Goods and Service Tax, abbreviated as GST, is a comprehensive tax levied on goods and services supply in India. A major aspect of GST is to understand who qualifies as a taxable person. Regardless if you are an individual engaged in a start-up, or perform e-commerce operations or service delivery, it is crucial to determine your GST status.
This blog post covers the GST and a taxable person, the registration process, the exemptions and more insights about the GST as a whole.
Who is a Taxable Person under GST?
A taxable person under GST is a person who supplies any goods or services which are effectively, exclusively or partly subject to GST under the Act. They include commercial entities, persons, and organizations with a total sales turnover above the set ceiling level. Any person earning a turnover that exceeds a certain threshold amount must get themselves registered under GST laws and follow all the laid down rules and regulations.
Key Categories of Taxable Persons
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Individuals and Sole Proprietors
Small business persons, self-employed persons, freelancers and persons or companies carrying on any business on their own or for their own account are considered as ‘taxable persons’ where the turnover of the business exceeds the specified limit.
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Companies
Taxable persons include private limited companies or any other company, public limited companies, and other similar corporations dealing in taxable supplies.
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Partnership Firms and LLPs
If the turnover in business verticals of a partnership firm and LLP indulged in business exceeds the threshold limit, they need to register themselves as the taxable person under GST.
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Hindu Undivided Family (HUF)
HUFs involved in any commercial operation are considered taxable persons under GST.
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Trusts and Societies
The trusts and societies having supplies of taxable goods or services also come under the ambit of taxpayers under GST.
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E-Commerce Operators
Electronic business marketplace sellers through which goods and services are supplied are considered taxable persons, irrespective of revenue.
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Casual Taxable Persons
A casual taxable person is one who makes occasional supplies of goods or services in any taxable territory where he has no business premises.
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Non-Resident Taxable Persons
A non-resident taxable person (NRTP) is a person who has carried out economic activities in India but does not have a permanent business establishment in the country.
Registration Requirements of Taxable Persons
It is compulsory for certain individuals and companies depending on turnover, business type, and place. Below are the key criteria for registration:
- Threshold Limits for Turnover
Where the category state is in a normal state, then there is a condition that if the registered person’s aggregate turnover is over ₹20 lakhs, then he must register. The qualifying limit in these states is ₹10 lakhs and therefore states like Arunachal Pradesh and Manipur qualify as special category states. In normal states it is ₹20 lakhs and for the special category states, it is ₹10 lakhs for service providers.
- Compulsory Registration
Some individuals and entities need to get registered for GST regardless of their turnover; suppliers are casual taxpayers, non-resident suppliers, e-commerce operators and suppliers required to collect TDS and/or TCS.
- Voluntary Registration
Those who have a turnover below such a threshold can choose to register for GST voluntarily in order to be able to avail of the input tax credit as well as to acquire recognition.
- Exceptions on GST registration
Despite the fact that GST is a comprehensive tax, not all people and firms must enrol in it. The registrants need to be persons who have been involved in the sale of exempted products or services, agriculturists who are farmers cultivating crops, and companies that have not crossed the prescribed limit of supplies.
- Liabilities of a Taxable Person
Any person registered under GST needs to meet various compliance measures, including filing periodic GST returns, issuing GST-compliant tax invoices, collecting and paying GST and keeping proper records of sales, purchases and input tax credits.
Special Categories of Taxable Persons
- Casual Taxable Persons: Casual taxable persons who possibly may engage in a taxable territory through business activities for a limited period require the following: Obtain GST registration prior to doing business, pay an estimated amount of GST in advance and submit returns periodically.
- Non-resident taxable person (NTRP): Non-resident taxable persons making taxable goods or services to India must obtain GST registration irrespective of turnover, have a statutory agent in India, pay GST in advance and meet return filing procedures.
Consequences of Non-Compliance
There are legal consequences if one fails to register or if they violate some of the provisions of the GST. Some of the compliance or explain breaches are failure to file GST returns within the stipulated time or failure to file at all, failure to pay the right amount of GST, making incorrect input tax credit claims or failure to issue GST-compliant invoices. Penalties for failure could be penalties such as fines, interest charges on tax unpaid or even prosecution where the infraction is grave.
Benefits of GST Registration for Taxable Persons
Some of the benefits of registering under GST are the availability of credit on input purchases, accreditation and collection of the business that helps in easy and effective compliance, and easy interstate sales without paying additional taxes.
Process to Register as a Taxable Person under GST
GST registration can be completed through the GST portal through a computerised application by clicking on GST New Registration, wherein you are required to enter your name and mobile number to receive an OTP, then complete the registration application in Form GST REG-01, uploading the required documents and verifying it with a digital signature or e-signature, and the GSTIN would be generated for you on approval.
Common Issues Faced by Taxable Persons
The issues faced by a taxable person include comprehending the various provisions under GST, record keeping and documentation, dealing with transition on GST laws frequently, filing of returns and payment of taxes on time. Realization of these challenges requires seeking professional guidance as well as using GST software.
Conclusion
Understanding taxable persons under GST is critical, especially for businesses and individuals who make taxable supplies. So, if you are an independent business person, a casual trader, or an e-commerce player, GST compliance will protect you against penalties and legal liabilities. Therefore, the taxable persons will have to inform themselves of registration requirements, exemptions and compliance obligations to help achieve an efficient taxation regime.
Continue being on the lookout and seek help from GST professionals so that your enterprise does not violate GST laws but enjoys the new registration.
