shared equally between the state and central government.

Advantages of GST for Startups or Small & Medium (SMB) businesses

If you register your Startup or SMB under GST, there are certain advantages involved with it:

  • If you file your return under GSTR-1 and GSTR-3B, no late fee will be charged as per 31st GST council’s declaration to boost Startups and SMBs.
  • Starting a business in India is now a lot easier. SMBs and startups can go ahead with only GST registration. Earlier, the process was a bit complex.
  • Simplified indirect tax system to one uniform system. Ever since GST came into existence, a lot of indirect and direct taxes have subsumed such as excise, VAT, etc. This has made the tedious process of filing and managing taxes much simpler.
  • Easy compliance and requirements
  • Paperwork efficiency & ease of logistics towards dense locations of client

Exemptions for Startups or Small & Medium Businesses under GST

Under the GST law, businesses having a turnover of under Rs. 40 lakhs per year are not supposed to register under GST. As a result, many startups and small businesses that fall under the category of Rs. 5 lakh – Rs.40 lakh income, stay out of the assessment.

How to Register a Startup or Small & Medium Business under GST?

It’s quite simple to register your business under GST online. Just follow the steps given below:

  • Go to the GST portal at https://www.gst.gov.in/. Click on Services and then select New Registration under Registration.
GST For business
  • Generate Temporary Reference Number (TRN) by filling in the details given below such as PAN number, Email, Mobile no, etc. and click on Proceed.
Step 2 to Register a startup or SMB under GST
  • Enter the OTP received on the given mobile number or email and validate it. 
  • Once you validate your number, a TRN number will be allotted. Use it to login again to complete the GST registration process. 
Step 4 to Register a startup or SMB under GST
  • Login to the portal using the TRN, enter the captcha and complete OTP verification. Click on the pencil icon below Action. 
Step 5 to Register a startup or SMB under GST
  • Enter all the information of your business asked such as Trade name, Commissionerate code, Composition scheme, etc. Click on Save & Continue. 
Step 6 to Register a startup or SMB under GST
  • On the next screen, provide all the promoters and director information of your business. Or you may enter the details of the proprietor in case of proprietorship. Do remember, you can enter the details up to 10 promoters or partners on the portal. Then, click on Save & Continue. 
Step 7 to Register a startup or SMB under GST
  • Enter the details of the authorized signatory nominated by the promoters to file GST returns of the business. 
  • Submit the details of principal place of your business such as address, official contact details (email, phone no., etc.), nature of possession and others. Upload relevant proofs of the same and click on Save & Continue. 
Step 9 to Register a startup or SMB under GST
  • Enter additional place of business details. E.g. if you are having an e-commerce business and uses Amazon’s warehouse then, the details of the warehouse must be given in this section.  
  • Provide the details of the top 5 goods and services supplied by the applicant. Fill in the HSN code for goods and SAC code for services. 
Step 10 to Register a startup or SMB under GST
Step 11 to Register a startup or SMB under GST
  • Verify the details submitted. Once it’s completed, select verification check box and e-verify the name of authorized signatory. 
  • After the signature verification, a success message will appear on the screen and an Application Reference Number (ARN) is generated. Use it to track the status of your application. Once the process will complete, you will be informed about the allotment of GST number. 

Conclusion

Registering under GST can be very time-consuming especially for startups or SMB owners. So, you may choose to take help from a chartered accountant to save your time.

Even, if you don’t want to bear the cost of a chartered accountant to help you with daily tax affairs. There are multiple paid or free accounting solutions available online which may prove quite cost-effective for you.

At last, just as a startup becomes successful when the idea behind it is properly executed likewise if GST is implemented properly, it helps a lot in achieving the financial goals easily.

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