If you run a business, then you may be considering opening a Current Account to bring more convenience and scale to your financial transactions. If you're wondering if you can open a Current Account without GST, then you are in the right place. It's also important to know the implications of Current Account opening without GST.
Impact of GST on Current Account opening
GST does not have any direct impact on the Current Account opening. However, there are some aspects you need to understand. Banks tend to prioritise businesses that have a GST registration as it enables them to ensure compliance with Current Account taxation requirements.
Today, businesses of various turnovers can open a Current Account to bring efficiency to their financial operations. By doing so, they can reap superior benefits such as generous overdraft facilities, and cash deposits and withdrawals of a larger ticket size.
Can we open a Current Account without GST?
Yes, you can open a Current Account without GST. You can also open a Current Account online without GST due to certain Current Account exemptions. Say you are a sole proprietor with a business turnover of less than ₹40 lakhs for goods. In this case, you need not apply for GST as your turnover is below the GST threshold. You can look at non-GST Current Account options. Here's an example.
The zero-balance Current Account for GST-exempt businesses allows a higher cash limit than the average Savings Account. Hence, this is a relevant Current Account for startups without GST. It can also work as a Current Account for individuals without GST, who may be working as consultants or freelancers, as a Current Account for sole proprietors without GST and as a Current Account for partnerships without GST.
When opening a business Current Account without GST, make sure it serves your specific transaction needs.
Alternate solutions for businesses without GST
You can continue to use your Savings Account to receive payments from your clients and make payments to your vendors. However, one challenge you may face as your business grows is that your Savings Account will have a threshold on the number of transactions, as well as the cash deposit limit.
The Reserve Bank of India guidelines mandate that the cash deposit limit in a Savings Account is ₹10 lakhs. To access a higher cash deposit limit, a Current Account for small businesses without GST is a better option as Current Account regulations allow for cash deposits of up to ₹3 crores.
Entrepreneurs and small businesses are increasingly opting for e-payment gateways and digital wallets for financial transactions, as these platforms do not necessitate GST registration. However, if you wish to apply for GST registration, you can initiate the process without much difficulty. Simply visit the GST portal, fill out the application, submit the relevant documents, provide your bank account details, and proceed with the submission.
List of documentation required to register for GST
The list of documents is as follows:
- PAN card of the owner / partners / company
- Aadhaar card of the owner / authorised signatory
- Proof of appointment of any authorised signatory
- Address proof of principal place of business
- Photographs of owners / partners / board members
- Complete bank details
- Certificate of incorporation by the Ministry of Corporate Affairs / Memorandum of Association / Articles of Association (for large businesses)
- Authorisation form
Also Read: How to choose the best current account for your needs?
Conclusion
It is important to understand the tax implications on Current Accounts. Today, a Current Account for non-GST registered businesses is a possibility for businesses with transactions below the GST threshold limit. Also, there is no Goods and Services Tax on Current Accounts. Axis Banks offers a wide range of Current Account products relevant to MSMEs, corporations, consultants, trusts, and societies. Choose the cash deposit limit and monthly average balance according to your real-time needs and gain access to overdraft facilities, superior payment options, Forex services, and more.
FAQs
Q1. Is it compulsory to add a Current Account in GST?
No, you do not need to add a Current Account on the GST registration form. But you do need to add a bank account, such as your Personal Savings Account, from where you transact.
Q2. What is the limit of business without GST?
The GST registration minimum threshold limit is determined by the type of business and its location. Businesses with a turnover of less than ₹40 lakhs for goods and ₹20 lakhs for services need not register for GST. However, in the North Eastern states the limit is ₹20 lakhs for goods and ₹10 lakhs for services.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
