GST Registration for Sole Proprietorship in India

GST Registration Online

Introduction

With the introduction of Goods and Service Tax (GST) in India, starting from 1st July 2017, this tax reformation has created a single national market, common tax base, and common tax laws across the Centre and the State. Cascading Mitigation feature of GST provides the Input Tax Credit at every stage of supply for the tax paid earlier. Extensive use of Information Technology through GSTIN has led to greater transparency in taxation.

GST has boosted the import-export business by creating more employment, which has led to an increase in GDP and overall substantial economic development. GST is an indirect tax that replaced multiple indirect taxes imposed earlier, such as Central State Tax, Excise, VAT, Service tax, etc. GST rules for registration and other similar laws have been approved by the GST council and are placed in the public domain.

Sole Proprietorship — An Overview

A sole proprietorship is a type of enterprise that is owned and run by a single person individually, and there is no legal difference between the owner and the business entity. However, a sole proprietor does not necessarily operate alone and can hire other people too.

A sole proprietor is the most common form of business entity in India, where a sole owner earns the entire profit, and he is also responsible for all the debts and liabilities that arise. It is the simplest form of an entity with minimal compliance required. It can get its legal name or trade name registered as a trademark.

Benefits of Sole Proprietorship

Following are benefits to operating the business as a Sole Proprietorship concern:

·        Fewer Compliances

·        Ease in start-up

·        Low cost to start-up the business

·        Full control and ownership

·        Easy winding up

Sole Proprietorship Registration

A sole proprietorship can be registered in the following three ways:

·        Registration under Shop & Establishment Act

·        Udyog Aadhar under Ministry of MSME

·        GST registration.

a) Registration under Shop & Establishment Act: In case, the sole proprietor has the shop for business, the proprietorship can get registered under this act. The shop can be any place or premise where goods and services are provided to customers. Goods sold can be in retail or wholesale. It also includes office, godown, store-room, warehouse or any similar place used in connection with such trade or business. But it doesn’t include factory, commercial spots, residential hotel, restaurant, theater, or any area of amusement or entertainment.

b) Registration through Udyog Aadhar under Ministry of MSME: Udyog Aadhar is a unique identification number provided by the Ministry of MSME to all the business entities such as company, partnership, sole proprietorship, etc. Sole proprietorship gets to avail the Benefits of MSME along with the added advantage of getting a unique identification number that can be used as proof of registration.

c) GST Registration: Sole proprietorship can get registered through GST registration. If proprietor deals in trading of any goods and services can apply for GST registration. GST has replaced the VAT and service tax registration that was required pre-GST regime.

GST registration is the best source of identity proof of sole proprietorship concern. The only drawback of GST Registration is that it is mandatory to comply with the provisions of GST after registration. Every registered business has to compulsorily collect the tax from the customer and shall deposit the same with the government in the form of GST return.

If the annual turnover of the sole proprietorship is more than INR 20 Lakhs has to get itself compulsorily registered under GST. However, the proprietor can get itself registered voluntarily to obtain the GST registration certificate.

GST Registration Process

GST Registration Process

Following is the step by step process for online GST registration of sole proprietorship:

·        Visit the official website of GST online https://reg.gst.gov.in/registration/

·        Select the option “Services” from the menu and choose the option of “Registration” from the drop-down menu.

·        Select the category of registration and choose “New Registration”

·        Fill the form by selecting a category from the down menu such as taxpayer (in the case of a sole proprietor), tax-deductor, tax-collector, etc. Further complete the details such as state, district, Legal Name as mentioned in the PAN, PAN number, Email id, and contact number (For OTP and login credential).

·        Once the form is completed, click on “Proceed” to generate the TRN (Temporary Reference Number) by completing the OTP validation. OTP remains valid for 10 minutes and the applicant has to complete the validation by entering two separate OTP received on mail id and mobile number.

·        After validation is completed, TRN (Temporary Reference Number) is generated online and is received on the registered mail id that can be used to Login and complete the GST registration application.

·        Login with generated TRN and enter the captcha text, as shown on the screen. OTP is generated every time the applicant login the portal. Proceed by entering an OTP to the next portal.

·        10 stage of the registration process has to be completed for GST registration. Following are the stages of GST registration:

1.     Business Details: Complete the business details by entering all the mandatory fields such as Constitution of business, Commissionerate Code, Division Code, Range Code, a reason to obtain the registration, date of commencement of business, etc.

2.     Promoter/Partner Information: Complete the details of the owner, such as name, father’s name, DOB, Email id, Mobile Number, Residential address. Upload the passport size photograph of the owner in JPG format of size up to 1 MB

3.     Authorized Signatory: Complete this information by nominating the authorized person who will be responsible for GST registration, have complete access to the GST portal, and will be responsible for undertaking a wide range of transactions.

4.     Principal Place of Business: Details of the principal place of business have to be provided, which will be the primary location for operations in the business. Complete the necessary details and upload the documentary evidence of the principal place of business such, as electricity bill in PDF format up to 1MB.

5.     Additional Place of Business: Enter the details in this tab in case an applicant has any additional place of business

6.     Details of Goods and Services: Provide the top 5 categories of goods or services provided by the sole proprietor. This list is indicative and the applicant is not restricted up to these goods.

7.     Bank Details: give the details of the bank such as account number, bank name, IFSC code, etc, up to a maximum of 5 bank accounts.

8.     Verification of application: complete the GST registration application by verifying the application through digitally signing it using Digital Signature Certificate (DSC) of the authorized signatory.

·        Within 15 minutes of completing the verification, acknowledgment is received on registered mail id and phone number. ARN (Application Reference Number) is generated on registered mail id that can be used to track the status of the GST registration application.

·        After an authority approves the application, the GST certificate is received on mail id with the GST number and other details of the business.

Documentation

Following documents are required for GST Registration:

·        PAN card and Aadhar card of the sole proprietor

·        Email id and mobile number of the sole proprietor.

·        Address proof of principal place of business.

·        An updated copy of the passbook for bank details.

·        Passport size photograph

·        Digital Signature Certificate (DSC) of an authorized signatory.

Conclusion

GST registration is compulsory in case any person or entity is providing a taxable supply of goods or services with an annual aggregate turnover of more than Rs.20 Lakhs (Which is reduced to 10 Lakhs in cases of Assam, Nagaland, Manipur, etc.). Also, if any business entity undertakes inter-state supply of goods or services or has an existing VAT, Service Tax or central excise registration, they must obtain GST registration.