Goods and Services Tax, also known as GST is a tax imposed on value added goods and services that are used as domestic consumption. The main aim of GST was to create single market in India by replacing multiple tax collection system. It came into force on 1st July 2017. It is the multi-stage, comprehensive and destination-based tax. The tax is levied on individuals who are involved in business sector. A “taxable person” under GST, refers to people who undertake business in India and is registered under the GST Act. An individual engaging in economic activities including trade and commerce is also considered as taxable person.
Person in “taxable person” refers to individuals, HUF, companies, industries, firms, LLP, Government bodies, Corporations, Corporates under laws of foreign country, co-operative society, local authority, NGO’s and Trusts Artificial Judicial person.
The tax is usually paid by the person on the supply of goods or services made by them. This method is called as “Forward Charge of Tax.” A “Reverse Charge of Tax” is a method where the obligation to pay the tax lies on the receiver, that is, the GST law states that the responsibility to pay tax also lies on the person receiving the supply of goods or services rather than the person who is supplying the goods or services.
An individual or person shall be liable to register under GST law based on two categories
INDIVIDUALS LIABLE TO BE REGISTERED UNDER GST
- A company or a business whose turnover exceeds Rs.20 Lakhs in a financial year is liable to be registered under GST. However, for North-eastern and hill States it is Rs.10 Lakhs.
- All the individuals who are registered under Excise, VAT, Service Tax laws are liable under GST
- A registered business has been transferred, then, the transferee shall register with effect from the date of transfer.
- An individual who drives inter-state supply of goods
- Casual Taxable People and Non-Resident Taxable Person
- E-Commerce operator or aggregator for sites like Amazon, Flipkart etc.,
- Input Service Distributor
- Agents or a supplier
- An individual in-charge of driving and delivering a supply of goods and services across State borders
- An individual or company that supplies online information and database access or retrieval services
AGGREGATE TURNOVER CRITERIA
An individual or the supplier of goods and/or services makes a taxable supply with an aggregate turnover of Rs.20 Lakhs and above in one financial year, then that person is required to obtain a GST Registration. However, for special category states – who have low infrastructure, economic backwardness and strategic locations with neighbouring countries – the threshold is set at Rs. 10 lakhs.
MANDATORY REGISTRATION CRITERIA
1. CASUAL TAXABLE PERSON UNDER GST
An individual who doesn’t have a permanent settlement for his/her business, yet occasionally supplies goods and services in a territory that is under GST is considered as a casual taxable person.
For Instance, if a person has a business in Chennai and supplies taxable consulting services in Bengaluru, albeit Bengaluru not being her business place, then she will be considered as casual taxable person in Bengaluru.
2. NON-RESIDENT TAXABLE PERSON UNDER GST
If an individual is a non-resident of India and doesn’t own a permanent business place in India, yet occasionally supplies goods/services in a territory in India that is under GST, is considered as a non-resident taxable person.
3. INPUT SERVICE DISTRIBUTOR
It means an office of an individual – who supplies goods and services – that receives tax invoices on receipt on input services, as well as issues tax invoices for distributing the credit of GST paid on the services through PAN. Hence, only credit on “input services” can be distributed and not on input or capital goods.
SPECIAL REGISTRATION FOR CASUAL AND NON-RESIDENT TAXABLE PERSON
Section 24 under the GST Act, allocates special provisions for casual taxable person and non-resident taxable person. These individuals are required to apply for registration five days prior to the commencement of business at the maximum.
Casual and Non-Resident taxable individual may obtain a temporary registration for a period 90 days and is extendable for additional 90 days. Based on the individual’s estimated tax liability, he/she can obtain registration that would require advance deposit of GST.
GST REGISTRATION – FOR VARIOUS CATEGORIES OF TAXABLE PERSON
- An individual should and must apply for registration in every State in which he/she is liable. He/She should apply within thirty days from the date where he/she become liable to registration.
- Casual and Non-resident taxable individual, as mentioned before, should apply atleast five days before their commencement of business.
- The main pre-requisite for registration is to have a PAN card, as the registration number of GST is based on PAN.
- As the registration for GST is based on State-wise, the assesse shall obtain separate registration for each State.
- The assesses also has an option of obtaining a separate registration for each “business vertical” in the same State.
COLLECTING GST
A registered taxable person under GST Act is allowed to collect GST. The taxable person should predominantly indicate the GST amount on tax invoices.
RETURNS
A normal taxpayer has to furnish three monthly returns and one annual return. However, different taxpayers have separate returns registered under the composition scheme, Input Service Distributor, a person liable to deduct or collect the tax (TDS/ TCS)
GST, a complex yet a simple and single tax will complete one year of its implementation in the month of July this year. The taxable person connotation is defined under GST law, which includes not only natural person but also judicial persons. Apart from the aforementioned individuals who are liable to GST registration, there is ambiguity and vagueness for services like blogging. The Government is yet to define the applicability of the law. However, in the inter-state transactions (the goods and services exported outside India as well as across State border), the taxes collected directly goes to the Union or the Centre. This system is called as Integrated GST or IGST. The criteria to collect taxes is set and specified in the GST Act. Agriculturists and individuals who are engaged in supply of goods or services that are not liable to tax under GST are not required to obtain GST Registration.
