GST or Goods and Services Tax was introduced in India in 2017 to simplify the tax system and bring uniformity in indirect tax. GST is levied on the supply of goods and services, including food businesses. As a food business owner, you need to understand how GST impacts your business, including the license/registration fee and penalty.
GST registration is mandatory if your annual turnover exceeds Rs. 20 lakhs. You can also opt for voluntary registration if your turnover is below Rs. 20 lakhs. As a food business owner, you need to register under GST to collect tax from your customers.
The GST rate for food businesses varies depending on the food item. For example, packed and branded food items attract a GST of 5%, while non-branded and unpacked food items are exempt from GST. However, food delivery services such as Zomato and Swiggy are charged a GST of 18% as they provide a service along with the food item.
If you do not register under GST, you may be liable to pay a penalty. The penalty for non-registration is 10% of the tax due or Rs. 10,000, whichever is higher.
If you do not file your GST returns on time, you may be liable to pay a penalty. The penalty for late filing of GST returns is Rs. 50 per day for GSTR-1 and GSTR-3B and Rs. 20 per day for GSTR-4 and GSTR-5.
The procedure for GST registration is simple and can be completed online. You need to provide your PAN, Aadhaar, and bank account details, along with the necessary documents such as proof of address and identity, to register for GST. Once you have submitted the application, a GST officer will verify the details and grant you the GST registration.
The license/registration fee for food businesses under GST is Rs. 5,000. However, small businesses with an annual turnover of less than Rs. 1.5 crores can opt for the composition scheme and pay a lower fee of 1% of their turnover.
As a food business owner, it is crucial to understand the impact of GST on your business. GST registration is mandatory if your annual turnover exceeds Rs. 20 lakhs, and you need to pay the license/registration fee to collect tax from your customers. Failure to register under GST or file your GST returns on time may result in penalties. By complying with the GST regulations, you can avoid penalties and focus on growing your food business.
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