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Understanding The Importance of GST Registration in India


GST registration is the process by which taxpayers register and enlist themselves under GST. Whenever a business registers under the Goods and Service Tax, it receives a 15-digit GSTIN (GST Identification Number) from the government.

Registering a business under GST comes with a wide range of benefits. Contrarily, enterprises that attempt to evade taxes by not registering themselves often tend to face hefty penalties. Non-compliant businesses might have to pay 10% of the evaded tax amount or Rs.10,000. If you are a business owner wondering how crucial a GST registration is for your enterprise, make sure to go through the following sections. 

4 reasons why GST registration is essential for a business

Here are some of the essential factors that make GST registration highly necessary for a business to function:

  1. Provides credibility

If your business is registered under GST, it automatically becomes a trustworthy entity to the suppliers and consumers. Businesses compliant with GST regulations and guidelines find it easy to reach out to consumers with confidence. This helps in developing a stable and cordial business relationship with the consumer base. 

  1. Helps to avoid unnecessary issues

The GST regime usually functions in a chain system. Government can easily track the journey of a product right from the manufacturer to the supplier, retailer, wholesaler and ultimately to the customer. If you are a non-registered entity among other registered and compliant individuals and entities, you might face certain hurdles.

The government can track your activities, which might lead to unnecessary legal and financial issues in the future. At times, authorities might even confiscate goods if an enterprise does not possess GST certification. 

  1. The benefit of input tax credit

Under the GST regime, suppliers can opt for the input tax credit if they conduct business with GST registered enterprises or individuals. In other words, suppliers tend to prefer business entities with GST registration over businesses without the same.

  1. Easy availability of loans

No matter how big or small a business is, it will require an additional source of funds for a diverse range of purposes. With GST registration, businesses can avail of loans with the least possible hassle. Businesses without a GST certification might face multiple hurdles on their way to secure a loan. 

Business owners looking for funding can opt for business loans from various NBFCs such as Bajaj Finserv. They provide collateral-free business loans with instant approval, minimal documentation and competitive interest rates. 

In addition, they provide several pre-approved offers to help borrowers streamline the process of loan application and approval. One can also avail of these offers on other financial products, including personal loans, credit cards, and more. To check your pre-approved offer, provide a few basic details like name and contact information.

Who can register under GST?

Businesses with an annual turnover of Rs.40 lakh are required to register under GST. However, enterprises in the North-East states can get a maximum GST-free slab of Rs.10 lakh.

For some businesses, however, Goods and Service Tax is compulsory regardless of the yearly turnover. These include:

  • Input service distributor
  • Inter-state providers of goods and services
  • TCS/TDS deductor
  • Data access service provider
  • Suppliers of goods via e-commerce platforms and others

Documents necessary for GST registration

If you are planning to get GST certification for your small business, make sure to keep the following documents ready for a smooth application process:

  • Bank account statement
  • Cancelled cheque
  • PAN card of the applicant
  • Aadhaar card
  • Proof of the business registration 
  • Photo ID and address proof of the directors or other key figures of the company
  • Digital signature

Once you have gathered all the necessary documents, you can register for GST online. The entire process is smooth and simple. Moreover, it is also important to calculate the GST amount beforehand. Business owners should know how to calculate GST with the help of an online GST calculator.