Who all are liable to pay GST in India? Or who all are liable to be registered under GST in India?

1.0 Introduction

The concept of taxable person is the area of vital importance. This concept has a direct impact on taxability under the GST law. The charging section itself states that the tax will only be paid by the taxable person, hence, if any person is not covered under this section, then he shall not be liable to pay tax. Therefore, it is very imperative to understand and apply this concept in the real world.

2.0 Taxable Person

1. Taxable Person means a person who is registered or liable to be registered under Schedule V of this Act.

Important Points

• The above definition is exclusive and not inclusive and hence whatever is been enumerated in the definition will only decide the taxable person criteria.
• The definition is linked with the chapter of registration and should be read in consonance. However, we shall reproduce the chapter herewith and important points herewith.
• We shall discuss the schedule V of this act in point 3.0 below.

3.0 Schedule V of this Act

We shall discuss the schedule V here in order to decode the meaning of persons liable to be registered.

1. Every supplier shall be liable to be registered under this Act in the State from where he makes a taxable supply of goods and/or services if his aggregate turnover in a financial year exceeds twenty lakh rupees:

However, in the case where such person makes taxable supplies of goods and/or services from any of the States specified in sub-clause (g) of clause (4) of Article 279A of the Constitution, he shall be liable to be registered if his aggregate turnover in a financial year exceeds ten lakh rupees.

Example on proviso:
The objective of this proviso maybe for the following case. Suppose Mr. A is a supplier from Delhi with a total supply of 14 Lakh. He wants to expand his business so he decided to open a branch in Assam (North east state). So the question is which basic limit does it apply to the Mr. A, 20 Lakh or 10 Lakh?

The answer -  is Rs.10 lakh as per the proviso above.

2. Every supplier shall be liable to be registered under this Act in the State from where he makes a taxable supply of goods and/or services if his aggregate turnover in a financial year exceeds ten lakh rupees. (This clause shall be added only in special category states).

Important Points

(a) The important point to note here is the definition of aggregate turnover. As per GST model law, aggregate turnover means the aggregate value of all taxable supplies, exempt supplies, exports of goods and/or services and inter-State supplies of a person having the same PAN, to be computed on all India basis and excludes taxes, if any, charged under the CGST Act, SGST Act and the IGST Act, as the case may be;

Explanation- Aggregate turnover does not include the value of inward supplies on which tax is payable by a person on reverse charge basis under sub-section (3) of Section 8 and the value of inward supplies.

Hence, for the purpose of registration, the turnover shall be computed on all Indian basis and not just state wise.

(b) The aggregate turnover shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals.

(c) The supply of goods, after completion of job-work, by a registered job worker shall be treated as the supply of goods by the “principal” referred to in section 55, and the value of such goods shall not be included in the aggregate turnover of the registered job worker.

4.0 Persons not liable for GST registration in India [Clause 2 of schedule V]

There are only two categories of person which are not liable for registration which are as follows;

• Any person engaged exclusively in the business of supplying goods and/or services that are not liable to tax or are wholly exempt from tax.
• An agriculturist, for the purpose of agriculture.

5.0 Persons are mandatory to be registered under GST in India

6.0 Persons shall be treated as taxable person

Any person falling in the following categories shall be required to be registered irrespective of the turnover mentioned above. In another word, even a single transaction conducted by the following categories of a person shall make them liable for registration.

• Persons making any inter-State taxable supply
• Casual taxable persons (Defined ahead)
• Persons who are required to pay tax under reverse charge
• A person who are required to pay tax under sub-section (4) of section 8 (E-commerce).
• Non-resident taxable persons (Explained ahead)
• Persons who are required to deduct tax under section 46, whether or not separately registered under this Act
• Persons who are required to collect tax under 56, whether or not separately registered under the Act
• Persons who supply goods and/or services on behalf of other taxable persons whether as an agent or otherwise.
• Input service distributor
• Persons who supply goods and/or services, other than supplies specified under sub-section (4) of section 8, through such electronic commerce operator who is required to collect tax at source under section 56.
• Every electronic commerce operator.
• Every person supplying digital services from a place outside India to a person in India, other than a registered taxable person
• Such other person or class of persons as may be notified by the Central Government or a State Government on the recommendations of the Council

Conclusion

GST meaning has been explained in the above article. However, you maybe looking for something else and you might not get the answer. In that case, you can ask us any time through below mentioned query form.

Know more about the GST Registration in India.