19 July 2023 5 mins read Once businesses exceed a turnover of the threshold limit, the seller is obliged to apply for GST. The limit varies across different states and also depends on the type of business being run. For some, it is ₹20 lakhs, while others require a minimum of ₹40 lakhs. Before learning how to register for GST, let us first know what it actually refers to.
GST stands for Goods and Services Tax. It was first implemented by the Government of India back in 2017 to replace VAT (Value-Added Tax). Both of these are indirect taxes levied on the production, distribution, and sale of goods or services. The only difference between them is that Goods and Services Tax is the digital version of VAT. So if you are interested to learn how to register for GST, keep reading.
How GST Works
If you want to know how this tax is levied before understanding how to register for GST, let us give you a small explanation. It was introduced with the idea of replacing several indirect taxes and imposing a common method of taxation in every state. It is levied on the product during the three stages of the supply chain — production, distribution, and sale.
Before knowing how to apply for GST, allow us to explain this process with an example. Let us analyse the life cycle of a T-shirt and the imposition of GST on this product. In order to manufacture this item, raw materials would be purchased. For instance, if they are sold for ₹100, a certain percentage of tax would be levied. Let us assume this amount to be 12%. Then the manufacturer would have to pay a ₹12 tax. This is why it is important to know the implementation of this tax before learning how to register for GST.
After the T-shirt has been tailored, a certain value is added by the manufacturer. Suppose they add ₹75; then the total amount becomes ₹175. Now, upon this value addition, another 12% (₹21) should be levied. However, since the manufacturer has already paid ₹12 tax for the raw materials, they would only have to pay ₹9 (₹21 - ₹12) more. This is why it is also crucial for manufacturers to learn about the application of this tax before learning how to register for GST.
Then, when the T-shirt is bought by the wholesaler at ₹175, they would set their own margin on the product. If they add ₹50 to the T-shirt, the total value will become ₹225. Similar to before, instead of paying the entire 12% (₹27) tax, the wholesaler would only need to pay ₹6 (₹27 - ₹21) more. This is why it is critical for them to know about this process before registering for GST.
Finally, during the sale of the product, let us assume that the retailer adds ₹25 to the T-shirt. Now the gross value becomes ₹250. After deducting the total tax amount from 12% of ₹200, they would only have to pay ₹3 (₹30 - ₹27) more. If you are a retailer who wants to learn how to register for GST, you must know about the way it is implemented.
Now, let us learn how to register for GST.
An Eight-Step Guide on How to Register for GST
Now that we have explained how Goods and Services Tax works, allow us to enlighten you on how to register for GST. Visit the official government website — gst.gov.in, and fill out the form provided. It is divided into two major parts. Here is a step-by-step guide on how to register for GST:
- Enter Identity Details
The first step of knowing how to register for GST is filling out ‘Part A’ of the form. Here, the applicant will have to mention whether they are a taxpayer or not. Then, they must fill in the necessary contact details, such as mobile number, email address, and PAN. Other fields in the How to Register for GST form include state, district, and the name of the business.
- Verify E-mail and Mobile
Upon submitting the e-mail address and mobile number, the applicant will receive an OTP on both of them. Just enter them in the given fields and proceed to learn more about how to register for GST. After verification, a TRN (Temporary Registration Number) will be created. Remember, once it is generated, ‘Part B’ of the form must be filled within 15 days. A few steps later, you will learn how to apply for a GST number.For now, let us further understand how to register for GST.
- Enter TRN
The next step in learning how to register for GST is entering the TRN and completing the captcha process. Then, an OTP will be sent to their email address and the phone number that is linked to their PAN. Fill it in the next field and click on the ‘Proceed’ button. By doing so, the application is created successfully and Part A of the form is completed.To fully grasp how to register for GST, the following steps will guide you through filling out ‘Part B’. This section also requires important documents to be uploaded.
- Enter Business Details
Here, the applicant needs to enter the trade name and constitution of the business along with the district and sector. Then, fill in the centre jurisdiction details. It is necessary to mention the type and reason for registration. Lastly, the applicant must provide the date of establishment and the date on which they became liable to register.
- Enter Proprietary Details
In this section of learning how to register for GST, one must be ready with their personal information, identity details, and residential address. Then they will have to upload their photograph in the JPEG format. Note that the file size should not exceed more than 100 KB. If the applicant has an authorised representative, they would need to mention their details as they continue to understand how to register for GST.
- Enter Details about the Principal Place of Business
Then, the applicant must enter details about the main area of operations of their business. The address, contact information, and the nature of the possession must be provided while knowing how to register for GST. They must also upload a document proving the same and mention the type of business activity held on the premises.If there are any additional places of business, then the relevant details must be provided while learning how to register for GST. Then, in the next segment, mention the top five goods and services offered, along with their HSN chapter and classification code, respectively.
- Provide State-Specific Information
Following are the state-specific details to be entered while understanding how to register for GST:a.) Professional Tax Employee Code Number
b.) Professional Tax Registration Certificate Number
c.) State Excise License Number
d.) Name of the person holding the Excise License
- Complete the Final Verification
In the final step of knowing how to register for GST, the name and the place that the applicant is registering from must be entered. It should be submitted with DSC, e-signature, or EVC. Note that DSC is compulsory for companies and LLPs. Once submitted, the application will go through a verification processThis completes the application, and you have successfully learned how to register for GST. The registration status can be checked on the dashboard of the website.
GST for Online Sellers
It is essential to know how to register for GST, as without it, one cannot sell online. Unless the products lie in the category of exempted goods, a GST number must be in place. By choosing Flipkart Seller Hub to conduct business online, one automatically becomes liable to own this number.
On every product sold, a TDS of not more than 1% will be deducted from the sale amount. This tax is paid to the government. However, the seller has the right to claim this amount every month.
Along with knowing how to register for GST, it is also crucial to learn about return filing. It is a document that contains all the information about sales, purchases, and taxes. A GST return file should be issued and submitted monthly or quarterly.
Selling online comes with certain obligations that need to be fulfilled for safe and effective marketing. GST is not only necessary but also beneficial to the sellers. It saves them from paying multiple indirect taxes and also protects them from legal trouble. If you are planning to bring your business to Flipkart Seller Hub, it is important to know how to register for GST.
FAQs
Disclaimer: The views shared in this blog by Flipkart Seller Hub are for informational purposes only. Readers are urged to make informed decisions and understand that we do not assume any responsibility for the outcomes of their choices based on the content provided.