Who needs to register for GST?
Anyone who sells goods and/or provides services worth more than Rs.20 lakh (Rs.10 lakh for North East states) in a financial year & taxpayers already registered under VAT/service tax must register under GST. Those making inter-state supplies or supplies via e-commerce must mandatorily register irrespective of turnover.
How will it help?
Registering under GST allows you to claim input tax credit. Which means, at the time of paying GST which you have collected on your sales, you can reduce the GST you have paid on inputs used for your business. If you are unregistered, businesses to which you supply will have to do compliance on your behalf which will increase their cost & thus you may risk losing the business.
How to register
New registrations have not opened yet. Existing central excise and service tax registrants and VAT dealers will first be migrated to GST. To migrate to GST, a provisional ID and password by the CBEC/State Commercial Tax Departments will be provided. You can use this provisional ID and password to log on to the GST Common Portal (https://www.gst.gov.in). Fill up the form and submit Form 20 along with necessary supporting documents.
Everything will be online
All GST compliance will be paperless. GST returns will have to be filed online. Therefore, it will be beneficial to move to an electronic system of record keeping. Details of every B2B invoice will have to be submitted to GSTN. Invoices must also be prepared in the format prescribed under GST Rules. The process of tax payment, tax credit, and refund of GST would be carried out electronically.
Small businesses and taxpayers with turnover of less than Rs 50 lakh in a financial year can opt for the composition scheme under which they will be taxed at fixed rates on turnover; 1% for manufacturers, 2.5% for restaurants, 0.5% for other supplies which may be notified in due course. Composition dealers will have to file quarterly returns instead of three returns every month. However, they cannot collect tax from customers. They also have to pay GST out of their own pocket and are not allowed to claim any input tax credit. This scheme is not available to those who make interstate sales or sell via e-commerce.
Penalty for non-compliance of GST
Anyone who supplies goods on which tax is not paid or is short paid, must pay a penalty of 10% of the tax amount due or Rs 10,000, whichever is higher. The penalty can be 100% of the tax amount in case of deliberate evasion or fraud. There are other penalties for non-filing of returns, other non-compliance etc.
Related Links: GST rates fixed for goods & services
Related Links: GST – Unifying multiple indirect taxes
Sabyasachi Paul has been associated with equity research and advisory on equity markets in India for over 9 years & currently heads the equity research desk of Eastern Financiers Ltd, Kolkata.He also manages a portfolio on the online platform Kristal. Find link to the strategy named ‘The Tortoise’