GST : Is it Mandatory for MSME ?

WHAT IS GST ?

GST is the Goods and Services Tax that is collected by the Government on various goods and services  that seeks to replace all central and state taxes and levies such as excise duty, countervailing duty, service tax, value added tax, octroi, entry tax and luxury tax.

This tax has been in effect from July 01, 2017 & has brought a major change in the taxation visuals in India. Earlier, different taxes were paid separately to the state and the center. However, GSTin subsumed all taxes into one, and now there is the practical application of ‘One nation, one tax.

WHICH ENTITIES ARE TO BE REGISTERED UNDER GST ?

The following entities are required to be registered under GST –

  • Businesses getting an annual turnover of over more than Rs 20 lakh in a financial year ( Rs 10 lakh for North eastern and hill states)
  • Businesses engaged in Interstate supply, Input services, ecommerce operations, agencies dealing with suppliers.
  • Person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered taxable person.
  • Entities that are earlier registered for other tax liabilities like Excise duty, Service tax etc. have also to get registered under GST.
  • Business units counted under definition of reverse charge mechanism.

IS GST MANDATORY FOR MSME ?

As a registered entity, each business unit registered as MSME has to apply for GSTN number which is used for specifying the flow of goods and services, GST collected and paid etc.

To register under GST an MSME has to apply on GST online portal and submit the following documents :-

  • Certificate of MSME Registration
  • Existing Service Tax/VAT/CST/Excise Registration details
  • Proprietor PAN details
  • Bank account details opened in name of business.
  • Aadhar details of proprietor
  • Address proof of business ;
  • Other documents as specified by government .

MSME UNITS EXEMPTED FROM GST REGISTRATION

There are certain exemptions granted to MSME units which are listed as below-

  1. INTRA STATE TAXABLE SUPPLY OF GOODS & SERVICES :- If the aggregate turnover is less than Rs 20 lakhs in a financial year, there is no need to obtain GST registration.
  2. INTER STATE TAXABLE SUPPLY OF GOODS & SERVICES :- If the aggregate turnover does not exceed Rs 20 lakhs in a financial year, there is no need to obtain GST registration. (Rs. 10 lakhs in case of the special category states of Nagaland, Manipur, Mizoram and Tripura).

However, for inter-state suppliers of goods, registration under GST is a compulsory, even if their aggregate turnover in a financial year does not exceed the prescribed limits.

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