Documents Required for Sole Proprietorship Registration for GST?

Documents Required for GST registration

GST Registration Documents

Sole proprietorship firms accounted for 62.5% of the total number of companies operating in India in 2014. A business entity registering for sole proprietorship will have only one individual with ownership rights and carry all the liabilities of the same. It is by far one of the most popular business models in the country, especially among small and medium industries in India.

It’s practically more convenient to register a business for sole proprietorship instead of limited liability companies or other business firms. The business owner has to conform to minimum compliance and can complete the registration process within 10-15 days. It is also relatively less expensive as there are no corporate taxes involved in such businesses.

Starting from 25th June 2017, any sole proprietorship selling goods or services is mandated to complete their GST registration. Business entities that fall under the following criteria will have to register themselves under the Goods and Services Tax-

  1. If they are selling goods in states other than the registered state.
  2. Sole proprietorship firms that sell products via e-commerce platforms.
  3. Distributors of taxable goods and services.
  4. Businesses that have a turnover of more than Rs. 40 Lakh in a year.
  5. Proprietorship that trade with manufacturers and suppliers with GSTIN are also required to register for GST. It will allow them to avail input credits against their purchases.

Let’s we take a detailed view on how one can become a proprietor, following these simple steps and what will be the advantages of owning a sole proprietorship.

How to become a proprietor?

Any individual selling goods or services can initiate their business with a sole proprietorship. The implementation of Goods and Services Tax (GST) has further simplified the registration process for such organisations. The owner is not liable to pay service tax, VAT, or any other indirect taxes as all these have been unified under the GST.

You May Read: Penalty for Late Filing GST Return

An individual can complete the entire application process online through the dedicated GST web portal. Furthermore, the minimum documents required for GST registration of a sole proprietorship firm also helps keep the process streamlined and time-saving. Here is the list of documents required to complete the GST registration procedure in India.

  • PAN card of the sole proprietor.
  • A cancelled cheque or bank statement copy.
  • A recent passport-sized photograph.
  • Documents like Aadhaar Card, passport, driving licence, etc. which will act as ID and address proof of the individual.
  • No Objection Certificate of the property where the proprietor wants to register the business.

The simple documents required for GST registration makes it easier for new businesses to list themselves as a sole proprietorship in India.

The registration process for a sole proprietorship firm

After preparing all the documents required for the registration, the proprietor will have to fill up the registration form in the GST web portal. Generally, the GST number will be allocated within 3 to 4 days of application.

Advantages of owning a sole proprietorship

There are several advantages of a business entity that operates as a sole proprietorship. Let’s take a look. But it is necessary to know what actually is the meaning of the term “sole proprietorship”. A sole proprietorship is a business entity that is owned and fully controlled by an individual only. The most common advantages of owning a sole proprietorship is that these kinds of firms are easy to maintain and form as well. However with the advantages some disadvantages are also involved in the concept of sole proprietorship. The biggest disadvantage of owning a sole proprietorship is that as in that kind of business, an owner is personally liable for his/her business, a complete loss by chance could vanish all, while on the other hand, if you own a business in partnership, the loss and profit will not incur more loss on only the one person as you may also understand that 50% investment may not lead 100% loss of your finances. However these disadvantages could be negligible, if one holding sole proprietorship has business mind and know how to deal with these situations if occurs.

  • High market credibility – Sole proprietorship are likely to enjoy higher market credibility as they are identified as an organised business by the Government of India. It will allow them to avail raw materials and financing with relative ease.
  • Easier taxation – Sole proprietorship firms can avail standard GST rates as well as exemptions. For example, an organisation with less than Rs. 40 Lakh of revenue per year will be exempted from GST, whereas the rest will fall under four tax slabs of 5%, 12%, 18%, and 28% as per the GST Act.
  • Availability of better business infrastructure – A sole proprietorship will have to comply with easier regulations to avail better infrastructure for individual ownership. They are also likely to get the GST benefits provided under the MSME Act.

You May Read: GST State Code – State Code List Under GST

The standardized GST rate in India allows the business to stay within a pre-set tax slab as well as earn the benefits of the unified taxation system. The increased market credibility also helps businesses ensure their growth during their operation.

Sole proprietorship firms that are registered with GST can enjoy better market credibility, benefit from the unified taxation system and exemptions offered by the GST Act, and avail better business infrastructure and employee hiring benefits in the long run. Even for entities that earn revenues less than Rs. 40 Lakh per annum should register for GST to clearly define their expenses and save money while filing Income Tax Returns.

A business owner can easily list their company thanks to the simple GST registration procedure in India. The simplified online application process and minimum documents required for GST registration make it easier for entities to register their business.

About Sashi 78 Articles
Sashi Singh is content contributor and editor at IP. She has an amazing experience in content marketing from last many years. Read her contribution and leave comment.

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