What all you must know about GST Registration - Why I am Not required to Register under GST

1.0 Introduction

With GST is on the corner, every person in India is searching around three letter word, GST. Further, in this world of GST, one must know whether he is liable for GST registration or not. Hence, this article will help you to understand everything about the basic exemption under GST.

 

2.0 Persons not liable for registration [Clause 2 of Schedule V]

 

There are only two categories of person which are not liable for GST registration which is as follows;

 

• Any person engaged exclusively in the business of supplying goods and/or services that are not liable to tax or are wholly exempt from tax.

 

• An agriculturist, for the purpose of agriculture.

 

Let us discuss the cases one by one:

 

3.0 Any person engaged exclusively in the business of supplying goods and/or services that are not liable to tax or are wholly exempt from tax.

 

If any person is exclusively dealing in goods/services which are not liable to tax or are wholly exempt from tax, then he shall not be liable to take registration. The word ‘exclusive’ has its own importance here. The exemption with regard to registration shall only be applicable if one is dealing only in non-taxable or wholly exempt goods/services.

 

Further, what would happen if one is dealing in non-taxable goods/services, but not exclusively i.e. dealing in other taxable goods/services as well simultaneously? The following situations may emerge.

 

3.1.1. Person engaged exclusively in the business of supplying goods and/or services that are not liable to tax or are wholly exempt from tax.

Person is not liable for registration under GST.

 

 

3.1.2. Person engaged in the business of supplying taxable and non-taxable goods and/or services in a state but the aggregate turnover of taxable goods is less than 20 Lakh.

 

Once the person is not exclusively dealing in non-taxable/exempted goods and /or services, then clause 2 of Schedule V does not apply and the case shall be interpreted in consonance with clause 1 of Schedule V.

 

According to clause 1 of Schedule V, every supplier shall be liable to be registered if he makes a taxable supply of goods and/or services and his aggregate turnover in a financial year exceeds twenty Lakh rupees.

In our case, the aggregate turnover of a taxable supply of goods and/or services is less than twenty lakh, hence, a person is not liable to registration as per clause 1 of Schedule V.

 

3.1.3. Person engaged in the business of supplying taxable and non-taxable goods and/or services in a state and the aggregate turnover of taxable goods is more than 20 Lakh.

 

Once the person is not exclusively dealing in non-taxable/exempted goods and /or services, then clause 2 of Schedule V does not apply and the case shall be interpreted in consonance with clause 1 of Schedule V.

 

As said, in our case the aggregate turnover is more than 20 Lakh, i.e. exceeding the threshold limit as mentioned in clause 1 of Schedule V, hence the person is liable for registration.

 

3.1.4. Person engaged exclusively in the business of supplying non-taxable goods and/or services outside the state.

 

Any person falling under clause 2 of Schedule V is not liable for registration even if the supplies are made outside the state or even exported.

 

3.1.5. Person engaged in the business of supplying taxable and non-taxable goods and/or services outside the state and the aggregate turnover of taxable goods is less than 20 Lakh.

 

Once a person is supplying any taxable goods/services outside the state irrespective of the value, then that person is mandatory liable for registration under GST law (as per clause 6(i) of Schedule V).

 

3.1.6. A person engaged in the business of supplying non-taxable goods and also exporting some taxable goods and the aggregate turnover of which is less than 20 Lakh.

 

The person is liable for registration as exports are treated in line with interstate supply. Hence, any person making any interstate supply shall be liable for registration.

 

4.0 An agriculturist, for the purpose of agriculture

 

This is the second category of person that has been kept out of GST preview and it one of the latest and important concepts that has been inserted into the new GST law.

 

Agriculturist means a person who cultivates land personally, for the purposes of agriculture [clause 8 of section 2]. The aforesaid definition has two concepts under it which are as follows;

• Meaning of agriculture
• To cultivates land personally

 

1. ‘Agriculture’ includes floriculture, horticulture, sericulture, the raising of crops, grass or garden produce and also grazing, but does not include dairy farming, poultry farming, stock breeding, the mere cutting of wood or grass, gathering of fruit, raising of man-made forest or rearing of seedlings or plants; [Clause 7 of Section 2]

The above definition is an inclusive definition and hence becomes of wider import than just what has been enumerated in the definition above.

 

2. ‘To Cultivates land personally’ [Clause (103) of Section 2] means to carry on any agricultural operation on one‘s own account-

(a) by one‘s own labour, or

(b) by the labour of one‘s family, or

(c) by servants on wages payable in cash or kind (but not in crop share) or by hired labour under one‘s personal supervision or the personal supervision of any member of one‘s family;

 

Explanation 1. - A widow or a minor or a person who is subject to any physical or mental disability or is a serving member of the armed forces of the Union, shall be deemed to cultivate land personally if it is cultivated by her or his servants or by hired labour.

 

Explanation 2. - In the case of a Hindu Undivided Family, the land shall be deemed to be cultivated personally, if it is cultivated by any member of such family.

 

Conclusion

In case of any doubt, you can email us at info@hubco.in

 

Related Links:

• GST Registration
• GST Return Filings
• GST Software