What is Goods and Services Tax (GST)?

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GST or Goods and Service tax is a single comprehensive tax levied by the Government on supply of goods and services, right from manufacturer to end consumers. It will mostly substitute all indirect taxes levied on goods and services by the Central and State governments in India.

Topics covered in this blog

  • What is GST registration?
  • Necessity of GST registration
  • Documents required for registration of GST
  • GST calendar and its importance
  • What is GST Return?
  • Does everyone need to file GST return?
  • Late filing of GST returns
  • GST Cancellation

What is GST Registration?

GST Registration is a process by which a taxpayer gets himself registered under GST. Once a business is successfully registered, a unique registration number is assigned to them known as the Goods and Services Tax Identification Number (GSTIN). This is a 15-digit number assigned by the central government after the taxpayers obtain registration.

 Why is the GST registration necessary for e-commerce?

Any seller who wants to sell across India needs to enrol for GST (Goods and Services Tax), except if the seller sells goods or services under exempt categories. The GST registration process is entirely paperless which means that it will take place online or digitally. There will not be any hard copies or physical print outs required for the enrolment.This number is used to monitor tax payments as well as the compliances of the registered body by the tax authorities.

In other words, once you register your business entity and acquire your unique number from the tax authorities, you can do two things smoothly.

  1. One is to do with tax collection
  2. The other is to avail of Input Tax Credit on any inbound supplies.

Note:- GST registration (normal category) is compulsory to sell goods on an e-commerce platform irrespective of the threshold limit to get a GST registration.

Required documents for registration

Regardless of the nature of the business or the type of GST registration, there are certain common documents that you will need to fill out the GST registration form:

1. PAN Card
  • Any form of GST registration will require the PAN (Permanent Account Number) of the authorized signatories/applicant (Directors, Partners, Proprietors, etc.) An Aadhar card is also an important document for GST registration of individuals or sole proprietors, in addition to the owner’s PAN card. For companies (private and public) or Hindu Undivided Families (HUF), a special PAN card of the Company or the HUF must be provided instead.
2. Photograph of Owner/Authorized Signatories
  • Passport sized photos of all owners, partners, and authorized signatories are a must for GST registration. In the case of online applications, these photos should be uploaded in JPEG format, with a maximum size of 100KB.
3. Mobile Number & Email ID
  • A valid contact number along with an email address for the Primary Authorized Signatory is required during the GST registration process. As a source of contact and updates on the status of your registration, this information is an essential part of any GST registration checklist.
4. Proof of Place of Business
  • A Principal Place of Business is the central location from where a taxpayer’s business is conducted and the business’s records and accounts are stored.
  • When establishing address proof for GST registration, any of the following documents can be used:
  • Any document that shows proof of ownership for the premises, such as a recent property tax receipt, a copy of the municipal khata or a copy of an electricity bill.
  • In the case of owned property, the ownership deed/document.
  • Any copy of a valid rent or lease agreement (as required).
  • For additional places of business, the requisite proof of each place in the state must be provided as well.
5. Bank Account Details
  • Bank Account details are not mandatory at the time of applying for GST registration. It can be subsequently added by filing an amendment application at the time of the first login. The following documents can be provided to update the bank accounts details that are used to run the business.
  1. A copy of a cancelled cheque, the first and last pages of your passbook, or a bank statement.
  2. The Indian Financial System Code (IFSC) for the account.
  3. The details of up to 10 bank accounts can be provided for this process.
What is a GST Calendar and What is its Importance?
  • A GST calendar is the list of important dates to file all GST returns. It proves to be very helpful for every registered business and professionals to be ready for compliance well in advance.
  • Proper knowledge of GST Dates holds a great value for every taxpayer to file the GST returns and prescribed forms under the GST law on time to avoid incurring any interest or late fee.
What is GST Return?
  • A GST return is a document containing details of all income/sales and/or expense/purchase which a taxpayer (every GSTIN) is required to file with the tax administrative authorities. This is used by tax authorities to calculate net tax liability.

Under GST, a registered dealer has to file GST returns that broadly include:

  • Purchases
  • Sales
  • Output GST (On sales)
  • Input tax credit (GST paid on purchases)

Does everyone need to file GST return?

  • Yes, all taxpayers having GST registration should file GST returns on the 10th, 15th and 20th of each month.
  • Even if there was no business activity or transaction during a month, the taxpayer must still log in to the GST portal and file NIL GST return to avoid penalty.
  • In case a person has no business, NIL GST return must be filed. Failure to file NIL GST return can lead to a penalty of Rs.20 per day for each of the GSTR-3B return and GSTR-1 return. Penalty of Rs. 50 applicable if there are any sales liability.

Late filing of GST returns

Not filing the GST return within the time period given by the department (including the extension), is considered as non-compliance with the law and attracts a strict penalty amount. The amount of late fees differs according to the type of return filing. The 3 categories are:

  1. Late fees for non-annual GST returns
  2. Late fees for annual GST returns
  3. Late fees for filing NIL returns

The details for these scenarios are as follows:

  1. Late fees for non-annual GST returns
    • If the taxpayer fails to file the GST return on time, then a late fee of Rs. 100 is applicable under the CGST Act and Rs. 100 under SGST Act. Thus, per day a late fee of INR 200 is applicable. This late fee is accumulated every day till the returns are filed and the late fees have been paid. The total amount cannot gather more than INR 5000. The per day and maximum amounts hold even for inter-state supplies.
  2. Late fees for annual GST returns
    • Just like non-annual GST returns, the late fees for annual GST returns are INR 100 under CGST law per day and INR 100 under SGST law per day. Thus, a total of INR 200 per day is applicable till the date late fees have been paid. The maximum penalty amount cannot be more than 0.25% of the total turnover of the taxpayer for the particular financial year.
  3. Late fees for filing NIL returns
    • Even if there is no GST return amount to be paid to the tax department, a NIL return has to be filed within the stipulated time period. So if there is a delay in filing NIL returns, a late fee is applicable on per day basis. According to the CGST Act, INR 50 is charge per day and according to SGST INR 50 is charged per day. So, in all a late fee of INR 100 is charged per day till the date of fee payment for late filing NIL returns.

Even if there is no GST return amount to be paid to the tax department, a NIL return has to be filed within the stipulated time period. So if there is a delay in filing NIL returns, a late fee is applicable on per day basis. According to the CGST Act, INR 50 is charged per day and according to SGST INR 50 is charged per day. So, in all a late fee of INR 100 is charged per day till the date of fee payment for late filing NIL returns.

GST Cancellation

Failure to file GST returns on time can lead to penalties and cancellation of GST registration. If GST return is continuously not submitted for 6 months, then the GST registration would be cancelled, and the person would not be able to obtain another GST registration – unless all the late filing penalty is paid.

Conclusion

  • For businesses that need to charge GST, it is necessary to file the GST returns on time as specified by the tax department. Missing the deadline can result in heavy penalties and interest. 
  • There are various types of GST returns which can be beneficial to the public. However, one should always take care of preparing all the documents and exemptions under the section. 
  • Sellersupport offers all GST Services for companies looking to set up operations in India.
  • We help clients in fulfilling all their compliances required under Goods and Services Tax (“GST”) laws.

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