Yes, you can open a current account without GST registration in India, as it is not mandatory for all businesses, particularly for those with low turnover or operating in exempt sectors. Banks typically require alternative proof of business existence, such as PAN cards, Udyam registration, or shop establishment licenses.
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.
While it is not a necessity for opening a current bank account, having a GST registration can benefit business operations. It simplifies the tax structure, lowers business expenditures, ensures compliance, and contributes to the growth of the economy.
Bank/s, that have not provided CC/OD facility/ies to customer requesting for current account, cannot open current account of that customer or collection account. However, Non Lending Bank/s may open Collection Account of the customer if the customer has availed other credit facilities but not CC/OD.
1. Is it mandatory to add a bank account? No, it is not mandatory to add a bank account. Details to be entered in Bank Accounts tab has been made optional and non-mandatory w.e.f. 27th Dec 2018.
Your GST registration may be suspended if you don't submit your bank account details on time. Make sure to provide this crucial information within 30 days of registration, or before filing outbound supplies. Neglecting this requirement could lead to serious disruptions in your operations.
Required documents include proof of identity, address, business existence, and business address. NRIs need to provide a declaration on the source of funds and confirm business activities. Limited Liability Partnerships and companies need additional documents like incorporation certificates and resolutions.
Entities engaged in business activity such as Individuals (business purpose), Sole Proprietorship Firms, HUF, Partnership Firms, Private/Public Limited Companies, Trusts, Associations, Societies & Clubs (TASC) Limited and Limited Liability Partnerships (LLP) are eligible for opening a Current Account.
Funds in such accounts must be transferred within two working days, and facilities such as withdrawal, cheques and cards will not be allowed. Banks must review accounts every six months, flag them in core systems and take action within defined timelines if rules are breached.
There is no income tax on Current Accounts. However, under Section 194N of the Income Tax Act, banks are required to deduct tax at source when the aggregate sum of cash withdrawals exceeds a certain limit.
Registration under GST is a legal requirement for businesses. The CGST Act 2017 specifies minimum turnover criteria for registration (Rs 40 lakhs for goods and Rs 20 lakhs for services). Still, certain specific businesses are required to register under the GST, irrespective of their annual turnover.
Businesses with annual sales of Rs. 40 lakhs or more for goods, and Rs. 20 lakhs or more for services, must register for GST. If the turnover exceeds the allowed threshold, there is a penalty for failing to register under GST.
When to register for GST. If you've started a new business, you should register if you expect your GST turnover to reach $75,000 in the first year. You have to register for GST within 21 days of becoming aware that your GST turnover will go over the threshold.
To register a proprietorship firm without GST in India, you need to follow these steps:
Apart from the Udyam Registration Certificate (URC), the three mandatory documents to open a current account include: PAN card. GST registration (active for more than 3 months) Aadhaar linked with your mobile number (for OTP verification)
It also clarifies that while GST affects goods and services transactions, it does not apply to the operation of a Current Account, which is essential for business transactions.
If you deposit more than ₹10 lakh in a financial year, the income tax department will receive a report from your bank regarding these transactions. ₹50 Lakh Limit for Current Accounts: The mechanism for current accounts is similar. The only exception is the threshold is much higher at ₹50 lakh.
Types of current account
To open a Current Account, all you need to do is:
Normally, the current account is calculated by adding up the 4 components of current account: goods, services, income and current transfers. Being movable and physical in nature, goods are often traded by countries all over the world.
What ID and address documents can we accept?
i. No bank shall open current accounts for customers who have availed credit facilities in the form of cash credit (CC)/ overdraft (OD) from the banking system and all transactions shall be routed through the CC/OD account.
Account specific requirements