GST Registration & Cancellation
The implementation of the GST Registration & Cancellation in India was a historical move, as it marked a significant indirect tax reform in the country. The amalgamation of a large number of taxes (levied at a central and state level) into a single tax is expected to have big advantages. One of the most important benefit of the move is the mitigation of double taxation or the elimination of the cascading effect of taxation. The initiative is now paving the way for a common national market. Indian goods are also expected to be more competitive in international and domestic markets post GST implementation.
From the viewpoint of the consumer, there would be a marked reduction in the overall tax burden that is currently in the range of 25% to 30%. The GST, due to its self-policing and transparent nature, is also easier to administer on an overall scale.
The GST Council also finalised on the GST rates and GST rules. The Government declares that the GST Bill will be applicable from 1 July 2017, following a short delay that is attributed to legal issues.
Constitution (One Hundred And First) Amendment Act, 2016
- The Bill suggests levy of GST on all goods and services, except alcohol that humans consume.
- The tax is levied as Dual GST by the Centre and states/union territories. The component levied by the Centre is Central Tax – CGST, while that levied by the state is State Tax – SGST. The tax levied by union territories is Union Territory Tax – UTGST.
- The Centre would levy the GST on inter-state trade or imports of services and goods. This tax is referred to as Integrated Tax – IGST.
- The Central Government will also levy excise duty on tobacco products, in addition to GST.
- The tax on five petroleum products, i.e., high speed diesel, crude, petrol, natural gas, and Aviation Turbine Fuel (ATF) will be outlined later after a decision is made by the GST Council.
GST Council: A Goods and Services Tax Council (GSTC) was created by the union finance minister, revenue minister, and ministers of state to take decisions on GST rates, thresholds, taxes to be subsumed, exemptions, and other features of the taxation system on September 2016. The state finance ministers mentioned that the Empowered Committee (EC) would be a platform for states where there would be discussions of their regional issues. The GST Council is a separate entity that would oversee the implementation of the GST system.
Decisions taken by GST Council
Some of the major decisions taken by the GSTC so far are:
- There would be four tax rates under the GST regime, i.e., 5%, 12%, 18%, and 28%. Some goods and services were also classified as exempt from tax.
- A cess above the peak rate of 28% would be levied on certain sin and luxury goods.
- The administrative control over 90% of taxpayers with turnover less than Rs.1.5 crore would be with the State tax administration. 10% of control would be with the Central tax administration.
- Administrative control over taxpayers having turnover above Rs.1.5 crore would be equally divided between the State and Centre tax administration.
Goods and Services Tax Network
Goods and Services Tax Network (GSTN) was set up as a private company in 2013 by the Government under Section 25 of the Companies Act, 1956. GSTN is expected to offer the front-end services of registration, payment, and returns to taxpayers. It would also develop back-end technical modules that will be utilised by 25 states that have opted in.
GSTN has also identified 34 IT and financial technology companies and tagged them as GST Suvidha Providers (GSPs). These organisations will develop applications that will be used by taxpayers when they interact with GSTN.
Key features of the GST regime
- GST is applicable on the “supply” of services or goods as opposed to the earlier concept of taxation on goods manufacture, sale of goods, or service provision.
- GST is a destination-based tax structure unlike the origin-based structure that existed previously.
- CGST, IGST, and SGST/UTGST are levied at rates that would be mutually agreed upon by the states and Centre.
- GST will replace the central taxes mentioned below:
- Duties of Excise (medicinal and toilet needs)
- Central Excise Duty
- Additional Duties of Excise (Goods of Special Importance)
- Additional Duties of Customs (CVD)
- Service Tax
- Special Additional Duty of Customs(SAD)
- Additional Duties of Excise (Textiles and Textile Products)
- Cesses and surcharges
- GST will subsume the following state taxes:
- Central Sales Tax
- Entry Tax
- State VAT
- Luxury Tax
- Purchase Tax
- Entertainment Tax, except that levied by local entities
- Taxes on lotteries and gambling
- Taxes on advertisements
- State cesses and surcharges
- Taxpayers with annual turnover of Rs.20 lakh is exempt from GST. For special category states, this cut-off is Rs.10 lakh. An option of compounding is available to small-scale taxpayers with annual turnover of Rs.50 lakh or below. The choice of threshold exemption and the compounding scheme are optional.
- Input credit of CGST shall be used only for paying CGST on the output. Similarly, input credit of SGST/UTGST will be used only for the payment of SGST/UTGST. Therefore, the two channels of input tax credit cannot be cross-utilised, except for the payment of IGST for inter-state supplies.
Benefits of GST Implementation
Key benefits of the GST announcement are detailed below:
- As mentioned above, the GST system will create a common national market that boosts foreign investment.
- The cascading effect of taxation will be mitigated.
- There will be uniformity in laws, rates of tax, and procedures across states.
- The GST regime is expected to boost manufacturing activities and exports. This would, in turn, generate more employment and lead to the growth of the economy.
- Indian products would be more competitive in the international markets.
- The GST system is likely to improve the overall investment climate in India.
- Uniformity in the rates of SGST and IGST will reduce tax evasion to a large extent.
- The average sales burden experienced by companies is expected to come down, thereby increasing consumption and boosting subsequent production of goods.
- GST is a simpler system of taxation with smaller number of exemptions.
- There are automated and simplified methods for processes such as registration, refunds, returns of GST, tax payments, etc.
- All interactions will be handled by the common GSTN website.
- The input tax credit process will be more accurate and transparent, as electronic matching will be performed.
- The final price of most goods will be lower when taxation is at the New GST rates.. There will also be a seamless input tax credit flow between the manufacturer, retailer, and supplier of service.
- A huge segment of small-scale retailers may be either exempt from tax or may benefit from low tax rates based on the compounding scheme. Consumers will further benefit if purchases are made from these small retailers.
Registration of GST :
Under the present regime, every individual or company that supply goods and service has to get registered under Goods and Service Tax (GST), So if you run a business with an annual turnover exceed 20 lakhs (in all Indian states other than north eastern states), then you have to register with GSTN (Goods and Service Tax Network).
In GST registration, the supplier is allotted a 15-digit GST Identification Number and a certificate of registration incorporating therein this GSTIN is made available to the applicant on the GSTN common portal.
A registered person irrespective of their nature i.e. proprietary concerns/partnership firms/ LLP/ AOP/ HUF/ companies etc. has to follow various statutory compliances monthly/ quarterly/ annually, as the case may be. Non-filling of the returns on the prescribed dates will attract interest, late fees, and penalty as applicable. We also provide consultancy for matters related to classification of an item as good/service, determination of HSN, place of supply, appropriate tax rate and any specific issue based on the requirement.
Documents Required for GST Registration for Proprietor and individual :-
- Owners PAN Card
- Owners Aadhar Card
- Owner Photograph
- Proof of Address
- Bank Account Details
- Electricity Bill/Water Bill/Proper Tax etc (Any Govt document for address proof on which registration is required)
- Trade Name
- Email ID and Mobile No
The GST Registration is applied online and verified through Owner Aadhar OTP. The physical verification will be done by govt department if not authenticated by Aadhar OTP.
Cancellation of GST
Cancellation of GST registration is not a hard work as Indian government GST Portal has provided a simple an easy step by step procedure to finally cancel the GST registration of migrated taxpayers through newly implemented feature. Goods and services tax which was implemented recently and to be exact on 1st July 2017 with a lot of promises and work on progress tagline, is known to be subsuming all the indirect taxes into one. The cancellation of GST registration means from now onward we are not liable for any compliance pertaining to GST.
The cancellation of registration can only be done by three person only the details regarding this is given below
- The taxpayer himself
- GST officer
- A legal heir of the taxpayer
The cancellation of the registration can be initiation in some cases like the death of the taxpayer. While the registration can also be done voluntarily but only after one or more years are elapsed starting from the date of GST registration.
Conditions, When a Taxpayer Can Cancel the GST registration?
- Discontinuance or closure of the business
- Taxable person ceases to be liable to pay tax
- Transfer of business on account of amalgamation, merger de-merger, sale, leased or otherwise
- Change in constitution of business leading to change in PAN
- Registered voluntarily but did not commence any business within specified time
- A taxable person not liable any longer to be registered under GST act