Jan 252017

Taxable person in GST

Who is taxable supplier under GST?

As per Sec 2(98) of model GST ACT – “taxable person’’ shall have the meaning as assigned to it in section 10;

As per sec 10(1) A person who is registered or liable to registered under schedule V of the GST act shall be a taxable person. As per sec 2(73) of the act the person shall include –

  • an individual;
  • a Hindu undivided family;
  • a company;
  • a firm;
  • a Limited Liability Partnership;
  • an association of persons or a body of individuals, whether incorporated or not, in India or outside India;
  • any corporation established or a Government company;
  • any body corporate incorporated by or under the laws of a country outside India;
  • a co-operative society registered under any law relating to cooperative societies;
  • a local authority;
  • government – means central government, State government or union territory or their respective department except where any such entity the accounts of which are not required to be kept in accordance with Article 150 of the constitution;
  • society as defined under the Societies Registration Act, 1860 (21 of 1860);
  • trust; and
  • every artificial juridical person, not falling within any of the preceding sub-clauses;

Hence, the definition of term taxable person includes wide range of person. Even gram panchayat or municipal council, central government or state government etc. can be taxable person if it is, either registered under the act or is liable to get registered as per schedule V of the act.

The provision of schedule V of the act may be summarized as under:-

Person liable to be registered

Person not liable to be registered

General rule:1.     Supplier whose aggregate turnover in a financial year exceeds rupees 20 lacs.2.     Every person who is registered under any of the earlier law – service tax, sales tax, etc.

3.     Transferee in case of business transfer

1.     Person exclusively engaged in supplies not liable to tax or are wholly exempt from tax2.     An agriculturist, for the purpose of agriculture
Special category:In the below mentioned cases person is liable to get registered irrespective of the turnover –1.     Inter-State taxable supply

2.     Casual taxable

3.     Persons who are required to pay tax under reverse charge

4.     Electronic commerce operator

5.     Non-resident taxable person

6.     Person required to deduct TDS or collect TDS

7.     Person supplies on behalf of other taxable person

8.     Input service distributor

9.     Every person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered taxable person

Few important clarifications on taxable person:

  1. For liability to get registered under a particular state – rules shall apply state wise. For example – Mr. A have business entity in state A and state B. If Mr. A supplies from state A are chargeable and From state B non – chargeable then Mr. A is liable to get registered only in state A and not is state B. And if he meets other criteria then he is also liable to be registered under state A only.
  2. When to get registered – in the above example Mr. A is liable to get registered in state A only if his aggregate turnover in a financial year exceeds rupees 20 lacs, that means, the aggregate value of all taxable supplies, exempt supplies, exports of goods and/or services and inter-State supplies of Mr. A (having the same PAN), computed on all India basis and excluding taxes, if any, charged under the CGST Act, SGST Act and the IGST Act, as the case may be exceeds 20 lacs rupees.

Two GST registrations shall always be treated as different person:

  1. In the following case a person is required to hold more than one GST registrations:
    • More than one registration in each of the state from when he makes taxable supplies
    • If the person applies for registration for each of his business vertical
    • Two establishments of person and such person apply for different registrations under different states.
  2. For the purpose the act, all registrations under the act shall be treated as different person. Hence, all sale and purchase between such persons shall be accounted at market price and provisions of input tax credit shall apply accordingly.
  3. The registration under the GST is PAN based. Hence, for the same business vertical by same person (means PAN holder), in same state two registrations are not possible.