GST Registration – Benefits, Drawbacks, Process and Cancellation

GST Registration – Benefits, Drawbacks, Process and Cancellation

GST Registration: From 1 July 2017, a new tax system came into force  in India, which we  call GST – Goods and Services Tax. Earlier, there were different indirect taxes like VAT, Service Tax, Excise Duty, due to which businessmen had to face a lot of confusion and paperwork  . After the introduction of GST, a single tax structure was created in the whole of India  , which is a big step towards "One Nation, One Tax".

But GST registration is not necessary for every business. The government has set some turnover limits. If your business annual turnover  is more than 20 lakh (services) or 40 lakh (goods), then it is mandatory to get GST registration  . If you do interstate business, or want to sell your products on e-commerce platforms (Amazon, Flipkart, Zomato, Swiggy), GST registration is also mandatory.

There are also benefits of GST registration, such as input tax credit and legal recognition. But at the same time, there are some challenges, such as compliance pressure and penalties. In this blog, we  will understand the pros, disadvantages, registration process, and cancellation process of GST registration in detail, along with examples.

Benefits of GST Registration

GST registration provides multiple benefits to the business that are helpful in both short-term and long-term growth. Let's understand in detail:

1. Legal Recognition of Business

If you are GST registered, then your business is officially in the records of the government. For example, when a small shop owner uses GSTIN (GST Identification Number), both customers and suppliers are confident that it is a registered and genuine business.

2. Benefit of Input Tax Credit (ITC)

Suppose you are a manufacturer and purchase raw material for ₹ 1,00,000, which includes ₹ 18,000 GST. When you sell your finished product, you can adjust the tax paid earlier from the GST that you charge from the customers. This eliminates the problem of double taxation and increases cost efficiency.

3. Interstate Business Easy

Earlier, different states had different tax rules, but now after GST, you can easily send your product from Delhi to Maharashtra, or Haryana to Karnataka without extra paperwork.

4. Business Trust & Credibility

In today's time, people prefer to deal only with GST registered suppliers. It increases your market reputation and helps you attract bigger clients.

5. E-commerce platforms pe business

If you want to sell your product on Amazon, Flipkart, Meesho, Zomato, Swiggy, then GST registration  is mandatory. Without GSTIN, you cannot register on these platforms.

👉 Overall, GST registration has become a kind of "business license" that is essential for long-term growth.

Decoding Online GST Registration: Your Benefits and Smooth Process Guide

Disadvantages of GST Registration (Drawbacks)

As much as the benefits of GST registration are, there are also some challenges and drawbacks – especially for small businesses. Let's understand them in detail:

1. Compliance and Burden of Paperwork

GST registered businesses have to file regular returns . If your turnover is high, then you have to file GSTR-1 and GSTR-3B monthly. There is a quarterly filing option for small businesses, but still maintaining forms, invoices, and accounts becomes time-consuming. For example, a small trader has to enter the exact data of his sales and purchases on the portal every 3 months, otherwise there may be a penalty.

2. Additional Cost (CA/Consultant Fees)

It is not easy for every businessman to understand the rules of GST. For this reason, they have to take the help of a Chartered Accountant (CA) or GST Consultant. An average CA fee is a return of Rs. 500–Rs. 2000, which becomes an extra expense for small shopkeepers  .

3. Financial Load for Small Businesses

If your turnover  is between 20-40 lakhs and it becomes mandatory for you to take GST registration, then you have to manage both compliance and tax payment. This sometimes affects the working capital of the business.

4. Risk of penalties

If you do not file GST returns on time, then you  have to pay late fees + interest. For example, if your GSTR-3B return is delayed, a penalty of ₹50 per day is applicable. This burden can be heavy on small businesses.

👉 This means that GST registration is good for growth, but sometimes it becomes an extra burden for small and locally run businesses  .

How to do GST registration? (Step-by-Step Process)

In today's time, the process of GST registration  is online and you get the facility to do it from your home or office. But it is important to keep proper steps and documents ready. Let's understand the step-by-step process in detail:

Step 1: Visit the GST Portal

First, you  need to visit the official GST portal (www.gst.gov.in). Registration starts from here.

Step 2: Select New Registration.

Click on the "Services > Registration > New Registration" option on the portal. Here you  have to enter your PAN, mobile number, email ID. OTP will come which has to be verified.

Step 3: Generate TRN

After filling in the details, you  will get a Temporary Reference Number (TRN).  It is important to note down the TRN because you will be able to complete your application form.

Step 4: Fill in the business details

Now you have  to fill in your business name, address, constitution (proprietorship, partnership, company), bank details, and nature of business.

Step 5: Upload the documents

Documents such as –

PAN Card (Business Owner's)

Aadhar Card

Business address proof (rent agreement, electricity bill, etc.)

Bank statement / Cancelled Cheque

Passport size photograph

All this has to be scanned and uploaded to the portal.

Step 6: Verification & ARN Number

After submitting all the details, an Application Reference Number (ARN) is generated. On the basis of this ARN, the tax officer verifies your application.

Step 7: GSTIN Issue

As soon as the verification is complete, you  are allotted a GSTIN (15-digit Goods and Services Tax Identification Number). Now you can login to the GST portal and file your returns and run your business legally.

👉 For example – if you are a cloth shop owner with an annual turnover of ₹ 25 lakh, then you will have to take GST registration. After this, you will be able to get input tax credit from suppliers and issue GST invoices to your customers.

https://youtu.be/2YgBjboYIDw

How to cancel GST registration? (Cancellation Process)

GST registration is not mandatory for every business, and sometimes there are situations where cancelling  GST registration is the best option. The process of GST cancellation is also online. Let's understand in detail:

When is it possible to cancel?

Here are some common situations for cancelling GST registration:

• Business has closed – If you have closed your business permanently.

• Turnover should be below the threshold – e.g. your annual turnover has fallen below ₹ 20–40 lakh and GST is no longer mandatory.

• Wrong registration – Accidentally double registration or registered in the wrong state.

• Business transfer / merger – If your business has been transferred to someone else.

Step-by-Step GST Cancellation Process

Step 1: Login to the GST portal (www.gst.gov.in) with your valid GSTIN and password.

Step 2: Select Services > Registration > Application for Cancellation of Registration from the top menu  .

Step 3: Inside the form, you  have to select Reason for Cancellation. For example – "Discontinuance of business" or "Turnover below threshold."

Step 4: If the business is closed, you  will need to fill in your stock details and tax liability data. If you have to adjust any pending tax or ITC, then it will also have to be declared.

Step 5: Upload supporting documents – such as closure certificate (if company), affidavit or surrender letter.

Step 6: After submitting the application, an ARN number is generated. With this ARN, you can track the status of your application.

Step 7: After tax officer verification, the cancellation is approved and your GSTIN is deactivated.

👉 Example: Suppose a small bakery owner closed his business permanently after the lockdown. Now he can cancel GST registration to avoid unnecessary return filing and penalties.

Conclusion

GST registration is an important compliance that has become a kind of "license" for every business. If your turnover is above the government's threshold limit, you do interstate trade, or sell on e-commerce platforms, then it is mandatory and beneficial to take GST registration.

It has multiple benefits such as input tax credit, legal recognition, credibility, and growth opportunities. But there are also some drawbacks – such as the pressure of regular compliance, CA/consultant fees, and the risk of penalties.

You have to decide whether GST registration is necessary or optional according to the size and nature of your business. And if the business is closed or the turnover is below the threshold, then GST cancellation can also be easily done online.

👉 In short, GST registration is a ticket to business growth – but it is equally important to take care of its rules and compliance.

Frequently Asked Questions (FAQs) about GST Registration

Q1. What is GST registration?

GST registration is an official process in which the government gives you a unique GSTIN number from which you collect and pay tax legally.

Q2. Is GST registration necessary for every business?

Nope. Mandatory only for businesses with an annual turnover of above ₹20–40 lakh or those who trade interstate/e-commerce.

Q3. What should be the minimum turnover for GST registration?

₹40 lakh for goods and ₹20 lakh for services (limit ₹10 lakh in special conditions).

Q4. Can I voluntarily register GST if my turnover is below the limit?

Yes, you can register voluntarily and avail the benefit of input tax credit.

Q5. What are the documents required for GST registration?

PAN card, Aadhaar card, business address proof, bank details, and owner's photograph.

Q6. How many days does GST registration take?

Normally, after verification in 7–10 working days, GSTIN is allotted.

Q7. What is a GSTIN number?

GSTIN is a 15-digit unique identification number that is assigned to every registered business.

Q8. What happens if I don't file a GST return?

You will have to pay late fees and interest. Also, GSTIN can also be canceled.

Q9. How many types of GST are there?

CGST (Central GST), SGST (State GST), IGST (Interstate GST), and UTGST (Union Territory GST).

Q10. Is GST registration free?

Yes, registration on the official GST portal is free. But the service charge of the CA / Consultant is different.

Q11. How is GST Cancellation Done?

Login to the GST portal and fill in the "Application for Cancellation" and submit the reason and documents. After verification, the cancellation is approved.

Q12. Can there be multiple GST registrations for a single person?

Yes, if your business is in multiple states, then separate GST registration will have to be taken for each state.

Q13. Can a GST number be taken without a business?

Nope. GSTIN is only for registered businesses or startups.

Q14. What is a composition scheme?

This is a simplified scheme in which small businesses (turnover up to ₹ 1.5 crore) have to pay GST at a lower rate (1–5%) and they do not need to file monthly.

Q15. Can I apply again after GST registration is canceled?

Yes, if you start a business again or cross the turnover limit, then you can apply for a new GST registration.