What is GST?

GST or Goods and Services Tax is a single indirect tax in India. Its main objective is to turn the nation into a unified common market. It’s applied to products and services in the country.

Earlier, there were many taxes and duties like custom and central excise duty, surcharges, cesses, and central tax on commodities and services, to name a few. However, the Goods and Service Tax has eliminated other indirect taxes that were applied to suppliers and customers by both State and Central Governments in India.

What are the advantages and benefits of GST?

  1. a) End of cascading tax on the sale of goods and services like previous indirect taxes.
  2. b) Unorganised sectors of business like construction are now regulated in an organised manner.
  3. c) Lesser burden for compliance.
  4. d) Comprehensive threshold for registration.
  5. e) Correct and distinct treatment for eCommerce businesses.
  6. f) Prices of goods have been reduced due to the elimination of other indirect taxes.
  7. g) Online platform for registration, filing returns for taxes, a simplified procedure for refunds, and more.
  8. h) Better programs for small businesses.

But if you have a business and wish to carry out financial transactions, then you must have a Current Account. That being said, GST is not compulsory to set up your Current Account.

Current accounts are popularly used by companies, sole proprietorships, and enterprises. If you are a business and want to carry out large financial transactions daily, then you must choose to open a current account.

Regular current accounts can be set up with almost all the commercial banks. However, with current accounts, you must make sure to maintain a high minimum balance. Also, there’s no interest levied on the deposited money. This is because the nature of current accounts is highly liquid. There is also no GST on your current bank account.

Now that we have a fair idea about what is a current account and GST, let’s see if these two have any other implications for one another.

The current account is primarily used for conducting business transactions. The GST is primarily an indirect tax applied on the consumer when they buy a commodity or avail of a service.

Hence, there is no GST applied to the Current Account.

Let’s take a look at the necessary documentation for setting up a current account and registering for GST.

Current Account:

  • PAN Card is compulsory ID proof.
  • Other identity proofs like Passport, Aadhaar Card, etc.
  • Address proofs like voter identity card, driver’s license, Aadhaar card, etc.
  • In case of a company, the registered documentation pertaining to the specific type of company is needed.

For GST:

  • PAN Card
  • Details of Jurisdiction
  • Indian mobile number
  • Email ID
  • Indian current bank account details
  • Bank details: IFSC code, address & branch name
  • Office address
  • Other required documents & information
  • At least one proprietor, partner, director, and trustee, along with their corresponding PAN
  • An authorised Indian signatory with PAN details.

Thus, the business owner does not have to pay GST on the Current Bank Account set-up or functioning.