Taxable Person Under GST: A Comprehensive Guide

Taxable Person Under GST

The Goods and Services Tax (GST) is a comprehensive indirect tax system in India that applies to the supply of goods and services. To ensure compliance, it is crucial to identify whether an individual or entity qualifies as a taxable person under GST.

This guide explores who is considered a taxable person, the criteria for registration, and the obligations they must fulfill under Indian GST law.

Who is a Taxable Person Under GST?

A taxable person under GST is any individual, business, or entity engaged in the supply of goods, services, or both, and is liable to register under GST if they meet specific criteria.

Categories of Taxable Persons

1. Individuals and Sole Proprietors
   • Traders, freelancers, and small business owners supplying taxable goods or services.
2. Partnerships and Companies
   • Businesses operating as partnerships, private limited companies, or public limited companies.
3. Government Entities
   • Government departments involved in taxable supplies.
4. Non-Residents
   • Foreign entities supplying goods or services in India without a fixed place of business.
5. E-Commerce Operators
   • Platforms facilitating the supply of goods or services.
6. Casual Taxable Persons
   • Entities supplying goods or services occasionally without a fixed place of business in India.

Eligibility Criteria for Taxable Persons

1. Turnover Threshold
   • Businesses with annual aggregate turnover exceeding the prescribed limit must register under GST:
     • ₹20 lakhs for most states (₹10 lakhs for special category states).
     • ₹40 lakhs for goods-only suppliers in some states.
2. Inter-State Supply
   • Entities supplying goods or services across state borders must register under GST, irrespective of turnover.
3. E-Commerce Involvement
   • E-commerce operators and sellers supplying through online platforms.
4. Taxable Reverse Charge Mechanism
   • Persons liable to pay GST under the reverse charge mechanism.
5. Input Service Distributors (ISD)
   • Entities distributing input tax credit to branches.
6. Voluntary Registration
   • Any entity can voluntarily register under GST, even if not required by law.

Obligations of a Taxable Person

1. GST Registration
   • Obtain GST registration and a GSTIN (Goods and Services Tax Identification Number).
2. Invoicing
   • Issue GST-compliant invoices with GSTIN, HSN/SAC codes, and applicable tax rates.
3. Filing Returns
   • Regularly file GST returns, such as:
     • GSTR-1 (outward supplies).
     • GSTR-3B (monthly summary return).
     • Annual return (GSTR-9).
4. Tax Collection and Remittance
   • Collect GST on taxable supplies and remit it to the government.
5. Maintain Records
   • Keep detailed records of sales, purchases, input tax credit, and other relevant documents.

Exemptions from Being a Taxable Person

Certain entities and activities are exempt from GST registration:

1. Agriculturists
   • Individuals supplying produce grown through agricultural activities.
2. Exempt Goods/Services Suppliers
   • Entities dealing exclusively in GST-exempt goods or services.
3. Services Under Reverse Charge
   • Persons providing services where the recipient pays GST under reverse charge.

Penalties for Non-Compliance

Failure to comply with GST regulations can result in penalties:

1. Late Filing Penalty
   • ₹50 per day (₹20 for nil returns), up to a maximum of ₹10,000 per return.
2. Non-Registration Penalty
   • 10% of the tax amount due or ₹10,000, whichever is higher.
3. Fraudulent Activity
   • 100% penalty or imprisonment in severe cases.

How to Register as a Taxable Person Under GST

Step 1: Visit the GST Portal

• Access the official GST portal at https://www.gst.gov.in.

Step 2: Fill Out the Application

• Complete Part A of Form GST REG-01 with your PAN, mobile number, and email.

Step 3: Submit Required Documents

• Upload documents such as:
  • PAN card.
  • Proof of business registration.
  • Address proof.
  • Bank account details.

Step 4: Verification and GSTIN Issuance

• Upon verification, the GSTIN and registration certificate are issued.

FAQs

1. Can individuals register under GST voluntarily?
Yes, individuals can voluntarily register under GST, even if they do not meet the turnover threshold.

2. What is the GSTIN?
The GSTIN (Goods and Services Tax Identification Number) is a unique 15-digit identification number assigned to registered taxable persons.

3. Are all exporters taxable persons under GST?
Yes, exporters must register under GST to avail of benefits like input tax credit and tax refunds.

4. What is the penalty for not registering under GST?
Non-registration attracts a penalty of 10% of the tax due or ₹10,000, whichever is higher.

5. Can a taxable person deregister from GST?
Yes, if the turnover falls below the threshold or business operations cease, a taxable person can apply for deregistration.

Conclusion

Understanding who qualifies as a taxable person under GST is essential for compliance and smooth business operations. By meeting registration requirements and fulfilling obligations, businesses can avoid penalties and leverage the benefits of the GST system.