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WHAT IS GOODS AND SERVICES TAX?

The constitution amendment bill for ‘GOODS AND SERVICE TAX’ (GST) was approved in the Parliament Session in August 2016 along with the confirmation by 50 percent of the state legislatures. Hence, all the existing indirect taxes levied by state and center were replaced with the proposed implementation of GST on 1st July 2017.

This move by the Government is the greatest tax reform since independence & is an added benefit to the Indian economy as it strives to eradicate the discrepancies of the existing tax structure & promotes single tax payment on the supply of all goods and services.

One of the much-awaited tax reforms to get launched in the Financial Year 2017-18, improving the ease of doing business for many micro and small businesses in India by reducing compliances. By incorporating multiple taxes into a single tax system, the complexities are bound to get reduced while the tax base would rise substantially.

Under the new GST process, all entities that are involved in buying or selling of goods or providing any services or both are required to obtain GST registration compulsorily. Entities without the registration of GST will not be permitted to collect GST from a customer or claim the input tax credit of GST paid. Also, the GST registration is mandatory once an entity crosses the minimum threshold turnover.

Most importantly, according to the GST Council, business entities situated in the Northeastern and hill states having an annual turnover of Rs.10 lakhs and above would be required to attain GST registration. For all the other business entities in the rest of India would be required to obtain GST registration, only if the annual turnover crosses Rs.20 lakhs.

Entities required to obtain GST registration as per the regulations must file for the registration within 30 days from the date on which the entity becomes liable for obtaining the GST registration. The average time taken to obtain GST registration is about 5 – 10 working days, subject to government processing time and submission of client documents.

It is mandatory for a business entity that is currently registered under any of the existing tax regimes to move to GST law irrespective of the concerned threshold limits. The following central and state level tax regimes will end with the introduction of Goods and Service Tax (GST):

  • Central Excise duty.
  • Service Tax.
  • State VAT.
  • Central Sales Tax.
  • Entry Tax.
  • Entertainment and Amusement Tax (except when levied by the local bodies).
  • Purchase Tax.
  • State Surcharges and Cess if related to supply of goods and services.
  • Taxes on lotteries, betting, and gambling.

 

ADVANTAGES OF GST

  1. Tax rates are relatively lower as the tax base will increase substantially.
  2. GST will eliminate the cascading effect of taxes.
  3. The prices of the goods and services will reduce eventually.
  4. GST will promote a shift from unorganized to organized sector.
  5. A consistent flow of Input tax credit.
  6. Effective & efficient supply chain management.

 

DOCUMENTS REQUIRED

  1. A scanned photograph of the applicant.
  2. The Constitution of the Taxpayer (Example – Partnership deed, Registration certificate etc).
  3. The proof of principle address of business (Electricity bills, Rent Agreement).
  4. Scanned copy of Bank account details.

 

GST REGISTRATION PROCESS

  • Log in to the online site i.e. the GST Portal (www.gst.gov.in).
  • Fill Part-A of Form GST Registration form 1.
  • Subsequently, the concerned person will receive a reference number for the application through SMS and via E-mail.
  • Fill the second part of the form and upload the required documents according to the type of business an entity is engaged in.
  • Certificate of registration is then issued by the department.
  • Produce the documents within 7 working days along with GST REG-04.
  • The officer may also happen to reject the application if he finds any errors. The same will be informed in form GST REG-05 of GST registration.

But if an assessee is not registered under any existing tax legislative then he is liable to register only if the aggregate turnover of his business in any financial year exceeds the threshold limit. The existing threshold limit specified by the GST council is 20 lakhs for all the states except for the North Eastern States where the limit is 10 lakhs.


OTHER REQUIREMENTS FOR GST REGISTRATION

 

Apart from the documents required mentioned above, there are no formal requirements for GST registration. The main requirement after GST registration is important. The following should be known regarding the GST Registration:

  • Three monthly returns and one annual return should be filed after the registration process.
  • One may also opt for the Composition Scheme under GST to ignore heavy compliances.
  • Also, various penalties are prescribed under GST.

SHOP & ESTABLISHMENT CERTIFICATE

The Shop & Establishment Certificate is a state based license which is required during the establishment of any commercial place like a hotel or a shop.

Every new establishment must be registered under the Shop & Establishment Act and get the license within 30 days from the commencement of the work whether or not it has emploEyees. The validity of the certificate is for one year and can be renewed every year.

The Act regulates work conditions, rights of employees in the unorganized sector and a list of obligations are provided for every employer. It applies to all the commercial establishments, shops, restaurants, theatres and other places of public amusement or entertainments.

Registration is required even by sole proprietors working out of their homes. If one is trying to raise investment or trying to get a loan for the business the establishments needs to be registered.
Even if one is managing and operating an office from home, the concerned person can apply for this registration.

 

REGULATIONS UNDER THE SHOP AND ESTABLISHMENT ACT

The Shop and Establishments Act sets certain rules and regulations for working hours per day and week, rest intervals, opening and closing office hours, closed days, religious national holidays, overtime work, rules for employment of children, rules for annual leave, maternity leave, sickness and casual leave, rules for employment and termination of service, maintenance of registers and records and display of notices and obligations for employers as well as employees.

 

SHOP ESTABLISHMENT CERTIFICATE BENEFITS

  • Easy to obtain the certificate.
  • Less Compliance.
  • Audit is not mandatory.

DOCUMENTS REQUIRED FOR REGISTRATION

  • Address Proof.
  • Passport Sized Photographs.
  • Copy of PAN Card.
  • The Partnership Deed or COI.
  • Authorization letter/the self-attested letter.
  • Challan/Payment Receipt/Transaction Receipt.

PROCEDURE

  • PAN cards, identity and address proofs of the proprietor/partners/directors needs to be submitted. Details of employees must also to be submitted.
  • File the application with the issuing authority i.e. the local Municipal Corporation.
  • The procedure for obtaining the registration will be completed as soon as the additional documents if any are submitted as instructed by the inspecting officer.
  • The hard copy of the certificate is issued within 10 days in major cities but would take around 15 to 20 days elsewhere.

 

PROVIDENT FUND REGISTRATION

PROVIDENT FUND REGISTRATION

Employees Provident Fund implemented by the Employees Provident Fund Organization (EPFO), being one of the main medium for savings for working class people whether in Government, Private or Public sector organizations.

Firms or Companies having employee capacity of not less than 20 are required to be registered with the Provident Fund Department. The strength of 20 also includes contract-based employees like security, housekeeping or other contractual workers required for the business entity. Companies not having the mentioned capacity of employees but are willing to register to owe to the benefits of Provident Fund for their employees can register voluntarily with the Regional Provident Fund Office. Registration has to be done within thirty days from the date of hiring 20 employees. Delay might result in a penalty.

The schemes framed by the Employees Provident Fund Organization (EPFO) provide for three types of benefits –

  1. Contributory Provident Fund.
  2. Pensioner benefits to the employees and their family members.
  3. Provides insurance cover to the members of the Fund.

It serves as a social security benefit to the employees. During an employee’s productive lifecycle; along with his employer, an employee contributes monthly to the PF Fund which then serves on retirement.

 

ELIGIBILITY

 

An employee at the time of joining the employment, receiving salary up to Rs. 6,500 is required to become a member. According to this act, salary means and includes BASIC SALARY + DEARNESS ALLOWANCES (DA), value of food concessions (cash) and retaining allowances (if any). He is thus, eligible for the membership of PF from the very first date of joining a business establishment.

 

EMPLOYEE CONTRIBUTION

Provident fund (PF) contribution is recovered @ 12% of salary or wages from employees who do not earn less than a wage of Rs. 15,000 p.m. However, employees can contribute more than this statutory maximum limit which is then, considered as a voluntary contribution.

 

VOLUNTARY CONTRIBUTION

  • An employee can voluntarily contribute above the stipulated rate of Provident Fund contribution by opting for the voluntary scheme at any rate so desired, also up to 100% of Wages.
  • The contribution to VPF should not be a fixed amount, but should be a certain % of wages. However, the employer is not legally bound to contribute at the enhanced (increased) rate.

EMPLOYER CONTRIBUTION

  • Employer is required to contribute towards the provident fund; the deduction rate for the employer is the same as employee’s contribution (12% of the wages).
  • Out of this 12%, 3.67% goes to the Provident Fund and the balance of 12% that is; 8.33% to the Pension Fund.
  • The employer must deposit the contribution recovered from employees to the provident fund account on or before 15th of the following month.

 

DOCUMENTS REQUIRED

  • Certificate of Incorporation (private limited company) and Certificate of Registration of the Firm (partnership Firm).
  • MOA & AOA (private limited company) and Partnership Deed (partnership firm).
  • Rental Agreement or Lease Agreement.
  • PAN Card of Company or Firm.
  • Address Proof.
  • ID Proof – Pan Card/Election Card/Passport/Driving License (Directors/ Partners).
  • List of Directors/Partners.
  • Registration copies with other Departments-VAT, PT; etc.
  • First Invoice raised by the company.
  • A true copy of Board resolution.

Once documents are filed the authorities will verify all the original documents and carry out a physical inspection on the premises of the company. The business entity will be then granted with a PF allotment letter.

 

PROCEDURE FOR PROVIDENT FUND REGISTRATION

 

The forms to be filed for registering an establishment are below;

  1. One detailed application termed as “PERFORMA FOR COVERAGE”.
  2. Form 5 A having Annexure I.
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