Taxable Person under GST

Taxable Person under GST

A taxable person under GST is anyone who is registered under GST or required to be registered under GST. Various criteria’s like turnover, business activity or transaction have been specified in the GST Act, which details persons liable to be registered under GST. Further, any person having registration under Service Tax, VAT or Central Excise on the date of GST coming into force will automatically be considered a taxable person under GST.

GST Definition of Taxable Person

The term “person” has been defined in Section 2(73) of the GST Act as follows:

  • An Individual
  • A Hindu Undivided Family
  • A Company
  • A Partnership Firm
  • A Limited Liability Partnership
  • An Association of Persons or a Body of Individuals, whether incorporated or not, in India or outside India
  • Any Corporation Established by or under any Central, State or Provincial Act, or a Government Company
  • Any body corporate incorporated by or under the laws of a country outside India
  • A co-operative society registered under any law relating to cooperative societies
  • A local authority
  • Government
  • Society as defined under the Societies Act, 1860
  • Trusts Artificial judicial person, not falling within any of the above categories

The definition for a taxable person under GST is similar to the definition in the existing Service Tax law. Its important to note that the definition for a taxable person includes all kinds of judicial persons (artificial persons) also and not only natural persons.

Who needs GST Registration?

The criteria for persons who should be registered under GST is provided under Chapter 6 of the GST Act. As per the GST Act, the following persons should mandatorily obtain GST registration:

Aggregate Turnover Criteria

Any supplier of goods and/or services who makes a taxable supply with an aggregate turnover of over Rs.20 lakhs in a financial year should mandatorily obtain GST registration. In special category states, the aggregate turnover criteria is set at Rs.10 lakhs.

Special Category States under GST

Currently, Assam, Nagaland, Jammu & Kashmir, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Uttarakhand, Tripura, Himachal Pradesh, and Sikkim are considered special category states. The National Development Council composed of the Prime Minister, Union Ministers, Chief Ministers and members of the Planning Commission determines the list of special category states in India. Also, the decision to accorded special status to a State is based on factors like: hilly and difficult terrain; low population density and or sizeable share of tribal population; strategic location along borders with neighbouring countries; economic and infrastructure backwardness and non-viable nature of state finances.

Mandatory GST Registration Criteria

Some taxable persons who do not qualify for GST registration under the aggregate turnover criteria should mandatorily obtain GST registration if they satisfy any of the following criteria:

Persons making any inter-state taxable supply

Inter-state supply is supplying goods or services from one state to another. Hence, any taxable person who is involved in supplying goods or services to persons outside of the State should mandatorily obtain GST registration.

Casual taxable persons making taxable supply

A casual taxable person refers to a person who occasionally undertakes supply of goods and/or services and has no fixed place of business. An example of a casual taxable person would be a fireworks shops setup during Diwali festival time, selling fireworks temporarily.

Persons required to pay tax under reverse charge

Under GST, for most goods and/or services, the liability for payment of tax rests with the supplier. However, in some cases, the liability to pay tax (GST) would rest with the recipient of the goods or services, instead of the supplier. Such transactions are called reverse charge. Hence, any person (recipient of goods or service) required to pay tax under reverse charge must mandatorily obtain GST registration.

Non-resident taxable persons making taxable supply

A non-resident taxable person refers to any person who occasionally supplies goods or services to recipients in India with no fixed place of business or residence in India. All non-resident taxable persons engaged in the supply of goods and services should mandatorily obtain GST registration, irrespective of aggregate turnover criteria.

Persons Required to deduct tax under GST

According to Section 51 of the GST Act, the Government may mandate a department or establishment of the Central Government or State Government or local authority or Governmental agencies or a category of persons to deduct tax at the rate of 1% from the payment made or credited to the supplier, where the total value under a contract, exceeds Rs.2.5 lakhs. Such persons should mandatorily obtain GST registration and thus referred to as “deductor”.

Persons who make taxable supply of goods or services on behalf of other persons

Any person who makes a taxable supply of goods or services on behalf of other persons would include agents, brokers, dealers, etc., Such persons should mandatorily obtain GST registration.

Input Service Distributor

Input Service Distributor means a supplier of goods or services which receives tax invoices for the receipt of input services and issues a prescribed document for the purposes of distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the said services to a supplier of taxable goods or services.

Electronic Commerce Operator

Electronic commerce refers to the supply of goods or service, including digital products over a digital or electronic network. An electronic commerce operator refers to any person who owns, operates or manages digital or electronic facility or platform for electronic commerce. All electronic commerce operators should mandatorily obtain GST registration, irrespective of turnover.

Persons supplying online information and database access or retrieval services (OIDAR)

Any person supplying online information and database access or retrieval services from a place outside India to a person in India should mandatorily obtain GST registration. Online information and database access or retrieval refer to providing data, information, retrievable or otherwise, to any person, in electric form through a computer network.

Persons who supply goods or services through electronic commerce operators

Persons who supply goods or services through electronic commerce operators may require to collect tax for acting on behalf of the supplier for providing supplies. During these circumstances, the concerned person acting on behalf should mandatorily obtain GST registration.

Under GST, the Government can specify liable categories for taxation. If any services provided by the electronic commerce operator falls under the categories, the operator shall pay the amount as mentioned by the government.

Persons Having Service Tax or VAT or Central Excise Registration

All person who, on the day immediately preceding the appointed day having a service tax or VAT or central excise license under the existing law shall register under GST. Hence, migration to GST applies for all taxable persons having an existing registration.

Transferee or Successor of a Business

Any person represents as a transferee or a successor of a business, carried on by a person registered under GST shall register under GST with effect from the date of such transfer or succession.

Eligibility to Obtain GST Registration

Any person engaged exclusively in the business of supplying goods or services that are not liable to tax under GST or wholly exempt from tax under GST is exempt from obtaining GST registration.

Also, an agriculturist, to the extent of supply of produce out of cultivation of land is exempt from obtaining GST registration. Under GST, agriculturist means an individual or a Hindu Undivided Family (HUF) who undertakes cultivation of land:

  • Involved in own labour,
  • Established the labour of family, or
  • By servants on wages payable in cash or kind or by hired labour under personal supervision or the personal supervision of any member of the family;

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