In India, a firm can be owned, managed, and controlled by a single individual as a Sole Proprietorship. You get to retain all of the money or profits you make. It is also possible to avoid multiple taxes in India because of the advantages of single proprietorships. Only in your own name will you be required to complete tax returns and make tax payments. As a result, GST Registration in India for a Sole Proprietorship has numerous advantages. In this article, you will understand the GST for Sole Proprietorship in India.
What is Sole Proprietorship?
Sole Proprietorship registration can be included in the category of business entity. However, Sole Proprietorship Registration doesn’t mean forming a separate legal entity.
Unlike other business structures, a proprietorship is run and controlled by a single individual, the company’s owner. It’s quite simple to get started, and there are just a few regulations to follow because the proprietorship and the owner are one and the same.
A proprietorship can’t have any additional partners or shareholders because the owner and the business are one and the same thing. As a result, the owner of a single proprietorship has unlimited accountability for the business ventures he or she engages in. As a consequence, small enterprises with fewer employees should use this business structure.
Sole Proprietorship Registration is not mandatory. However, to operate the business smoothly and beneficially, it’s important that Sole Proprietorship must have some registrations or licenses, such as GST Registration, MSME Registration, or Trade License.
When should a sole proprietorship register for GST?
In the following circumstances, a proprietorship firm must get GST Registration:
- When a company’s annual turnover exceeds 40 lakhs rupees.
- When a proprietorship firm sells goods or services over state lines (from one state to another)
- When you are engaged in e-commerce business
- To be eligible for an input tax credit, a Proprietorship Firm must have GST Registration
- Based on a voluntary basis.
Documents required for GST registration for proprietorship firm
- Personal Pan Card, Copy of the Proprietor
- Aadhar Card, Copy of the Proprietor
- Electricity Bill, Telephone Bill or water Bill of Business Location or Premise or Rent Agreement if Office is Rented
- Personal Bank Statement or Canceled Bank Cheque or Passbook Frontpage Copy of the Proprietor (Remember if you have already a current bank account on the Firm Name then instead of saving a bank account provide a current bank account for the same)
- Passport Size Photograph of the Proprietor.
After registering for GST, what are the conditions for a sole proprietorship?
A Proprietorship’s GST Registration might be canceled if it doesn’t meet certain requirements. Monthly GST Return Filing as a Proprietorship Firm is required, as is tax payment. If you miss it, you’ll be penalized on a per-day basis. Moreover, the GST Return Filing is mandatory even if your business has zero transactions or no tax liability.
Benefits of GST for Sole Proprietorship in India
- Ownership is not recognized as a distinct legal entity. As a result, some MNCs or other businesses do not engage with Sole Proprietorship. However, if you have GST Registration, your business gets a solid reputation.
- The proprietor’s PAN will be used to open a bank account for the proprietorship. Having GST Registration for Sole Proprietorship eases this process.
- You can easily avail the benefits of government schemes if you have GST Registration.
- GST Registration and GST Return Filing is online and hence you don’t need to be physically present for the process.
- Registering under GST for Sole Proprietorship in India will help you gain the confidence and understanding of business compliances in India. As a result, when you want to expand your business, you can do so easily.
- If you are into the export-import business, GST Registration along with IEC Code Registration is mandatory.
Moreover, If you want any other guidance relating to GST Registration for Online Sellers at Flipkart, please feel free to talk to our business advisors at 8881-069-069.
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