GST REGISTRATION LIMIT

INTRODUCTION

GST means Goods and Services tax, GST is a destination-based tax technically paid by suppliers but it is actually borne by consumers. https://gstcouncil.gov.in/ GST Council recommended the threshold limit of GST registration limit. Without registration under the GST ACT person is not eligible to raise a tax invoice. A person is neither eligible to claim of input tax credit paid by him unless obtains a GST Number.  For registration, there are various GST Registration limit which is different for the four (4) states GST Registration limit is ₹ 10 lakhs. Different for six (6) states GST Registration limit is ₹ 20 lakhs. For other states, the GST Registration limit is ₹ 40 lakhs.[1]

GST REGISTRATION LIMIT

                                                            Image Source: Pixabay 

WHO IS LIABLE FOR GST  REGISTRATION LIMIT?

Every person is liable for registration  in a state or union territory whenever his aggregate turnover in a financial year of more than ₹ 20 lakhs

 

States Engaged in the Supply of Goods Engaged in both Supply of services and Supply of Services
1.    Tripura   2. Mizoram 3. Nagaland 4. Mizoram

 

₹ 10 lakhs ₹ 10 lakhs
1.    Pondicherry 2.  Uttarakhand 

2.    Meghalaya 4. Arunachal Pradesh 5.  Telangana 6. Sikkim

 

₹ 20 lakhs ₹ 20 lakhs
 

Other states

 

 

 

 

₹ 40 lakhs ₹ 40 lakhs

 

 

 

 

 

Sources: CGST Act,2017

 

Cases, where the GST Registration limit is irrelevant, are given below:-

  1. A person is required to take compulsory registration under GST.
  2. A person who wants to take a Voluntary Registration.
  3. A person is a supplier of the Supply of ice cream or edible oil Pan Masala

all tobacco products.[2]

 

WHO IS NOT LIABLE FOR REGISTRATION?

The following persons are not liable for the GST registration limit:

  1. Those engaged in the exclusive supply of non-taxable goods.
  2. Those engaged in the exclusive supply of goods exempt from tax.
  3. Agriculturists up to the extent of cultivation.
  4. Those engaged only in supplies on which the tax is to be paid by the recipient under reverse charge mechanism (RCM).
  5. Interstate supply of services up to ₹10 lakhs or ₹20 lakhs.
  6. Interstate supply of handicraft goods up to ₹10 lakhs or ₹20 lakhs.[3]

 

WHO SHOULD BE COMPULSORILY LIABLE FOR REGISTRATION UNDER THE GST REGISTRATION LIMIT?

The following persons should be compulsorily liable for registration under the GST registration limit:1. Persons required to take compulsory registration even without triggering the GST registration limit.

  1. Persons making inter-state taxable supplies.
  2. Casual taxable persons making taxable supplies.
  3. Persons required to pay tax under the reverse charge mechanism.
  4. Persons required to pay tax under ECO (E-commerce Operator).
  5. Non-resident taxable persons making taxable supplies under GST.
  6. Persons required to deduct tax under section 51 of the GST Act, whether or not separately registered.
  7. Persons making taxable supplies of goods or services or both on behalf of another taxable person as an agent.
  8. Input Service Distributors.
  9. Every person supplying Online Information Database Access and Retrieval (OIDAR) services from a place outside India to a person in India, other than a registered person
  10. Any other person notified by Central Government.[4]

 

What is a GST number and how is it defined? with example

A GST number, also known as a Goods and Services Tax Identification Number, is a unique identification number assigned to businesses registered under the Goods and Services Tax (GST) system[5].

Let’s take the example of India to illustrate how a GST number is defined. In India, a GST number is known as the Goods and Services Tax Identification Number (GSTIN). It is a 15-digit alphanumeric code that follows a specific format. Here’s how the GSTIN is structured:

  1. State Code: The first two digits represent the state code where the business is registered. Each state in India is assigned a unique two-digit code.
  2. PAN (Permanent Account Number): The next ten characters are the PAN of the business or taxpayer registered under GST.
  3. Entity Code: The thirteenth character indicates the type of entity, such as individual (I), company (C), partnership firm (P), Hindu Undivided Family (H), and so on.
  4. Serial Number: The last two digits serve as a unique serial number for the GSTIN.

For example, let’s consider a hypothetical business in India with the following GSTIN: 07ABCDE1234I1Z9.

Illustration of  GSTIN with the example:

– State Code: “07” represents the state code for Delhi.

– PAN: “ABCDE1234” represents the unique PAN of the business.

– Entity Code: “I” indicates that the entity is an individual.

– Serial Number: “1Z” serves as the serial number.

The GST number or GSTIN is used for various purposes, including tax registration, filing tax returns, generating invoices, and claiming input tax credits. It helps the government track and monitor tax compliance, simplifies the taxation process, and ensures transparency in the tax system.

 

 

Conclusion

To take advantage of input tax credit and raise invoices, businesses need to register themselves even without reaching the GST registration limit. Proper registration is essential to comply with GST regulations and ensure smooth operations.

 

FAQ ON GST REGISTRATION LIMIT

Q1: What is the GST registration limit?

A1: The GST (Goods and Services Tax) registration limit refers to the threshold turnover amount, above which a business is required to register for GST.

Q2: How is the turnover calculated for GST registration?

A2: The turnover for GST registration is calculated based on the aggregate value of all taxable supplies made (including exports and inter-state supplies) and exempt supplies made by a business.

Q3: Do I need to register for GST if my turnover is below the registration limit?

A3: If your turnover falls below the GST registration limit, you are not legally required to register for GST. However, you may choose to voluntarily register for GST to avail certain benefits, such as input tax credit and to expand your business.

Q4: What happens if I don't register for GST even though my turnover exceeds the registration limit?

A4: If your turnover crosses the GST registration limit, and you fail to register for GST within the specified time, you may be liable for penalties and fines as per the GST laws. Additionally, you could face legal consequences for non-compliance.

Q5: Can I register for GST voluntarily, even if my turnover is below the registration limit?

A5: Yes, you can choose to register for GST voluntarily, even if your turnover is below the registration limit. Voluntary registration allows you to claim input tax credit on your purchases, expand your business, and participate in inter-state transactions.

[1] https://cbic-gst.gov.in/pdf/CGST-Act-Updated-30092020.pdf

[2] https://cbic-gst.gov.in/pdf/CGST-Act-Updated-30092020.pdf

[3]  https://cbic-gst.gov.in/pdf/CGST-Act-Updated-30092020.pdf

[4] https://cbic-gst.gov.in/pdf/CGST-Act-Updated-30092020.pdf

[5] https://services.gst.gov.in/services/login

 

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