Who is Liable for GST?

Introduction

This is perhaps a very important question that everybody asks for. Is I am liable to pay GST? And if yes, then when? When did I am liable to pay the GST? What is the basic exemption limit for GST?

All these questions are of vital importance and hence, we try to find out answer for these questions in the most user-friendly language with covering all changes made under 21st GST Council Meeting dated September 09, 2017 relevant to our Notes. Let us proceed.

Who is Liable to pay GST?

Any person who is supplying goods or services is liable to pay GST. This is very clear; however, the government has also set up the basic exemption limit for small suppliers of goods and services.

Any person having aggregate turnover of more than 20 lakh is liable to register under GST and hence needs to pay the tax as well. However, if you belong to the north-eastern state (Special Category States), then you need to register if your turnover is more than10 lakh.

Example on 10 lakh limit: The objective of this proviso maybe for the following case.

Suppose Mr. A is a supplier from Delhi with a total supply of 14 Lakh. He wants to expand his business, so he decided to open a branch in Assam (Northeast state). So the question is which basic limit does it apply to the Mr A, 20 Lakh or 10 Lakh? The answer is Rs.10 lakh.

Here are some important points relating to it:

(a) If you make any interstate sale, then the basic exemption limit shall not apply with Certain Exception as decided in recent GST Council Meeting at Hyderabad dated September 09, 2017 i.e.

Exception -I : Presently, any person making inter-state taxable supplies is not eligible for threshold exemption of Rs. 20 Lacs (Rs. 10 Lacs in special category states except J & K) and is liable for registration. It has been decided to allow an exemption from registration to persons making inter-State taxable supplies of handicraft goods upto aggregate turnover of Rs. 20 Lacs as long as the person has a Permanent Account Number (PAN) and the goods move under the cover of an e-way bill, irrespective of the value of the consignment.

Exception -II : Presently, a job worker making inter-State taxable supply of job work service is not eligible for threshold exemption of Rs. 20 lacs (Rs. 10 lacs in special category states except J & K) and is liable for registration. It has been decided to exempt those job workers from obtaining registration who are making inter-State taxable supply of job work service to a registered person as long as the goods move under the cover of an e-way bill, irrespective of the value of the consignment. This exemption will not be available to job work in relation to jewellery, goldsmiths’ and silversmiths’ wares as covered under Chapter 71 which do not require e-way bill.

(b) If you are registered casually under GST i.e. casual registration, then the basic exemption limit shall not apply.

(c) If you are liable to pay tax under reverse charge, then also basic exemption limit shall not apply.

(d) E-commerce vendors and the aggregator are not eligible for basic exemption limit.

Also, the following category of person are liable to be registered under the act without any basic exemption limit:

(i) Every electronic commerce operator.

(ii) Every person supplying digital services from a place outside India to a person in India, other than a registered taxable person.

(iii) 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.

(iv) Any person who is required to collect Tax at the source.

(v) Non-resident taxable persons.

(vi) Persons who are required to deduct tax under section 46, whether or not separately registered under this Act.

(vii) Persons who are required to collect tax under 56, whether or not separately registered under the Act.

(viii) Persons who supply goods and/or services on behalf of other taxable persons whether as an agent or otherwise.

(ix) Input service distributor.

Note : The registration for persons liable to deduct tax at source (TDS) and collect tax at source (TCS) will commence from 18th September 2017. However, the date from which TDS and TCS will be deducted or collected will be notified by the GST Council later.

Conclusion

The conclusion is very simple; any taxable person must get registered under GST, and if not then you must understand face stringent penalties and action from the government.