1. The journey of GST commenced from 1st July 2017, and lot many changes have taken place since then. Due to a large number of amendments in the Act, there is a confusion as regards to threshold limit for registration under the Act. In this article, an attempt has been made to explain the requirement for registration under GST.
2. A taxable person is required to take registration under GST in the following cases :-
(a) Crossing of Threshold limit of aggregate turnover
(b) Compulsory Registration
(c ) Voluntary Registration
3. The article covers provisions related to point (a) above ie crossing of threshold limit of aggregate turnover. Point (b) & (c) that is Compulsory Registration & Voluntary Registration will be covered in the next article
4. As per section 22(1) of CGST Act, every supplier shall be liable to be registered in the State or Union Territory (other than special category states) from where he makes supply of goods or services or both, if his aggregate turnover in a financial year exceeds Rs. 20 lakhs.
In case of ‘special category states’, registration is required if his aggregate turnover in a financial year exceeds Rs. 10 lakhs – first proviso to section 22(1) of CGST Act [renumbered vide CGST (Amendment) Act, 2018, w.e.f. 1-2-2019]
However, CGST (Amendment) Act, 2018 second proviso to section 22(1) has been inserted to provide that The Government may, at the request of a special category State and on the recommendations of the Council, enhance the aggregate turnover referred to in the first proviso from ten lakh rupees to such amount, not exceeding twenty lakh rupees and subject to such conditions and limitations, as may be notified.
Accordingly, threshold limit remains rupees twenty lakhs for the States of Jammu and Kashmir, Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand w.e.f. 1-Feb- 2019 and rupees ten lakhs for the States of Manipur, Mizoram, Nagaland and Tripura.
The expression “aggregate turnover” has been defined under section 2(6) of the CGST Act. Aggregate Turnover is PAN based and not State/ Union Territory based
In the table below , Calculation of aggregate turnover and requirement of registration has been illustrated with the help of examples :-
|State||Turnover in Rupees
|Maharashtra||15,00,000||Since the turnover of the entire entity exceeds ` 20,00,000, (15,00,000+7,00,000) registration will be required in both the States.|
|Maharashtra||9,00,000||Since the entity has presence in special category State, the threshold limit is only Rs.10,00,000. Since the entity crosses such limit, registration will be required in both the States*|
* Please note that the proviso to section 22(1) appearing in CGST Act also appears in SGST Act(s). As a result, for a taxable person in a non-Special Category State, who has a branch in Special Category State, the threshold becomes Rs. 10 lacs and not Rs. 20 lacs.
5. For calculating the threshold limit, the turnover shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals. Explanation (i) to section 22 of CGST Act
As per sec 2(88) of CGST Act , the term ‘principal’ applies to clearances made by C&F Agent on behalf of Principal. It does not apply to clearances made by job worker.
Further, the supply of goods by a registered job worker, after completion of job work, shall be treated as the supply of goods by the “principal” referred to in section 143 (i.e. Job work procedure) of this Act. The value of such goods shall not be included in the aggregate turnover of the registered job worker. Thus , in case of job work, value of material will be included in aggregate turnover of principal and not of job worker
6. The Government , on recommendation of GST Council can grant exemption to specific category of person by issuing notification .Following category of person are not required to take registration :-
(a) Persons engaged in rendering taxable services where GST is payable under reverse charges by the recipient , are not required to take registration – (Notification No. 5/2017–Central Tax, dated 19.06.2017).
(b) A Job-worker with turnover less than 20/10 Lakhs is exempt from registration , even if he engaged in making inter-State supply of goods. This exemption is not available to jewellery, goldsmiths’ and silversmiths’ wares and other articles manufactured on job work basis – Notification No. 7/2017– Integrated Tax, dated 14.09.2017 as amended vide Notification No. 2/2019-Integrated Tax, dated 29-Jan-2019, w.e.f. 1-Feb-2019.
(c ) Persons effecting inter-State supplies of taxable services – where the aggregate value of supplies on PAN-India basis does not exceed Rs. 20 Lakhs in a year (Rs. 10 Lakhs for special category States- Manipur, Mizoram, Nagaland and Tripura) (w.e.f. 13.10.2017) – Notification No. 10/2017– Integrated Tax, dated 13.10.2017 as amended vide Notification No. 3/2019-Integrated Tax, dated 29-Jan- 2019, w.e.f. 1-Feb-2019.
(d) Categories of persons effecting inter-State taxable supplies of handicraft goods – where the aggregate value of supplies on PAN-India basis does not exceed Rs. 20 Lakhs in a year (Rs. 10 Lakhs for special category States- Manipur, Mizoram, Nagaland and Tripura) – (w.e.f. 22.10.2018) – Notification No. 3/2018–Integrated Tax dated 22.10.2018. This notification has superseded Notification No. 8/ 2017-Integrated Tax, dated 14.09.2017.
(e) Categories of casual taxable persons making taxable supplies of handicraft goods- where the aggregate value of supplies on PAN-India basis does not exceed Rs. 20 Lakhs in a year (Rs. 10 Lakhs for special category States-Manipur, Mizoram, Nagaland and Tripura) – (w.e.f. 23.10.2018) – Notification No. 56/2018-Central Tax, dated 23.10.2018. This notification has superseded Notification No. 32/ 2017-Central Tax, dated 15.09.2017.
(f) Persons providing services through an e-commerce who is required to collect tax at source, provided their aggregate turnover does not exceed Rs. 20 lakh (Rs. 10 lakh in special category States- Manipur, Mizoram, Nagaland and Tripura) (w.e.f. 15.11.2017). – Notification No. 65/2017–Central Tax, dated 15.11.2017 as amended vide Notification No. 6/2019-Central Tax, dated 29-Jan- 2019, w.e.f. 1-Feb-2019. The relaxation is not applicable to supplier of goods.
7. Note: W.e.f. 01.04.2019 – the basic limit beyond which obtaining registration becomes mandatory is increased from Rs. 20 lakhs to Rs. 40 lakhs for certain categories of persons vide notification No. 10/2019-Central Tax, dated 07.03.2019
As per the said notification, any person, who is engaged in exclusive supply of goods and whose aggregate turnover in the financial year does not exceed forty lakh rupees, except, –
a. persons required to take compulsory registration under section 24 of the said Act;
b. persons engaged in making supplies of the following goods,
|S. No.||Tariff item, sub heading, heading or chapter||Description|
|1.||2105 00 000||Ice Cream and other edible ice, whether or not containing cocoa|
|2.||2106 90 20||Pan Masala|
|3.||24||All goods i.e. Tobacoo and manufactured tobacoo substitutes|
c. persons engaged in making intra-State supplies in the States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand; and
d. persons exercising option under the provisions of sub-section (3) of section 25 [voluntary registration], or such registered persons who intend to continue with their registration under the said Act.
Calculation of exemption of Rs. 40 lakhs will be excluding interest on deposits, loans and advances –.– explanation to section 22(1) of CGST Act.However, this exclusion is not available while calculating exemption limit of Rs 10/20 lakhs
Note: The new exemption from registration (w.e.f. 01.04.2019) up till ₹ 40 lakhs is applicable only for those taxable persons, who are engaged in exclusive supply of goods. Therefore, in case a person in supplying goods but also earns a nominal amount of service income (whether taxable or not) such as commission income, or interest income say from bank (which is exempt), then he shall be liable to take registration above ₹ 20 lakhs and not ₹ 40 lakhs.
In the nutshell we can conclude that
(Republished with Amendments. Amendments been made by CA Anita Bhadra)