Section 2 of CGST Act defines Taxable person as under:
(107) “taxable person” means a person who is registered or liable to be registered under section 22 or section 24;
Thus, taxable person shall be a person who has either obtained registration or is liable to take registration under Section 22 and 24 of the CGST Act. Section 22 provides for liability to get registered when a person exceeds a prescribed limit of turnover or in certain cases, while Section 24 provides certain catergories of persons who are required to get themselves registered without any limit. Summary of such provisions is as under:
|Persons Specified||Criterion for obtaining registration|
|All persons||Person exceeding Specified Turnover|
|Suppliers conducting business in Special Category States|
|Suppliers holding license under earlier laws|
|Buyer of Business|
|In case of Amalgamation/De-merger|
|Inter-state Taxable Supplier|
|Persons required to make payment under Reverse Charge|
|Persons required to deduct tax|
|Agents of taxable Persons|
|Input Service Distributor (ISD)|
|Persons supplying goods through Electronic Commerce Operator|
|Electronic Commerce Operator|
|Online data base access & Retrieval service operator|
|Casual and Non-resident Supplier|
|Other notified persons|
No new Registration Application required if the person is already registered under an earlier law
The proviso to section 22(1) provides that if the person, is registered under an earlier law, it shall not be necessary for him to apply for fresh registration under this section and he shall follow the procedure as may be prescribed in the rules which are yet to be notified. All existing registered persons, whether with the Centre or State under any of the tax statues being subsumed in GST, would be allotted a GST registration number called Goods and Services Tax Identification Number (GSTIN) on voluntary basis.
No Turnover limit under specified categories
Any person who is required to obtain registration under any categories specified below other than in Para 3.2.1. or 3.2.2., then such person shall be a taxable person and would be required to obtain registration even if his turnover is nil.
We shall discus each of the notified categories in detail hereunder.
Specified categories of Taxable Persons
- Supplier exceeding specified threshold of supply of taxable goods or services Every supplier shall be liable to be registered under CGST/SGST 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 Rs twenty lakh. The supplier shall not be liable to registration if his aggregate turnover consists of only goods and/or services which are not liable to tax under CGST/SGST Act.It is pertinent to note that aggregate turnover is defined in section 2 of the CGST/SGST Act as:
“(6) aggregate turnover means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess;
Explanation – Aggregate turnover does not include the value of supplies on which tax is levied on reverse charge basis and the value of inward supplies.”
Thus, the total turnover of entire taxable territory shall be taken into consideration for examining the threshold limit. Aggregate turnover shall be sum of following turnovers of goods and / or services made by a person:
- all taxable supplies
- exempt supplies
Section 2(47) defines exempt supply as under:
(47) “exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply
Inclusion and Exclusion in Aggregate turnover
It is further clarified that the expression “aggregate turnover” shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals. However, 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 143, and the value of such goods shall not be included in the aggregate turnover of the registered job worker.
Aggregate turnover is total of all states
It is also important to note that sum of turnover of all states shall be considered and thus, a person might have a turnover less than 20 lakhs in one state, he will still be liable to apply for registration. For eg. Mr A has taxable supply of goods of Rs 15 Lakhs in Delhi and Rs 3 Lakhs in Haryana and Rs 4 Lakhs in Punjab, his aggregate turnover shall be Rs 22 Lakhs and thus, he shall be required to obtain registration in the states of Delhi, Haryana and Punjab.
It may however, be noted that in case a person is making only non taxable or exempt or export supplies from one state, he may not obtain registration in such state. It is only when he makes taxable supplies, he need to take registration.
It has been further clarified that the taxable threshold shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals. Also, 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, and the value of such goods shall not be included in the aggregate turnover of the registered job worker.
- Aggregate turnover for certain specific states
Every supplier conducting his business in any of the North Eastern States including Sikkim shall be liable to be registered under CGST/SGST 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 Rs. Ten lakh. Such states include Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Jammu & Kashmir, Himachal Pradesh, and Uttarakhand.
- Supplier already registered under earlier laws
Every person who, on the day immediately preceding the appointed day, is registered or holds a license under an earlier law, shall be liable to be registered under CGST/SGST Act with effect from the appointed day. Here, existing law as defined under section 2 and sub section 48 of CGST Act, 2017 means:
“any law, notification, order, rule or regulation relating to levy and collection of duty or tax on goods or services or both passed or made before the commencement of this Act by Parliament or any Authority or person having the power to make such law, notification, order, rule or regulation”
It will cover all laws, it includes :
- Finance Act, 1994
- Central Excise Act, 1944
- Customs Act, 1962
- Central Sales Tax, 1956
- Value Added Tax
- Entertainment Tax
- Entry Tax
- Luxury Tax
- Buyer of Business
Where a business carried on by a taxable person registered under CGST/SGST Act is transferred, whether on account of succession or otherwise, to another person as a going concern, the transferee, or the successor, as the case may be, shall be liable to be registered with effect from the date of such transfer or succession. It is pertinent to mention that since GSTIN is a PAN based number, any new person having a different PAN wouldn’t be able to continue the earlier GSTIN. Also, if the buyer already has GSTIN in the state, then he may not be required to obtain a new registration and can get his premises added in the earlier GSTIN.
- In case of Amalgamation/De-merger
In a case of transfer pursuant to sanction of a scheme or an arrangement for amalgamation or, as the case may be, de-merger of two or more companies by an order of a High Court, the transferee shall be liable to be registered, where required, with effect from the date on which the Registrar of Companies issues a certificate of incorporation giving effect to such order of the High Court. It is pertinent to mention that since GSTIN is a PAN based number, any new person having a different PAN wouldn’t be able to continue the earlier GSTIN. Also, if the buyer already has GSTIN in the state, then he may not be required to obtain a new registration and can get his premises added in the earlier GSTIN.
- Person making inter state Supply
Inter-state supply means supply which occasions the movement of goods/services from one state to another. Persons making any inter-State taxable supply are required to take registration under Central Good and Service Tax Bill, 2017. Irrespective of turnover, if a taxable person carries out any inter-state supply, he will be compulsorily required to take registration.
- Person required to obtain registration under Reverse charge
Persons who are required to pay tax under reverse charge are required to take registration under section 24 of the CGST Act, 2017. Irrespective of turnover, if a taxable person is liable to pay GST under reverse charge, he will be compulsorily required to take registration. The definition of the term “reverse charge” is given under section 2 which reads as under:
(98) “reverse charge’’, means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or subsection (4) of section 5 of the Integrated Goods and Services Tax Act;
- Person required to deduct Tax
Persons who are required to deduct tax GST Act are required to take registration. Such category of persons are specified in Section 51 which provides that Government may madate the following categories of persons, viz
(a) a department or establishment of the Central Government or State Government; or
(b) local authority; or
(c) Governmental agencies; or
(d) such persons or category of persons as may be notified by the Government on the recommendations of the Council, to deduct tax at the rate of one per cent. from the payment made or credited to the supplier in case of interstate supplies where the total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees. Such provision of requirement of deduction of tax at source is also required under IGST Act.
- Person supplying goods on behalf of another Taxable person
Persons who supply goods and/or services on behalf of other taxable persons whether as an agent or otherwise are required to take registration. The definition of the term “agent” is given under section 2 which reads as under:
“(5) “agent” means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another;”
- Input Service Distributor
Input service distributor is required by section 24 of the CGST Act to get registration. Input Service Distributor (ISD) would be required to obtain GSTIN for distributing the credit of GST paid on services proposed to be used at multiple locations which are separately registered. The term “Input Service Distribution” is defined under section 2 of the CGST Act which reads as under:
(61) “Input Service Distributor” means an office of the supplier of goods or services or both which receives tax invoices issued under section 31 towards 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 or both having the same Permanent Account Number as that of the said office;
- Persons supplying goods through Electronic Commerce Operator
Persons who supply goods or services or both, other than supplies specified under sub-section (5) of section 9, through such electronic commerce operator who is required to collect tax at source under section 52 are required to get themselves registered.
- Electronic Commerce Operator or his representative
Every electronic commerce operator is required to obtain registration. An Electronic Commerce operator is defined under Section 2 of CGST Act as under:
(45) “electronic commerce operator” means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce; Alongwith it is important to read definition of the term ‘Electronic Commerce’
(44) “electronic commerce” means the supply of goods or services or both, including digital products over digital or electronic network
Thus, every person who is making a supply over electronic or digital network is liable to get himself registered even though he is making his own supplies. However, merely owning a website would not make one liable for registration under the present law. In case of non presence of e commerce operator in India, such registration would be required to be taken by his representative / appointed person.
- Online data base access & Retrieval service operator
Every person supplying online information and data base access or retrieval services from a place outside India to a person in India, other than a registered person is liable to obtain registration.
- Casual and Non taxable Supplier
Casual taxable persons are also required to get registration under CGST Act. The definition of the term “casual taxable person” is given under section 2 which reads as under:
(20) “casual taxable person” means a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State or a Union territory where he has no fixed place of business;
A supplier who is not registered on regular basis, whether on mandatory or voluntary basis, in other State (s) and desires to conduct business in a particular State for a limited period, will have to obtain registration in that State for that limited period. Such suppliers are known as casual dealers and shall not be allowed to opt for composition scheme. However, the supplier would be eligible to claim ITC on purchases / inward supplies. Such person is required to obtain registration wherever he operates as casual taxable person.
Similarly, non resident taxable person is required to obtain registration. Non resident taxable person is defined as under:
(77) “non-resident taxable person” means any person who occasionally undertakes transactions involving supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India;
- Other Notified persons
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 are required to get themselves registered under the Act.
Person opting for Voluntary registration
Section 25(3) provides that a person, though not liable to be registered under Schedule III, may get himself registered voluntarily, and all provisions of CGST Act, as are applicable to a registered taxable person, shall apply to such person. It is pertinent to note that if a person has obtained a voluntary registration, then he would be required to pay taxes and undertake all the compliances under GST Acts irrespective of his turnover.
Persons who are not required to obtain registration
The following class of persons are not required to obtain registration:
- any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act;
This category covers such person who are supplying either non taxable goods viz., alcohol for human consumption or specified petroleum products or are supplying exempted goods. The list of exempted goods and services shall be notified by the government. It is also important to note that this benefit is available only when a person is dealing exclusively in such exempt / non taxable goods or services. In case of even a single rupee of taxable supply, this benefit shall not be available to such person. In other words, such exempt / non taxable supply turnover is not excluded for computation of aggregate turnover.
- an agriculturist, to the extent of supply of produce out of cultivation of land.
An agriculturist is defined as under:
(7) “agriculturist” means an individual or a Hindu Undivided Family who undertakes cultivation of land—
(a) by own labour, or
(b) by the labour of family, or
(c) 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;
Thus, as per the above definition only an Individual or HUF can be an agriculturist and thus, this benefit shall not be available to other categories of persons including AOP, BOI, company, firm etc. Secondly, such person shall cultivate land by his own labour or that of his family or by hired labour or servants. Thus, it seems that wherever an Individual /HUF is not taking active participation in such cultivation he is not covered within the ambit of Agriculturist.
Branches to constitue Distinct Persons
Section 25 provides the following deeming fiction to separate status of branches of same person as different persons:
(4) A person who has obtained or is required to obtain more than one registration, whether in one State or Union territory or more than one State or Union territory shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act.
(5) Where a person who has obtained or is required to obtain registration in a State or Union territory in respect of an establishment, has an establishment in another State or Union territory, then such establishments shall be treated as establishments of distinct persons for the purposes of this Act.
Section 25 creates a deeming fiction whereby every Brnach or establishment of any person which is seperately registered or is required to be separately registered shall be considered as different person. Accordingly, any transaction between such persons shall be taxable and CGST+SGST / IGST shall be levied on such transactions.
- Branches in same State
Branches of the same entity within the same state shall constitute same person and shall be under same registration. There shall be no tax on supply of goods or services amongst such branches. However, if such branches constitute separate business vertical and the person opts to register them seeprately within the same state, supply of goods and / or services between such separate registration shall be exigible to CGST+SGST.
- Branches in separate State
Branches of the same person (under same PAN) shall be deemed to be separate person for all purpose of GST and all supplies between such branches shall constitue taxable supply exigible to Tax. For eg. A manufacturer transfers goods from his factory in Haryana to his warehouse in Madhya Pradesh, then, he shall pay IGST on such supply of goods from Haryana and Madhya Pradesh branch can take credit of IGST so paid.
- Levy of Tax under Constitution prior to GST
- Payment of Tax under GST
- Place of Supply
- Position of taxing articles post Constitutional Amendment
- Rate of Tax in GST
- Registration under GST
- Returns under GST Law
- Structure of GST Law
- Taxable Supply
- TCS in case of E Commerce operator
- Time of Supply
- Transitional Provisions
- Understanding GST