GST has transformed the way taxation is performed in India, as it has formed a harmonious tax system across India among businesses.
Most goods and services attract GST, whereas there are a variety of categories that are not subject to the taxes at the moment, such as petrol and other petroleum products. It is this exclusion which has given rise to a general misunderstanding that GST is not at all payable even in the case of petrol.
Nevertheless, the GST payable on the different types of services and goods used in using petrol can be claimed as Input Tax Credit (ITC) by the businesses that come under the GST regime. In order to do that, some GST registration documents are necessary to receive such claims.
Want to know whether you are eligible or not and about the specifics regarding GST on petrol, then this article will clear the air as it brings up the topic in detail.
Understanding GST on Petrol in India
It is good to understand why petrol is not subjected to GST before getting into the various GST registration documents that one needs to claim GST with regard to petrol involvements.
The GST does not apply to petrol and other petroleum products, including diesel and Aviation turbine fuel, which were earlier chargeable to state and central excise duties. Although this subject has been discussed by the GST Council many times to bring petrol under the umbrella of GST, the political and economic nature has ensured that taxes called excise duties are not wiped out of these products.
Although petrol is not subjected to GST directly, when businesses use petrol in running business activities like logistics, transport, or even manufacturing, they may still have some form of expenses on GS expenses.
To illustrate, when buying different goods and services like maintenance of motor vehicles, procurement of spare parts or using transportation services that come with the consumption of petrol, GST is charged. Companies can claim Input Tax Credit (ITC) on these GST charges, provided they follow the rules and submit accurate GST registration documents.
Can You Claim GST Directly on Petrol?
Ab initio, the answer is no- you cannot claim GST on petrol because, as of now, petrol is not covered under GST. Nevertheless, other services and supplies which attract GST may assist the business to claim ITC to recover the taxes.
An example is where a firm transports its products by petrol in the logistics department, then it may buy vehicle insurance, spare parts or fuel vouchers, which are liable to GST. Such expenditures can be deducted as ITC provided that there is a good documentation record.
To receive GST benefits associated with petrol-related expenses, it is necessary to receive GST registration. A business without sufficient GST registration documents will not be in a position to claim on any service or product, which includes all the indirectly occurring services or products related to petrol consumption.
Essential GST Registration Documents
Whether you are a sole proprietor, a partnership firm, or a private limited company, acquiring GST registration is the first step toward claiming ITC. Below are the key GST registration documents required for different business entities:
1. Documents for Sole Proprietorship
- PAN Card of Proprietor: A valid Permanent Account Number is essential for GST registration.
- Aadhaar Card of Proprietor: Aadhaar details are often used for identity verification.
- Proof of Address: Address proof of business premises, which can be rental agreements, electric bills, or property ownership documents.
- Bank Account Statement or Cancelled Cheque: This serves as financial documentation.
- Photograph of Proprietor: A passport-sized photograph is required.
- Business Name and Details: Provide all the necessary business details, including name and nature of operations.
- Email ID and Mobile Number: Active contact information is essential for registration.
2. Documents for Partnership Firms
- PAN Card of Firm and Partners: Collective PANs of all partners must be provided.
- Aadhaar Card of Partners: Proof of identity for all partners.
- Proof of Business Address: Same as proprietorship—a rental agreement, utility bill, or ownership proof.
- Bank Account Details: Bank statements or cancelled cheques reflecting the firm’s account.
- Partnership Deed: Proof of partnership and agreement terms.
- Photographs of Partners: Passport-sized photographs of all partners.
- Authorisation on Letter: This permits specific partners to sign registration-related documents.
3. Documents for Private Limited Companies
- PAN of the Company: Central identification of a registered company.
- PAN and Aadhaar of Directors: Proof of identification for company directors.
- Proof of Business Address: Rental agreements, utility bills, or business property documents.
- Certificate of Incorporation: Issued by the Ministry of Corporate Affairs (MCA).
- Bank Account Details: Statements or cancelled cheques tied to the company’s official account.
- Digital Signature Certificate (DSC): Used for verification purposes during registration.
- Board Resolution Letter: This authorises directors to manage GST processes on behalf of the company.
- Photographs of Directors: Passport-sized images are required.
- Nature of Business: Specify the type and scope of operations.
GST Registration Process
Once you’ve gathered the necessary GST registration documents, the registration process is straightforward:
- Log in to the GST Portal: Access the GST portal (www.gst.gov.in) and click on “Registration.”
- Fill in Basic Details: Provide your PAN, mobile number, and email ID for verification.
- Submit Supporting Documents: Upload the required GST registration documents based on your business type.
- Verification: The GST system verifies submitted documents and details.
- Receive GSTIN: After approval, you’ll receive your unique GST Identification Number (GSTIN).
How to Claim GST on Petrol-Related Expenses
While GST on petrol does not directly apply to the fuel itself, businesses can claim Input Tax Credit (ITC) for expenses related to petrol’s utilisation. Below are key points to remember:
- Maintain Proper Records: All GST registration documents and invoices related to expenses need proper filing.
- File GST Returns: Businesses must file GST returns regularly to ensure eligibility and transparency while claiming ITC.
- Use Tax-Compliant Vendors: Ensure all purchases and services are from GST-compliant suppliers who provide GST invoices.
- Understand Claim Limits: Only GST paid on goods and services directly linked to business operations is claimable.
Documents Needed to Claim GST on Petrol-Related Transactions
To successfully claim GST-related benefits for petrol expenses, the following documentation is crucial:
- GST Invoice: The foundational document for every claim. Ensure all expenses include a proper GST invoice from vendors.
- Proof of GST Payment: Records of payments made under GST, whether for vehicle maintenance, transportation services, or spare parts, are essential.
- Input Tax Credit Ledger: Businesses must maintain an ITC ledger showcasing all credits claimed under GST.
- Proof of Business Usage: Establish that petrol-related expenses are directly linked to business operations. For example, logbooks for company vehicles are useful.
- GST Registration Certificate: Proof that your company is registered under GST.
- Bank Statements: These can provide financial evidence of related purchases.
- Tax Return Filings: Consistently filing GST returns ensures eligibility for ITC claims.
Conclusion
Although Petrol remains outside the concept of GST, one can enjoy Input Tax Credit on GST on services and products, which involves petrol consumption. Nevertheless, to be in a position to make such claims, it is necessary that companies have relevant GST registration documents and must adhere to the stipulated procedure. Businesses can also get the best of their tax benefits by adhering to the terms and conditions, as well as keeping clean records.
The question which now remains to be seen is whether the government is going to make petrol fall under GST in future or not. Provided that petrol is put under GST, the ITC claims-related petrol-associated costs will be very minimal. Businesses should, until then, follow the existing regulations, keep relevant records, and worry about compliance so that they may enjoy tax advantages well.
