Registration is an essential aspect of any law you ever talk about. It is the way the law identifies your existence under it. When you talk about the Companies Act, you need to get yourself registered with the Registrar of Companies so that you get your identification as a company under the Act. If you are a society, then you have to get yourself registered with the Registrar of Society, if you want an identification as a registered society. And every such Act has these kinds of requirements. And so has GST. GST requires to have a GST registration and get important GST number. Even the GST official website clearly mentions this requirement, and the GST online portal offers easy registration as well.
So, looking at this need, it is just obvious that we come across the question as to why such registration is so necessary. Is it only for creating an identity within the Act, or there are other sides to it as well? All this can be easily answered by looking at the importance of GST registration. However, before we get to that, let us have a brief idea about GST.
What is GST?
GST is called the goods and service tax. This is a tax levied for the supply of goods and the provision of services by a supplier of goods or a service provider.
Earlier, there were different taxes for the purpose. The supply of goods was governed by the Central Sales Tax Act, and the Value Added Tax Act, while the provision of services was governed by the Service Tax Act. However, this was creating incidences of multiple compliances on the taxpayers, and there were other issues as well, such as the cascading effects of taxes due to double taxation and the resultant corruption. GST came as an initiative to solve all these issues by bringing all the various tax laws under one single roof.
The initiative worked out really well, and with this one single law, people have been able to manage their indirect tax compliances in a much easier way. However, with everything new follows some significant changes to be made. And GST was no different. With the coming of GST, all the old tax laws stood repealed, having null effect and existence. With that, even the registrations that the taxpayers had under those Acts stood null and void. GST required new registrations to be made on the part of the taxpayers. And the taxpayers needed to do it at the earliest. Here is why.
Importance of GST Registrations
They create your identity as Taxpayer under the Act
The primary reason attributable to the need of taking a GST registration is the identification as a taxpayer under the Act. It is only through GST registration that you shall get on the records of the government as a GST taxpayer. And you need to get on these records if you want to avail of the further benefits arriving from the Act. GST Registration creates your unique identity under the Act through the GSTIN, and it is this identity that you use for the collection of GST from your customers. Such an identity is vital to keep up with the GST compliances. So, you must get a GST registration and create your identity under the Act.
The GST Registration authorizes you to Collect GST
If you do not have a GST number, any customer can simply refuse to pay GST to you. This can come as a loss to you, and you can even be in violation of the provisions of the Act. Such violations can attract strict penalties, which will be another significant loss. It is only through a valid GST registration that you can add up GST on your invoices and collect it from your customers to pay it further to the government. So, for having this authority, you must take up a GST registration.
You cannot claim Input Tax Credit without GST Registration
Input Tax Credit is the refund of tax you get against the amount of tax that you had already paid. To claim this credit, you must have a GSTIN. It is what proves that you are a taxpayer under the Act and that you have actually paid the tax for which you are claiming credit. Any rejection of this claim can come as a big loss to your business. So, if you want to ensure that you get your input tax credit, it is imperative that you take a GST registration.
With all the foregoing importance of GST registration and the benefits arriving out of it, you must now be sure that this is something you must never avoid as a responsible taxpayer. However, even with this importance, not every taxpayer needs to take a GST registration. For instance, the dealers and businesses who opt for a composition scheme can stay registered under that scheme and need not take a GST registration.
There are just some categories of people explicitly defined under the Act who must take a GST registration as strict compliance. The other people who do not fall under that category can do away with the registration formalities too. However, the registration will majorly come as a benefit only to your business, and it is good that you take it.
GST number every business needs; this is an essential phrase that one must keep up in mind. Even the GST website mentions the importance of getting registration and also specifies the latest dates within which one must get it. A GSTIN is just a 15digits number, but it can give you a complete identification under this vast Act and also equip you with powers to collect GST and the benefit to claim its credit. So, you must create your identification under the Act through GST registration, especially if you fall under any of the mandatory categories of the taxpayers. And the process is extremely easy. You need not wait up, do rounds or anything. All you have to do is log in to the GST online portal and go through some clicks. So, click at the earliest and get this much necessary identification as a taxpayer.