The new tax regime, the Goods and Services Tax (GST), was enacted in India on 1 July 2017. The GST has replaced many indirect taxes that the federal and state governments had previously imposed. A person or business organisation whose taxable turnover exceeds the established threshold limit is referred to as a taxable person for purposes of the GST. 

In this blog, let’s understand who is ataxable person under GST. 

Who Is A Taxable Person Under GST?

A person or business organisation that engages in a taxable supply of goods, services or both are referred to as a taxable person under GST if their combined annual revenue exceeds the threshold limit of ₹20 Lakhs (₹10 Lakhs for special category states). Taxes and inbound supplies are not included in aggregate turnover, comprising all taxable supplies, exempt supplies, and exports the taxpayer produces.

Mandatory GST Registration Criteria

Except for individuals who fall under the excluded categories, everyone taxable under the GST is obliged to register for GST. The following are the requirements for GST registration:

• A person or entity must register for GST if their total annual revenue exceeds ₹20 Lakhs (₹10 Lakhs for special category states).
• GST registration is necessary for taxpayers previously registered for an indirect tax, such as VAT or service tax.
• Any company that transacts in interstate commerce or provides goods or services across state lines must register for GST.
• E-commerce operators are also mandated to do the GST registration. 

Responsibilities of Taxable Persons

Being a registered GST taxpayer is essential for various reasons:

• Legitimacy: GST registration lends credibility to a firm by indicating that it has been recognised and authorised by the government.
• Credit for Input Tax: Taxes paid on inputs utilised during business may be claimed as an input tax credit (ITC) by registered taxpayers. ITC can be utilised to decrease the overall tax obligation by offsetting the tax due on output supplies.
• Opportunities for Business: The fact that many businesses prefer to work with GST-registered firms can lead to various business prospects for registered taxpayers.

Conclusion 

To summarise, knowing the idea of a taxable person under GST is critical for adhering to tax regulations and avoiding fines. Managing funds is critical in every organisation, and solutions like Fi Money may help keep track of your finances. 

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Frequently Asked Questions 

1. What is the GST, and why is it important to understand who a taxable person is under GST?

GST is a unified indirect tax in India. Understanding who a taxable person is under GST is crucial for tax compliance, efficient tax collection, and the ability to claim input tax credit (ITC).

2. What are the key criteria used to determine if someone qualifies as a taxable person under GST?

Key criteria to determine if someone qualifies as a taxable person under GST include:

• Threshold Turnover: Individuals or businesses with an annual turnover above the specified threshold (e.g., 20 lakhs for normal states) are required to register as taxable persons.
• Mandatory Registration: Certain businesses, regardless of turnover, must register, such as those engaged in inter-state supply of goods and services or selling online.
• Voluntary Registration: Even if turnover is below the threshold, businesses can opt for voluntary registration to claim input tax credit (ITC).
• Special Category States: Lower threshold limits apply to businesses operating in special category states (e.g., 10 lakhs).

3. Can you explain the concept of 'supply' in the context of GST and how it relates to taxable persons?

In the context of GST, 'supply' refers to any transaction involving the exchange of goods or services for a consideration. It's a fundamental concept because taxable persons must understand and report their supplies to determine their GST liability and claim input tax credit (ITC). 

4. Are there any exemptions or special cases where individuals or entities might not be considered taxable persons under GST?

Yes, there are exemptions and special cases where individuals or entities might not be considered taxable persons under GST. Some examples include small businesses below the threshold turnover, certain specific goods and services, and activities in special economic zones (SEZs). However, the specifics can vary, so it's essential to refer to GST regulations for details.

5. How does the turnover threshold affect the registration requirements for taxable persons under GST?

The turnover threshold determines whether registration under GST is mandatory or voluntary for taxable persons. If the annual turnover exceeds the threshold, mandatory registration is required. In special category states, a lower threshold applies.

6. What are the responsibilities and obligations of a taxable person once they are registered under GST?

Once registered under GST, a taxable person has several responsibilities and obligations, including:

• Tax Collection and Payment: Collect GST from customers and remit it to the government on time.
• Filing Returns: File regular GST returns, such as GSTR-1, GSTR-3B, and GSTR-9, within specified deadlines.
• Maintain Records: Maintain accurate records of all transactions, invoices, and accounts.
• Claim Input Tax Credit (ITC): Ensure proper documentation to claim ITC on taxes paid on purchases.
• Compliance with GST Rules: Adhere to GST rules and regulations, including invoicing and accounting standards.
• Disclosure of Information: Provide accurate information to the tax authorities as and when required.
• Compliance with Anti-Profiteering Provisions: Comply with anti-profiteering provisions if applicable.
• Display of GSTIN: Display GSTIN at the place of business and on invoices.

Failure to meet these responsibilities may lead to penalties and legal consequences.