What is GST?
GST (Goods and Services Tax) is a unified indirect tax system levied on most goods and services supplied in India by registered persons.
It also applies to most imported goods and certain
imported services. GST is added to the price.
Who needs to register for GST?
Any person with a taxable supply turnover of over Rs.20 lakhs is required to register for GST in India.
As per the exemption and remedies available, we can categorize the small taxable persons into two divisions;
- Those having turnover of up to Rs.20 lakh (remedy available under basic exemption limit)
- Those with a turnover up to Rs.50 lakh (remedy available in the form of composition levy)
Two important terms that determine the applicability of GST Registration
Taxable activity:ย GST is charged on the supply (sale) of most goods and services in India and some specified imported services. Supplying or making a supply is your taxable activity.
Aggregate Turnover: ย As per section 2 (6) of the MGL, aggregate turnover includes the aggregate value of:
- all taxable and non-taxable supplies,
- exempt supplies, and
- exports of goods and/or service of a person having the same PAN.
The above shall be computed on all India basis and excludes taxes charged under the CGST Act, SGST Act, and the IGST Act. Aggregate turnover does not include the value of supplies on which tax is levied on reverse charge basis and value of inward supplies.
Voluntary GST Registration for Startups, Small Business, and Freelancers
You don’t have to register for GST simply because you start a company, have a PAN number, or because you’re in business or trading. Nature or type of business doesn’t matter whether you are a freelance professional working from home or a startup venturing into digital business or a small business. However, there’s a provision for voluntary registration of GST. It is advisable to study the pros and cons before deciding to register.
When GST registration becomes mandatory?
As per paragraph 5 in Schedule III of MGL, the following categories of persons shall be required to be registered compulsorily irrespective of the threshold limit:
a) persons making any inter-State taxable supply;
b) casual taxable persons;
c) persons who are required to pay tax under reverse charge;
d) non-resident taxable persons;
e) persons who are required to deduct tax under section 37;
f) persons who supply goods and/or services on behalf of other registered taxable persons whether as an agent or otherwise;
g) input service distributor;
h) persons who supply goods and/or services other than branded services, through electronic commerce operator;
i) every electronic commerce operator;
j) an aggregator who supplies services under his brand name or his trade name; and
k) such other person or class of persons as may be notified by the Central Government or a State Government on the recommendations of the Council.
What is the time limit for taking a Registration under Model GST Law?
Any person should take a Registration, within 30 days from the date on which he becomes liable to registration, in such manner and subject to such conditions as may be prescribed.
Next steps in the GST registration process
Once you’ve worked out if you need to register, you can contact me for GST registration in India along with the required documents.
Questions
I am a startup company ventured into web design, SEO, digital marketing, web app development, etc. And my turnover is less than Rs.20 lakh. Do I need to register for the GST number in India?
The answer is No. Whether you are a small business, startup or a freelance designer, as long as, your annual turnover is less than Rs.20 lakh, you are not liable to register for GST.
