GST registration for the proprietorship
The Government of India introduced the Goods and Services Tax (GST) as a unified indirect tax system to replace various taxes on goods and services. This destination-based tax is applicable throughout the nation. GST registration is mandatory for businesses meeting the prescribed turnover threshold.
Eligibility Criteria for GST registration for proprietorship firms
GST registration isn't mandatory for all sole proprietorships. Whether you need to register depends on your annual turnover, business type, and location. Here's a breakdown of the eligibility criteria:
Turnover Limits:
The turnover limits for mandatory GST registration differ based on the business sector:
- Merchandise Businesses: ₹40 lakhs annually.
- Service Businesses: ₹20 lakhs annually.
- Businesses in Hilly Areas & North-Eastern States: ₹10 lakhs annually (for both goods and services).
Mandatory GST Registration (Regardless of Turnover):
Certain sole proprietorships must register for GST regardless of their turnover due to the nature of their operations:
- E-commerce operators/aggregators.
- Casual taxpayers (those operating from temporary stalls, etc.).
- Non-resident businesses operating in India.
- Importers and exporters.
- Businesses under the GST Reverse Charge Mechanism.
- Taxpayers registered under previous tax regimes transitioning to GST.
- Interstate suppliers of goods or services.
- Online Information and Database Access Providers (OIDAR).
Voluntary GST Registration:
Even if your turnover is below the mandatory thresholds, you can choose to register for GST voluntarily. This can be advantageous as it allows you to claim input tax credits, potentially improving your business operations, market presence, and future growth potential.
Documents required for GST registration
- Owner's PAN Card: This essential document contains the owner's 10-digit alphanumeric Permanent Account Number (PAN). It serves the purpose of identifying the owner and verifying income tax returns. An example of a valid PAN number is AABCD1234E.
- Owner's Aadhaar Card: This 12-digit unique identification number, allocated by the Unique Identification Authority of India (UIDAI), is crucial for authenticating the owner's identity and address. An example of a valid Aadhaar number is 1234 5678 9012.
- Bank Account Details: This includes the owner's bank account number, IFSC code, branch name, and the bank's address. These details are used to verify financial transactions and facilitate tax payments and refunds.
- Proof of Business Registration: This document establishes the legal status and name of the business, such as a partnership deed, certificate of incorporation, or trust deed. It is important to confirm the nature and ownership of the business.
- Address Proof of Owner and Principal Place of Business: This document provides the location and address of both the owner and the business. Examples include property tax receipts, municipal khata copies, electricity bills, rent or lease agreements, consent letters, or any government-issued document or certificate.
- Passport-Sized Photograph of the Owner: A recent and clear photograph of the owner in JPEG format not exceeding 100 KB in size.
- Shop Act License: A Shop Act License is a mandatory requirement for small firms or shops when initiating a business, ensuring the well-being of employees.
As of the latest update on December 21, 2021, Aadhaar authentication is mandatory for applying for the revocation of canceled GST registration under CGST Rule 23 in REG-21.
How to proceed with GST registration?
- Visit the GST portal and click on Services > Registration > New Registration.
- Fill in the required details, such as PAN, state, district, mobile number, and email. You will get an OTP on your mobile and email for verification. Enter the OTP and click on Proceed.
- You will receive a TRN (Temporary Reference Number) on your email and mobile. Note it down for future use.
- Go back to the GST portal and click on Services > Registration > New Registration. Select Temporary Reference Number (TRN) and enter your TRN and captcha code. Click on Proceed and enter the OTP you receive. Click on Proceed again.
- You will see the status of your application as Draft. Click on the thumbnail to fill the application form.
The application form has 10 sections. You need to fill in the mandatory sections marked with a red asterisk. The sections are:
- Business Details: Enter your trade name, legal name, constitution of business, and tax jurisdiction. You can also opt for Aadhaar authentication for faster approval.
- Promoter/ Partners: Enter the details of the proprietor, such as name, date of birth, gender, designation, PAN, Aadhaar, mobile number, email, and address. You also need to upload a photograph, address, and identity proof, such as a PAN card, Aadhaar card, passport, or driving license.
- Authorized Signatory: If the proprietor is also the authorized signatory, select the "Also Authorized Signatory " at the bottom of the previous section. Otherwise, enter the details of the authorized signatory and upload the relevant documents.
- Principal Place of Business: Enter the address of your principal place of business, such as building name, floor number, street, locality, city, state, district, PIN code, and contact number. You also need to upload proof of ownership or possession of the premises, such as an electricity bill, rent agreement, or property tax receipt. You also need to select the nature of your business activities, such as manufacturer, trader, service provider, etc.
- Additional Places of Business: If you have any additional places of business, such as branches, warehouses, or godowns, enter the details and upload the documents. Otherwise, leave this section blank.
- Goods and Services: Select the HSN code of the goods or the SAC code of the services that you deal with. You can search for the codes using the search box or the link provided. You can add up to 5 goods and 5 services.
- Bank Accounts: Enter the details of your bank account, such as account number, IFSC code, bank name, branch name, and address. You also need to upload proof of bank account, such as bank statement, passbook, or cheque.
- State-Specific Information: Enter any state-specific information, such as professional tax registration, state excise license, or drug license. This section may vary depending on the state you select.
- Verification: Verify the details you entered and select the verification checkbox. You also need to select the name of the authorized signatory and enter the place. You can submit the application using any of the methods given below:
- Digital Signature Certificate (DSC): This method is mandatory for companies and LLPs. You need to have a valid DSC and register it on the GST portal. You also need to install the emSigner utility on your computer and run it as an administrator. You can then sign the application using your DSC.
- E-Signature: This method is available for all types of applicants. You need to have a valid Aadhaar number linked to your mobile number. You can then sign the application using an OTP sent to your mobile.
- EVC: This method is available for all types of applicants except companies and LLPs. You must have a valid PAN and mobile number registered on the GST portal. You can then sign the application using an OTP sent to your mobile.
- After completing the application process, you will receive an Application Reference Number (ARN) on your mobile and email. You can use ARN to track the status of your application on the GST portal.
- Once the GST officer verifies and approves your application, you will receive your GSTIN and GST registration certificate on your registered email. You can also download them from the GST portal.
The time limit for GST Registration
The time limit for GST registration is 30 days from the commencement date of business or crossing the turnover threshold, whichever is earlier. If you fail to register within this period, you may face a penalty of 10% of the tax due or Rs. 10,000, whichever is higher.
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