Is GST Registration Compulsory for Startups?
What is Startup?
A startup is a new company that is yet to be registered or incorporated. Owners of these companies raise funds from various sources to start a company. A startup can be formed by a single person or a group of individuals. It is formed to earn profit or to bring innovation in certain areas.
Several company registration options are available for Startups:
- Private Limited Company Registration
- LLP Registration
- One Person Company Registration
- Sole Proprietorship Registration
- Partnership Firm Registration
Startups have to apply for Startup India Certificate to form the startup company. This certificate gives various benefits to the startups.
What is GST?
The full form of GST is Goods and Services Tax. It is a type of indirect and value-added tax. It is levied on all the goods and services sold within the states of India. GST is added to the final cost of the product and paid to the government by the seller of the product.
GST has many benefits for Startups. It reduces the cascading effect of taxes and brings a uniform procedure for tax collection. Apart from that, GST has also removed other direct and indirect taxes from the country.
Is GST Registration Compulsory for Startups?
Yes, it is necessary for startups to get GST Registration in India under the below cases:
- A non-resident who is liable to pay tax
- Businessmen who are earlier registered for taxes such as excise, VSAT, and service tax.
- Businesses that earn an annual profit of above INR 40 Lakhs and above INR 20 Lakhs in North-Eastern states, Himachal Pradesh, Uttarakhand, and Jammu & Kashmir.
- Data access provider
- Startups engaged in E-commerce businesses
- Businesses involved in selling services and products through E-commerce portals.
Now, businesses can do GST Registration online by submitting all the papers and documents. The whole process of registration for GST is online and you do not have to visit any office to obtain a GSTIN number.
The online process of GST Registration for startups is simple and quick. You will receive the GSTIN number within a few minutes after applying and submitting all the documents and papers.
Which Documents are Required for GST Registration?
You will need the following documents to register for GSTIN:
- PAN card of the business owner. You will need a PAN number to get a GST certificate.
- ID proofs of the business owner including an Adhar card, driving license, voter ID card, or address proof.
- The third most important thing for GST registration is address proof. You need to show address proof to get GSTIN. Address proofs can include electricity bills, water bills, or rent agreements or NOC. Apart from that, you can also give municipal tax bills to show your address.
- Another important document is a bank statement. You have to submit the scanned copy of the first page of the bank account that shows some transactions. The statement must also mention the address of your business place with current GST status.
These documents are also needed for online GST Registration. After giving all these documents, you will quickly receive GSTIN within a short time.
Advantages of GST Registration for Startups
GST registration is one of the most important steps for many startups and new businesses. It is important to register for GST after Company Registration in India. Different benefits of GST Registration in India are listed as under:
1. Removes Cascading Effect of Taxes
There were various types of indirect taxes in India. Businessmen have to pay many several taxes on the products. They could not get the benefit of Input Tax credit or ITC under other types of indirect taxes. With the introduction of GST, the different types of indirect taxes are eliminated. GST eliminated the tax on tax and gave the benefit of Input Tax Credit to the businessmen.
2. Easy Taxation Procedure
Businesses that go for Startup India in Registration will get several tax benefits. GST registration brings different tax compliances into one place. Apart from that, GST also simplifies the taxation process. You have to pay one common tax for your business. Moreover, it saves time and eliminates the need of paying multiple kinds of indirect taxes.
3. Easy to Commence any new Business
If you want to start a new company, GST registration will help you a lot. You can get a quick One Person Company Registration after registering for Goods and Service Tax. GST also aids in maintaining a centralized registration and reducing procedural fees. You can start a new business easily after completing all the formalities of GST.
4. Combines Different Taxes
Before Goods and Service Tax, businesses and start-ups have to pay VAT and service tax separately. But after the introduction of GST, businesses have to pay VAT and service tax together. This will further make the billing procedure much simpler. You do not need to make different invoices and bills for various types of taxes.
5. Reduces Costs of Transportation and Logistics
Under the GST regime, the different costs have been reduced from before. The number of border checks is reduced in every state of the country. Reduction in border checks also reduces the cost of logistics and transportation. You can save unnecessary costs on transportation and logistics. Moreover, businesses can get more opportunities to expand their activities after GST registration.
6. Brings a Systematic Procedure to Unorganized Sectors
Startup Company Registration in Jaipur, India brings uniformity in the taxation pattern of every sector. Apart from that, GST also turns an unorganized sector into a more systematic one. It also eliminates poor regulations and enhances the working of different sectors.
7. Helps in Maintaining a Common National Market
GST has given a lot of golden opportunities to many new businesses. Before GST, many businesses had to maintain different networks of distribution and logistics. Maintaining different networks increased the total cost of your business. GST eliminated the need to keep different networks of distribution and logistics. It also reduces the cost and gives a chance to start new ventures and business activities.