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Is GST registration compulsory for an online business to open a sole proprietorship account?

26 March 2024

I want to start an online buisness, but the payment gateway requires me to open a current account in the name of the company. I was searching the list of documents needed to open such an account, when I came across a problem - because certificates such as shop license and trade license are not applicable for an online business, It seems the only few options available for me were applying for a GST certificate. However, I'm really concerned about the cost and compliances for getting a GST registration, since I am just starting out. Do I have any other option?

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8 Replies

prasad Nilugal ( GST Practitioner & Accounts ) (14801 Points)
Replied 26 March 2024

Online business means , through E.Commerce Opretor like AMAZON , Flipkart etc ?. please Clarify.

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Money Money (413 Points)
Replied 26 March 2024

Starting an online business in India without a GST registration is possible, especially if you’re just starting out and want to avoid the complexities and costs associated with it. Here are a few alternatives you might consider:

MSME Registration: Registering as a Micro, Small, and Medium Enterprise (MSME) can provide you with government benefits and simplify compliance requirementsAd1.
ISO Certification: Although not a substitute for GST, getting ISO certification can demonstrate your commitment to quality and improve internal processes.
Trademark Registration: Protecting your brand identity through trademark registration can help build customer loyalty and is an important step for any business.
Additionally, you can operate without GST by:

Staying below the prescribed annual sales threshold limit, which exempts you from needing GST registration if your turnover does not exceed this limit.
Selling only within your state, as inter-state sales would typically require GST registration.
It’s important to note that certain categories of online businesses, such as those selling through e-commerce platforms or providing services across state lines, may still require GST registration.

NARENDRA (ACCOUNTS MANAGER) (1994 Points)
Replied 26 March 2024

This is not as expensive as you think & also you may appoint or give a contract to the tax practitioner, who will complete the compliance on behalf of you. You can contact me.

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 26 March 2024

@ Mr Ahmed Khatib,

You can register Your business under MSME act and get certificate of "UDYAM REGISTRATION CERTIFICATE".
The said certificate can be used for opening a CURRENT ACCOUNT.

But, Some of bankers ask GST registration for opening Current Account...

So, Contact banks and discuss about opening of current account and required documents.

1 Like

prasad Nilugal ( GST Practitioner & Accounts ) (14801 Points)
Replied 26 March 2024

If you check MSME / UDYAM registration portal from 1/4/2021 PAN & GSTN number was mandatory , for MSME/ UDYAM certificate registration , so please confirm , Since already GSTN number has been obtained at time of UDYAM registration, then there will be no problem to open Current Account in bank.

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RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 26 March 2024

GSTIN not mandatory for UDYAM REGISTRATION if Turn Over not crossed as per GST law...

prasad Nilugal ( GST Practitioner & Accounts ) (14801 Points)
Replied 27 March 2024

Yes , correct I agree with you and I know , because he has not exceed threshold limits, however on portal it is written . Also if he is doing business through E.commerce Opretor like ( Amazon , Flick-part ) etc then registration is compulsory irrespective of the Turnover .

Vishrut Darji (Accountant ) (35 Points)
Replied 29 March 2024

It can be a hurdle to open a business bank account when you’re just starting out, especially if you’re an online business. Here’s what you can do:

Check with your payment gateway provider: Some payment gateway providers, such as Paytm, allow you to use your existing bank account to settle payments. Check with your payment gateway provider to see if this is an option for you.
Look for a business account with minimal requirements: Many banks offer business accounts with minimal requirements for new businesses. These accounts may have lower fees or waived fees for a certain amount of time. Do some research to see what banks in your area offer these types of accounts.
Apply for a GST registration: While getting a GST registration may seem complex, it can actually benefit your business in the long run. A GST registration can help you appear more legitimate to customers and can also help you claim input tax credits on your purchases. You can find more information about GST registration on the GST website: https://www.gst.gov.in/.

Here are some of the documents you will typically need to open a business bank account:

Proof of business registration (such as a certificate of incorporation or a business license)
Your tax ID number
Your business plan
Financial statements (if you have them)
Proof of identity for the business owners and authorized signatories

The specific requirements will vary depending on the bank, so be sure to check with the bank you are interested in opening an account with.