It's only a matter of time until you come across the topic of Goods and Services Tax (GST) Registration if you own a business. Although the current GST rate in India is not particularly high (5 percent on most goods and services), there are numerous benefits to registering for GST as a business owner.
What is GST Registration?
On March 29, 2017, the Lok Sabha approved the Goods and Services Tax Act. The Act went into existence on July 1, 2017. The Goods and Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that would be collected on all value additions.
The Products and Services Tax (GST) is a single tax that applies to the delivery of goods and services from the manufacturer to the customer. Credits for input taxes paid at each level will be accessible at the succeeding stage of value addition, making GST a value-added tax at each stage. As a result, the ultimate customer will only pay the GST charged by the last dealer in the supply chain, with set-off benefits at all prior stages.
Who is eligible to register for GST?
GST registration is required for all businesses whose annual revenue reaches a certain threshold. The current GST registration criteria are 20 lakhs. It has been decided that the threshold limit would be reduced to 10 lakhs as of April 1, 2017.
Even if a company's annual revenue is less than 20 lakhs, it is not required to register for GST.
If an individual who is not registered under GST conducts a transaction with an individual who is registered under GST that exceeds 5 lakhs in a single year, he must register under GST.
However, independent of their sales, certain businesses are required to register. Lottery sellers, interstate traders, and service providers are examples of these enterprises (including restaurants).
Benefits of GST Registration
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Faster business growth
GST was created to ensure a continuous and smooth movement of goods and services across the country. This is accomplished by making it easier for you to make deals with consumers in other states. This can result in faster growth for your company.
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Increased consumer base
If your items are not subject to GST, you may find yourself at a competitive disadvantage when compared to businesses that have registered under the new taxation system. This is because consumers may prefer to conduct business with registered suppliers. As a result, they may decide not to purchase from you, limiting your consumer base and harming your business chances.
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Ease of obtaining raw materials
As a registered supplier, you can easily purchase raw materials from other registered suppliers without paying intrastate GST (SGST). Instead, you can claim the tax paid on purchases as an input tax credit (ITC) against the GST collected on finished goods sales. This can significantly reduce your overall costs while increasing your margins.
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A legally valid business
Once you have obtained GST registration, you do not need to be concerned about the legal status of your company. Even if obtaining a GST registration is difficult, there is no substitute for it. Only if you register for GST will your company be legally recognized.
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Public Image and Goodwill
Customers gain trust and confidence in a registered business by demonstrating its seriousness, responsibility, and professionalism in dealing with customers. As a result of its market reputation and image, a registered entity does not shy away from taking on large-scale projects and catering to large accounts.
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Achieving Input Tax Credit (ITC)
By registering under the Goods and Services Tax Act of 2017, businesses can claim ITC on all purchases, as well as input tax paid on inputs and input services used in their supply of goods or services. One of the most important advantages of GST registration for businesses is the ability to claim ITC. This can assist businesses in significantly lowering their costs and increasing their market competitiveness by eliminating tax ripple effects that existed before the implementation of GST in India.
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Increased credibility
One of the most sought-after benefits of GST registration is that it increases the credibility of your business. When you register for GST, you will be assigned a unique 15-digit GST identification number. This number contributes to the development of your brand's image and increases the credibility of your company. The general public has more trust in dealing with a government-registered business. When compared to other businesses, a registered business has more credibility. Customers are likely to believe that such companies are dependable and trustworthy. As a result, you'll be able to attract more customers, increasing your sales and revenue.
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Simple Accounting
When a business is registered under the GST regime, the accounting and tax compliance process becomes simpler than when it was registered under the previous indirect tax regime. Because GST is a destination-based consumption tax, any goods or services supplied by a registered person will be taxed concerning the place of supply, and this will be reflected in his GSTR 3B and GSTR 1 returns. This prevents any mismatches from occurring when filing returns, allowing one to file his return without error.
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Enhanced Threshold Limit
On an aggregate turnover of Rs. 40 lakhs, the registered person gains access to a higher threshold limit (Rs. 20 lakhs for North Eastern and the Special States). This means that the registered person does not have to pay tax on goods or services supplied below a certain threshold, but can claim Input Tax Credit for taxes paid on goods or services supplied by his supplier.
Conclusion
In this article, I tried to highlight the reasons why GST registration is essential for you. There is no reason why you should not register right away. The earlier you register for GST, the greater the tax benefits you will receive. If you are looking for best GST Services in Mumbai, you can opt for Viser Solutions GST experts services.
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