How to Open a Current Account without GST in India

A current account is essential for businesses to facilitate quick and smooth transactions. It allows business owners to handle payments, manage day-to-day operations, and maintain financial records. However, one common question among small entrepreneurs is whether they can open a current account without GST. This article will explore the importance of GST, its impact on opening a current account, and how to open a CA without GST.

What is GST?

GST is the Goods and Services Tax, a single indirect tax aimed at implementing a unified tax system in India. It applies to the sale of all the products and services in the country. It subsumes multiple indirect taxes imposed on consumers and suppliers by the State and Central Government. Some benefits of GST implementation include the following:

• Eliminates the cascading effect of taxation on the sale of products and services

• Organises regulation of unorganised business sectors

• Reduces the compliance requirements

• Extends the registration threshold

• Treats e-commerce businesses accurately and precisely

• Integrates the process of registration, ITR filing, and refund applications online

• Provides a composition program for SMEs

Why Does a Business Need a Current Account?

Opening a current account enables a business to manage its finances properly, determining the company's profitability or loss. Businesses can organise payrolls, avoid overspending, and efficiently file taxes with separate reports. A business's credit establishment begins with opening a current account. Moreover, it helps a company improve its creditworthiness through valid evidence. Here is how a current account helps a business entity:

No limit on the number of transactions

No restrictions on fund transfers and deposits from the home branch

Numerous additional services, including demand drafts, cheques, net banking, mobile banking, etc.

Overdraft facility for extra financial support

Extravagant features like free pay orders, demand drafts, multi-location fund transfers, inward remittancess, etc.

Dedicated customisation options and customer care for current account holders

Is It Possible to Open a Current Account Without GST?

While most financial institutions prefer GST registration for opening current accounts, some may consider exemptions based on the nature of the business and other criteria. For instance, some banks allow companies with a lower GST threshold turnover to open current accounts and manage operations without GST registration.

New businesses and startups yet to reach the GST turnover limit can also open current accounts without GST. However, since the rules and requirements may vary between finance companies, checking individual banks' policies regarding current account openings for businesses without GST is crucial.

How to Open a Current Account without GST?

Opening a current account without GST with leading financial institutions is simple and quick. However, do enquire about the fees and charges before opening. Here is the stepwise procedure to follow:

• Choose a Financial Institution: The first step is choosing a reliable financial institution like Kotak Bank and its fees and charges of current account. It is crucial to choose a bank with efficient transactional features and superior customer support. Moreover, the bank must provide necessary functionalities like loans, overdrafts, chequebooks, net banking, mobile banking, etc.

• Choose the Right Current Account Type: Banks offer various types of current accounts tailored to a business's specific requirements. Here, Kotak offers different types of current accounts, including Astra 15, Astra 05, ActivMoney, Startup Premium, Ace, and Elite. One must choose an account type most appropriate for their firm.

• Visit the Bank's Website: After determining the bank and the type of current account to open, visit the bank's website and fill out an online account opening form. Depending upon the entity type, the service provider may ask for various basic documents, including proof of business or activity, identity proof, address proof, self-declaration in a prescribed format, etc.

• The Final Steps: Once the application and documentation process is complete, the bank will verify the details, activate the current account, and send the account number and other information along with an account opening kit.

Alternatives to Current Accounts for Businesses without GST

If a business does not have GST registration, here are a few alternatives to current accounts for them:

• Savings Account: Unregistered businesses with limited transaction requirements may use their savings account. However, mixing business and personal transactions leads to accounting difficulties and complexities in maintaining records.

• Payment Gateways: Online wallets and payment gateways are great options for businesses without GST registration. They can use these platforms to receive customers' payments or pay vendors. They provide streamlined financial transactions without requiring GST registration.

While financial institutions often prefer registered businesses to open current accounts, certain alternatives and exemptions exist. Leading banks offer current account services to small businesses with turnovers lower than the GST threshold. Companies dealing in exempted products or services may also open current accounts without GST. Nevertheless, one must understand the bank's specific policies and explore alternative solutions to ensure compliance with tax regulations.

# This is a guest article authored by Kotak Mahindra Bank. For any enquiries or details, you can visit the author's website.