Is GST Registration Compulsory For exempted goods or services

Is GST Registration Compulsory For exempted goods or services

Is GST Registration Compulsory For Exempted Goods or Services For GST After Achieving Threshold Limit 20 Lakhs?

Section 22 of Goods and Services Tax Act, 2017 offers each supplier towards being registered in the state from where the individual makes taxable supplies of products or services or both if his aggregate turnover in a financial year surpasses Rs 20 Lakh. However, for Special Category states the individual shall be legally responsible to be registered if the aggregate turnover in a financial year surpasses Rs 10 Lakh.

A business whose aggregate turnover in a financial year surpasses Rs 20 lakhs is required to mandatorily register under Goods and Services Tax.

There are two threshold limits for exemption from registration as well as payment of GST for the suppliers of products that is Rs 40 lakhs and Rs 20 lakhs. States will have an option to decide regarding one of the limits within a weeks’ time. The threshold for registration for service providers will continue to be Rs 20 lakhs and in case of Special category States Rs 10 lakhs.

The exemption limit is the threshold of annual turnover above which corporations have to mandatorily register under the GST regime. Regarding exemption limit, a dual-threshold system is maintained, a lower cap for North-eastern as well as hilly states flagged as special category states and a higher one for the rest of India.

Facts of the exemption

The government notified on 1st April as the date for the implementation of doubling of GST exemption limit to Rs 40 lakh, which would benefit small and medium enterprises.

Aggregate turnover is a significant term that determines the GST registration requirement. Turnover, in common parlance, implies the value of a business over a period of time. Aggregate turnover in GST could be termed as the taxable value of supplies of goods and services, exempt supplies of goods and services, the export of goods and services as well as inter-state supplies. Thus, aggregate turnover for GST consist of supplies of goods or services supplies exempt from GST and exports.

The general pre-requisite for registration in GST is the aggregate turnover. The laws of GST held that any turnover up to 20 lakhs is totally exempted from GST, 10 lakhs for special category status, which excludes the state of “Jammu and Kashmir”, which is completely exempted from registration, although values above these are subjected to registration. The aggregate turnover is calculated by taking together the value regarding the actions carried by all the entities of the concerned individual on a pan- India basis.

The conception of aggregate turnover might also attract businesses which otherwise might not be genuinely required to register. This was a concern for a while, however, the government is unwilling to make any changes in existing provisions. It is significant to note that just by registering; the exempt businesses would not have to pay taxes. But registering would mean that they shall have to file mandatory returns as well as follow every other compliance. 

As a business, an individual might not have attracted the interest of tax authorities up till now, but the GST Law gives authorities the power in the direction of inspecting and compelling small businesses to register under GST. This would definitely increase the cost of compliance for small business in the short term. In the long run, however, this could prove to be a good thing. The information thus collected might help the government come up with better policies for small businesses in the future.

Composition Levy

Provisions before 1st April 2019:-

The threshold turnover limit

•    For Trader, Manufacturer – Rs. 1 Crore.

•    For Restaurant Service– 1 Crore.

The Rate –

•    For Trader, Manufacturer – 1%.

•    For Restaurant Service– 5%.

For Services, excluding restaurant scheme –No composition scheme

Though, Trader/Manufacturer could provide services towards the extent of 10% of turnover subjected to maximum Rs. 5 lacs

Forgiving exemption from registration for any individual carrying out in exclusive supply of products and whose aggregate turnover in the financial year doesn’t surpass Rs 40 lakhs.

Threshold limit for GST registration (effectual from 1st April 2019) for those carrying out in exclusive supply of products enhanced to Rs. 40 lacs excluding the following-

•    Except individuals engaged in making intra-State supplies in the Threshold limit for registration ( For those engaged in the exclusive supply of goods- States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand.

•    Except individuals required to take obligatory registration under section 24.

•    Except for suppliers of Ice cream and other edible ice, whether or not comprising cocoa; Pan masala; Tobacco and manufactured tobacco alternates.

However, the threshold for registration for service providers shall remain Rs 20 lakhs and in case of Special category States Rs 10 lakhs.

eStartIndia is the professional tech-based online business and legal services platform which help the clients to simplify the procedures of all kinds of registration, implementation, tax concerns and any additional legal compliances and services related to the business in India.


eStartIndia Team

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