If a registered dealer or a service provider gets supply or service from an unregistered dealer or service provider taxable goods or services and the value of supply is more than Rs. 5,000/- in a day, the service receiver has to pay GST at the rates applicable for the goods or services received and he can claim credit by deducting the same in the GST payable by him.
Instead of getting supply or service from an unregistered supplier, which results in payment of applicable GST on the services or goods received, most of the Service Receivers insist the supplier to get them registered though they are not obliged to register due to the reason that their gross turnover is going to be less than Rs. 20 Lakhs per year. Compelling the small business operators to register will be great hardship to them.Online GST Certification Course by TaxGuru & MSME- Click here to Join
Now another blow is that some of service receivers especially big corporates who pay commercial rent compel the land lords to register under GST and they have gone to the extent of sending notices to the effect that GST @ 18% would be deducted from rent payable from 01.07.2017 if the landlords fail to get them registered. Though they can claim deduction of GST paid on such services and which would not in any financial loss to them, why they resort to such drastic method is not known.
Since deduction of GST is violation of law suitable clarification or public notice may be issued to save the poor land lords from the Big Corporates to make it clear that deduction would attract severe action from the law enforcing authority.