What Is GST?
GST (Goods and Services Tax) is a single tax on supply of goods and services across India, replacing 17 older taxes. For small businesses, understanding GST registration is crucial.
Who MUST Register?
- Turnover above threshold: ₹40 lakh for goods, ₹20 lakh for services (₹20L/₹10L in special states)
- Interstate supply: Any amount — mandatory
- E-commerce sellers: Selling on Amazon, Flipkart — mandatory regardless of turnover
- Casual taxable person: Temporary business in another state
Types of Registration
Regular vs Composition Scheme
| Feature | Regular | Composition |
|---|---|---|
| Turnover limit | No limit | ₹1.5 Cr (goods), ₹50L (services) |
| Tax rate | Full GST rates | 1% (mfg), 5% (restaurant), 6% (services) |
| ITC (Input Tax Credit) | Yes — claim on purchases | No ITC available |
| Interstate sales | Allowed | Not allowed |
| Returns/year | 12+ (monthly GSTR-1, GSTR-3B) | 4 (quarterly CMP-08) + 1 annual |
| Invoice type | Tax invoice with GST | Bill of supply (no GST breakup) |
Choose Composition if: B2C business, turnover under ₹1.5 Cr, no interstate sales, want simple compliance.
Step-by-Step Registration on gst.gov.in
- Go to gst.gov.in → Services → Registration → New Registration
- Enter PAN, mobile, email → get OTP
- Fill Part A → get TRN (Temporary Reference Number)
- Log in with TRN → Fill Part B (business details, bank, partners)
- Upload documents (PAN, Aadhaar, bank statement, rent agreement)
- Aadhaar authentication or submit for manual verification
- GSTIN issued in 3-7 working days
Documents Needed
- PAN card of business/proprietor
- Aadhaar card
- Business address proof (rent agreement + NOC from owner, or property docs)
- Bank account statement or cancelled cheque
- Passport-size photo
- Electricity bill of business premises
GST Rates by Business Type
| Rate | Examples |
|---|---|
| 5% | Branded food items, footwear under ₹1000, transport |
| 12% | Processed food, smartphones, IT services |
| 18% | Most services, electronics, furniture, software |
| 28% | Luxury items, cars, tobacco, cement |
Input Tax Credit (ITC) Explained
ITC lets you subtract GST paid on purchases from GST collected on sales.
Example: You buy materials for ₹1,00,000 + ₹18,000 GST. You sell finished goods for ₹1,50,000 + ₹27,000 GST. GST payable = ₹27,000 - ₹18,000 = ₹9,000 only.
Return Filing Schedule
| Return | Due Date | What It Contains |
|---|---|---|
| GSTR-1 | 11th of next month | Outward supplies (sales) |
| GSTR-3B | 20th of next month | Summary + tax payment |
| GSTR-9 | 31st December | Annual return |
Penalties
- Late filing: ₹50/day (₹25 CGST + ₹25 SGST), max ₹5,000 per return
- NIL return late: ₹20/day
- Interest on late tax: 18% per annum
- Not registering when required: 100% of tax due or ₹10,000 (whichever is higher)