Chinta Money-50: Why GST registration, for whom it is important?


Last June, Sumit Nagpal suddenly faced a major problem when the employer withheld his pay for his lockdown. To manage the money, he started a technical writing service in the name of his wife. His clients have advised him to get GST registration done. As such, he wants to know why it is important for him to do so.

Sumit Nagpal of Panchkula had a comfortable life. He was working in a backend service company in Mohali for five years. But the lockdown suddenly put him in great difficulty years later. In addition to the maintenance of the wife and daughter, he also had the burden of paying the home loan installment. To make up for the economic loss, he started technical writing.

Since he does the same work in his company, he started this work in the name of his wife to avoid any dispute with the owner. Since July, they started getting work, which is getting financial help. Although he is doing the same job as before. Now some of his clients are insisting that he get GST registration done.

What is the GST registration?

The Goods and Services Tax (GST) is an indirect tax, which came into force on 1 July 2017. The main objective of implementing GST was to introduce uniform tax across the country. Taxpayers in the country have to register GST because GST has replaced all previous taxes. Units and companies with an annual turnover of more than 40 lakhs have to register as a general taxpayer.

This is a GST registration. GST registration is mandatory in many businesses. Doing business without registration is considered a crime and a heavy fine has to be paid if caught. Traders who were earlier under VAT or service tax are automatically subject to GST registration. This registration also applies to individual taxpayers, agents, and suppliers of e-commerce aggregators.

Registration process

GST registration usually takes two to six days. You have to fill the GST registration application form and put together the necessary documents, which can be uploaded electronically.

GST registration documents

Applicant's PAN.

Aadhaar Number

Proof of Business Registration or Incorporation Certificate.

Proof of identity and address, including photographs of promoters/directors.

Proof of work address.

Bank Account Statement / Canceled Check.

Digital signature.

Letter of Authority / Board Resolution for Authorized Signatory.

GST registration fees.

The implementation of GST has brought many changes in the service sector and service providers have to get registered if they come within a fixed radius. In this case, if the annual turnover of Sumit working in the name of wife is more than 40 lakhs, then they will have to get GST registration.

However, there are some organizations that ask individuals or companies for GST registration for which they work, as such, they can claim tax exemption on the services provided to them. Sumit should get GST registration, in which his wife's name is as a proprietor.

In this way, the income from the business will be in the wife's name and Sumit's salary will be separated from this. Since big companies prefer to work with people who have GST registration, Sumit should also do so.