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The introduction of the Goods & Services Tax (GST) in 2017 mandated that all individuals and companies pay a centralized composite tax on the acquisition of products and services. At first, this newly implemented integrated taxation system seemed rather complicated and underappreciated. However, it presented various advantages, including the considerable incremental value of products and services.
Thus, whether you are already managing a small business or looking to establish one, it is essential to understand the GST registration process, applicable laws, and other prerequisites to avoid facing a significant tax liability.
Do you know about the GST registration process? If you don't, you're in the right spot because we will provide you with the necessary information on this topic:
Section 23
Section 23 of the CGST Act specifies the conditions that allow an individual to be exempt from acquiring GST registration.
- Having Turnover of more than 40 lakhs in case of Goods
- Having Turnover of more than 20 lakhs in case of Services
- Voluntary Registration
- Inter State Sales
- Non-Resident taxable person
Section 22
Section 22 of the CGST Act outlines the essential registration requirements for entities responsible for paying GST.
Section 24
Section 24 of the CGST Act specifies the necessary registration for certain categories of individuals, irrespective of their turnover.
What Is GST Registration?
Under the Goods and Services Tax Act, any enterprise that exceeds the annual turnover threshold of 10 lakhs, 20 lakhs, or 40 lakhs, as applicable, must register as a normal taxable person. This process is known as GST registration. Furthermore, GST registration can also be done online.
- Take input tax credit
- Make interstate sales without restrictions
- Register on e-commerce websites
- Limited compliance
- Less tax liability
Why GST?
- Less Monetary Pressure
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The GST was enacted to eradicate superfluous and inappropriate state or central taxes (like service tax, excise duty, VAT, etc.). As a result, business owners experienced enhanced savings.
- Cost Benefits
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Small businesses that fulfill particular GST criteria and generate an annual profit exceeding INR 75 lakhs are required to pay a fixed tax rate ranging from 1% to 5%.
- Easier Loan Application
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All GSTIN holders have the right to obtain collateral-free loans following an assessment of their business's financial performance potential.
- Greater Credibility In The Market
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By registering a business for GST, it gains greater legitimacy and credibility in the perception of the government, customers, and other enterprises. This registration helps businesses avoid unnecessary compliance burdens, builds trust for potential partnerships or mergers, and facilitates quarterly income tax return filings.
- Affordable Transport For Interstate Deliveries
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Business owners who are registered for GST have the chance to broaden their reach both nationally and internationally without incurring significant costs for the transportation of goods and services across borders. The tax is applied at the location where the goods and services are sold, rather than where they are manufactured.
- Higher Market Value of the Final Product/Service
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As the GST is a value-added tax, a single product that undergoes various production stages is taxed repeatedly. For instance, this includes the acquisition of raw materials, product design, manufacturing, packaging, marketing, distribution, and final sale. This process raises the market value and selling price of goods and services.
