Goods & Service Tax Registration

GST Registration

Since its introduction on 1 July 2017, the Goods & Services Tax (GST) has been mandatory for all service providers, traders, manufacturers, and even freelancers in India. The GST system was implemented to replace Central and state-level taxes such as Service Tax, Excise Duty, CST, Entertainment Tax, Luxury Tax, and VAT, making the tax process more streamlined. The GST registration charges vary depending on the type of business and turnover.

For those taxpayers whose annual turnover is less than 1.5 crore, the GST framework provides an option for a composition scheme. This scheme allows them to undergo simplified GST procedures and pay taxes at a predetermined rate according to their turnover.

The GST mechanism operates throughout various stages of the supply chain. This includes acquiring raw materials, production, wholesale, retail, and the eventual sale to the end consumer. Notably, GST is imposed at every one of these steps. For example, when a product is produced in West Bengal and then used in Uttar Pradesh, the GST revenue generated is allocated entirely to Uttar Pradesh, emphasizing the consumption-based nature of GST.

Key Components of GST Registration

The Goods and Services Tax (GST) in India is structured around three primary components:

1: Central Goods and Services Tax (CGST):

The central government levies the CGST tax on purchases made inside a single state. It is one of the three parts of the Goods and Services Tax (GST), together with the Union Territory Goods and Services Tax (UTGST) and State Goods and Services Tax (SGST). For intrastate transactions, the combined rates of CGST, SGST, and UTGST apply, however for interstate transactions, the integrated goods and services tax (IGST) is applicable.

Purpose of CGST:

• The purpose of the CGST is to combine multiple central taxes into a single tax in order to establish a unified tax structure.
• It guarantees a smooth tax experience for both consumers and businesses while streamlining the tax system.
• The central government receives revenue from the CGST, which it uses for development initiatives and central services.

2: State Goods and Services Tax (SGST):

State governments levy the Goods and Services Tax (SGST) on the supply of goods and services within their borders. In intrastate transactions, where both the CGST and SGST are applicable, it functions in conjunction with the Central Goods and Services Tax (CGST).

Purpose of SGST:

• The purpose of the SGST is to bring in money for state governments so they may fund public services and local development.
• By combining multiple state taxes into one, it streamlines the tax structure.

3: Integrated Goods and Services Tax (IGST):

The central government imposes the Goods and Services Tax (IGST) on the exchange of goods and services between states or between a state and a Union Territory. It is intended to handle the tax ramifications of cross-state transactions and guarantee a seamless transfer of tax credits across states.

Purpose of IGST:

• State-to-state taxes becomes less complicated because to the unified tax structure that the IGST offers for interstate transactions.
• makes ensuring input tax credits are used across state lines in a way that doesn't result in tax cascades.