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How to Register a Company and Get GST Number - Ultimate guide

Introduction

The Goods and Services Tax (GST) is the single most indirect tax accounting reformation in India. Instead of the intricate system of multiple taxes levied by both central and state governments, such as excise duty, V.A.T. (Value Added Tax) and service tax, it was replaced with a simple taxation regime of just indirect taxation. GST system is a base tax applied at each stage of the supply chain but on value addition generated at each stage where goods and services are sold. This way the "chain" of taxation (tax on tax) will be broken, the business will become less taxed and therefore the business will play better the tax law.

Registering your company and having a unique identifier on your business – GST number – opens up a wide range of perks. With it, you will be able to finance your acquisition of materiel, via ITC portions of taxes paid for these assets. Consequently, it reduces your tax liability. Furthermore, registering for a GST not only boosts your business reputation but also gives chance to expand to large markets and pave the way for government tenders. Furthermore, it eliminates bureaucracy through a set of combined tax declarations in a single tax return. Hence, underlined, registration of your company with a GST number is a must to enable you to operate smoothly and competitively in the Indian market of various sizes.

How to Register a Company

A. Types of Business Entities

Your company's business structure depends on choosing a perfect type of business entity. This type of business entity decides your company's future growth and the legal structure it would follow. Here's a breakdown of the most common options in India:

  • Sole Proprietorship: The most straightforward business ownership format is a partnership. Managed and operated by one individual, small centres and other micro-enterprises are characterized by simple setup and fewer requirements for compliance. Although the owner bears unlimited risk, which makes his own assets liable for business debts, but offers the advantage of keeping profit for themselves even in bad times.
  • Partnership: A partnership is a form of cooperation between two or more people in the management and day-to-day operations of an enterprise. Earnings and losses, as prescribed in the partnership's agreement, are distributed fairly. Provides space for tailor-made solutions, and its shareholders have liabilities.
  • Limited Liability Company (LLC): One of the most favoured options is for every enterprise that wants to bring into existence an entity that should be independent of its proprietors. Corporate limited liability restricts companies' owners from their assets to be seized in the event of accumulated business debts. LLCs can go beyond single members to become structurally well-defined with donning the speed of growth. There are two main types:
    • Private Limited Company (Pvt. Ltd.): Particular but not for the few small companies and the medium businesses with an unlimited number of shareholders and quite the public share options.
    • Public Limited Company (Ltd.): Designed for enterprises of various sizes that can fund their activities through the issuance of shares as well as through other methods, such as public offerings. Complies with strict rules, compared to Pvt. Ltd. The companies.

B. Step by Step Process to Register a Company

Registering your company involves following these key steps:

  • Obtain Director Identification Number (DIN) and Digital Signature Certificate (DSC): DIN is a unique identification number for company directors, and DSC facilitates secure online filing of documents.
  • Choose a company name and check availability: Select a unique and appropriate name that reflects your business. You can check name availability online through the Ministry of Corporate Affairs (MCA) portal.
  • Prepare Memorandum of Association (MoA) and Articles of Association (AoA): MoA defines the company's objectives and powers, while AoA outlines internal rules and regulations for governing the company.
  • File incorporation documents with the Ministry of Corporate Affairs (MCA): Submit the required documents online or offline through the MCA portal.
  • Obtain Certificate of Incorporation (COI): Upon successful registration, you'll receive the COI, which is the legal birth certificate of your company.

How to Get GST Number

A. Eligibility for GST Registration

Not all businesses require GST registration. Here's a breakdown of eligibility:

Threshold Limit:

  • In most states and union territories, registration is mandatory if your business turnover exceeds ₹40 lakh per year.
  • For some special category states like North-Eastern and hill states, the threshold limit is ₹10 lakh per year.
  • Turnover refers to the total value of taxable supplies (sales) of goods and services made by your business in a financial year.

Exemptions:

  • Certain businesses are exempt from GST registration, including those engaged in agriculture, educational services, and specified public services.
  • It's crucial to check the official GST website or consult a tax advisor to confirm your exemption status.

B. Documents Required for GST Registration

To register for GST, you'll need to submit the following documents online:

  • PAN Card of the business entity.
  • Aadhaar Card of the authorized signatory.
  • Proof of Address for the principal place of business (electricity bill, property tax receipt, etc.).
  • Bank Account Details with cancelled cheque or bank statement.
  • Photographs of the promoters/directors.
  • Memorandum of Association (MoA) or Partnership Deed (if applicable).
  • Authorization Letter for the authorized signatory (if different from proprietor/director).

C. Online Registration Process on GST Portal

The GST registration process is online and relatively straightforward:

  • Navigate to the GST portal: Visit https://services.gst.gov.in/services/login and choose "Services > Registration > New Registration."
  • Initiate new registration: Select "Taxpayer" and fill in the required details like PAN, state, and contact information.
  • Fill out the online application form (GST REG-01): Provide details about your business, including constitution (proprietorship, partnership, etc.), nature of business, and bank account details.
  • Upload scanned copies of required documents: Ensure all documents are clear and meet the prescribed format.
  • Verification process through OTP and digital signature: You'll receive a One-Time Password (OTP) for verification on your registered mobile number and email. Additionally, a digital signature (DSC) is required for final submission.
  • Receive GST Registration Certificate and GSTIN (GST Identification Number): Upon successful registration, you'll receive a digital certificate and a unique GSTIN, which becomes your business identifier for GST purposes.

Conclusion

To establish yourself as an individual as well as a corporate entity and to enjoy the benefits of a registered business, the first thing that you should consider is registering your company. You decide to own a business type starting from a sole trading business to a limited liability company structure which is LLC used for growth purposes. The registration process varies depending on the type of companies to be registered. However, some general things are applicable. For example, you will be required to obtain a Director Identification Number (DIN) and Digital Signature Certificate (DSC), come up with a unique company name, and file incorporation documents with the Ministry of Corporate Affairs (MCA).

After your enterprise registration, GST registration should be taken into consideration if annual turnover in a financial year is more than the relevant threshold limit (₹40 lakh in most cases). This procedure involves the printing and handing of documents such as PAN cards, Aadhaar cards, address proofs, and bank details. You don't only get access to GST for input tax credits, enhanced business credibility, and trade in the larger markets but do it as well.

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