A manufacturer is an individual who engages in the production or manufacturing of excisable commodities, utilising either hired labour or independently producing them. This includes anyone involved in the creation of goods, whether through the employment of labour or personal efforts.
In terms of Section 2(72) of the CGST Act, the term ‘manufacture’ is defined as the processing of raw material or inputs in any manner leading to the creation of a new product with a distinct name, character, and use. The term ‘manufacturer’ is interpreted accordingly.
Further, the World Bank asserts that the implementation of the Goods and Services Tax, coupled with the elimination of inter-state checkpoints, stands as the most crucial reform capable of enhancing the competitiveness of India’s manufacturing sector. In this blog, we shall learn about GST registration for manufacturing units.
Advantages of GST Registration for Manufacturing Units
Under the GST system, GST registration for manufacturing units is not just a statutory obligation but also comes with a multitude of advantages, rendering it indispensable for businesses engaged in the production of goods. The following are the key benefits of GST registration for manufacturing units:
1. Input Tax Credit:
GST registration allows manufacturing units to claim Input Tax Credit on purchases made for business purposes. This credit can be employed to offset the GST liability on the output supply of goods, leading to reduced costs and enhanced profitability for manufacturers.
2. Wider Market Reach:
GST registration facilitates a broader market reach for manufacturing units. It empowers them to sell their products across India without facing state-wise restrictions. This fosters business expansion and growth, enabling manufacturers to explore new markets and expand their customer base.
3. Simplified Tax Compliance:
GST registration contributes to the simplification of the tax compliance process. The result of this is a more efficient and less time-consuming tax compliance process.
4. Business Expansion and Growth:
With the ability to sell products seamlessly across the country, GST-registered manufacturing units experience enhanced business opportunities. The removal of inter-state barriers promotes growth, encouraging manufacturers to tap into diverse markets and diversify their operations.
5. Online Filing of Returns:
GST registration facilitates the ease of online filing of returns. This digitised process enhances efficiency and reduces the manual effort involved in compliance activities. Manufacturers can file returns promptly and accurately, ensuring a smoother interaction with the taxation system.
So, GST registration for manufacturing units is not just a legal requirement but a strategic move that brings about a range of advantages. From cost savings through input tax credit to expanded market reach and simplified tax compliance, the benefits underscore the significance of GST registration for manufacturers operating in India.
Process for GST Registration for Manufacturing Units
As a manufacturer, GST registration for manufacturing units is crucial not only for legal compliance but also to steer clear of potential penalties. The steps involved in the GST registration for manufacturing units are:
Step 1: Determine Eligibility for GST Registration:
In accordance with GST regulations, any business with an annual turnover exceeding Rs. 40 lakhs (Rs. 10 lakhs for northeastern states) is obligated to register for GST. The initial step involves verifying whether your manufacturing unit meets this prescribed threshold for undergoing the process of registration under GST.
Step 2: Gather Essential Documents:
To initiate the GST registration process for your manufacturing unit, the compilation of necessary documents is imperative. Ensure you have the following documents ready:
1. PAN Card:
A copy of the Permanent Account Number card associated with the manufacturing unit.
2. Identity Proof:
Aadhaar card or passport-sized photograph, serving as proof of identity.
3. Business Registration Proof:
Documentation substantiating the business registration, such as a partnership deed, certificate of incorporation, or any other relevant proof.
4. Bank Account Details:
Provide comprehensive bank account details, including the IFSC code and branch address.
5. Address Proof for Manufacturing Unit:
Furnish valid address proof for the manufacturing unit, which may include a rent agreement, electricity bill, or other corroborating documents.
Step 3: Register on the GST Portal:
Once all necessary documents are in order, proceed to register on the GST portal by following these meticulous steps:
1. Visit the GST Portal:
Access the official GST portal at https://www.gst.gov.in/.
2. Initiate Registration:
Click on the “Register Now” button located under “Taxpayers (Normal)”.
3. Provide Basic Information:
Fill in essential details such as PAN, email address, and mobile number as prompted.
4. Verification via OTP:
Enter the One-Time Password received on both your mobile number and email address to authenticate the registration process.
5. Complete Registration Form:
Fill out the registration form comprehensively, including crucial information like business name, address, and bank account details.
6. Document Upload:
Upload all necessary documents as specified in the registration form.
7. Application Submission:
Submit the completed application for GST registration.
Step 4: Verification and Approval:
Following application submission, your manufacturing unit will undergo a thorough verification process. The GST department may request additional documents or information during this stage. Upon completion of the verification, you will receive either an approval or rejection of your application.
Step 5: Start Filing GST Returns:
Once GST registration is secured, commence the process of filing GST returns for your manufacturing unit. This involves meticulous reporting of sales and purchases to the GST department. You can undertake this task either directly on the GST portal or by utilising GST-compliant accounting software.
Hence, GST registration is an imperative undertaking for any manufacturing unit, ensuring legal compliance and averting potential penalties. By diligently following these steps, your manufacturing unit can successfully register for GST and leverage the advantages of a streamlined tax system.
Final Thoughts
GST registration for manufacturing units is essential, offering substantial advantages in the competitive business sector. It ensures eligibility for input tax credit, reducing costs and bolstering profitability. The widened market reach, unencumbered by state-wise restrictions, fosters business expansion and growth opportunities. Moreover, the simplified tax compliance process minimises paperwork and enhances operational efficiency. Overall, GST registration is not merely a legal mandate but a strategic necessity for manufacturing units in India, aligning them with a unified tax system and positioning them for sustained success in an evolving economic environment.
