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Minimum Turnover for GST before Application

Online Legal India LogoBy Online Legal India Published On 27 Feb 2024 Category GST

GST Registration is Mandatory for all businesses crossing the minimum turnover for GST according to the law. GST is a contracted form of Goods and Services Tax. The new amendment of the GST rule was implemented from the day of 1st July 2017 replacing the previous VAT (Value Added Tax). Under the GST act, goods and services taxes have been divided into some slabs that include 5%, 12%, 18%, and 28%. This is a simple division and the tax goes one time on a product or service not multiple times while crossing the different layers of transactions.

Goods are services tax has been divided into 4 types. They are:

4 Types of GSTs are:

  • CGST (Central Goods and Services Tax)
  • SGST (State Goods and Services Tax)
  • UGST (Union Territory Goods and Services Tax)
  • IGST (Integrated Goods and Services Tax)

Know the Minimum turnover for GST

Goods and services tax have been implemented on the businesses that cross the minimum turnover limit in a year. Here are the slabs of business turnover limits. Let’s have a look.

The business of goods with a yearly turnover of 40 lakhs or more must register GST and have to pay tax.

The service-providing companies having a yearly turnover of 20 lakhs a year must register for GST, by visiting the government portal for registering GST.

Special taxable regions

Some regions or special areas have different turnover limits for registering GST.  In some states GST limit is different. Goods with a minimum turnover of 20 lakhs and services with 10 lakhs go under the GST Registration Act. The special category states are Arunachal Pradesh, Mizoram, Sikkim Manipur, Meghalaya, Nagaland and Tripura.

However, when any business crosses the yearly transition of 40 lakhs of any region, they must register for GST whether they reside in a regular region or special taxable areas.

Voluntary GST registration

If any businessperson considers that their yearly turnover will cross the specific threshold of the area of business can register for GST voluntarily. Maybe, the previous year the business did not cross the limit and this year it may cross. Then, the taxpayer may register for GST to pay taxes to the government as a responsible citizen. In this factor, there is no minimum turnover for GST.

Composition Scheme of Tax

The composition scheme is the form of simplest taxation system under GST. Taxpayers can get rid of hundreds of formalities of GST filing. The taxpayers whose turnover is 1.5 crore can apply for the composition scheme. They can pay a fixed rate on the turnover.

If you want to learn about the type of taxpayers, you can type in the taxpayer search option. Check the “Taxpayer type” and enter the details wanted. You will learn whether the taxpayer is under a composition scheme. You have to enter the GSTIN in the section searching taxpayer type. If the taxpayer is paying regular taxes, you will learn. The result will also show if they have opted for another option.

How is the turnover limit determined for a composition scheme taxpayer? Here is the process in which you will learn how to determine the tax and the amount of the tax it would be when someone goes under a composition scheme.

(Taxable supplies + Exports + Exempt Supplies + Inter-State Supplies) – (Taxes + Value of Supplies Taxable under Reverse Charge Mechanism + Value of Inward Supplies + Value of Non-Taxable Supplies)

The aggregate turnover has been calculated by capturing the data of transactions reflected in the PAN (Permanent Account Number). The taxpayer may have turnover in various locations in India or abroad. Only the Permanent Account Number can trace the aggregate amount of transactions he has done against it. Hence, a composition tax account helps the users pay taxes at a flat rate in a hazardless way. So, you can register GSTIN under this scheme if the terms and conditions are fulfilled.

Reverse Charge Mechanism in GST

GST mechanism is a special scheme under GST registration. Goods and raw product supply systems have to follow these rules. GST is mandatory for produced items when they are acquired by users. So, the sellers have to pay GST, collecting it from the purchasers.

But what happens when the company purchases raw materials? Wholesale, production, retail, and eventual sales require GST bill submission. GST is implementable in all those stages of business. The receivers have to pay the tax directly to the government. The basic rule of GST payment is that the end users pay tax to the seller and the seller pays tax to the government. For some products and goods, GST has to be paid by the recipient of the goods, products, or services to the government.

When the GST payment is the requirement of the sellers to the government has been revised for the recipients. Hence, the taxation scheme reverses. That is why, it is called Reverse Charge Mechanism (RCM).

E-commerce sales

There is no need to consider minimum turnover for GST registration when anybody sells goods and services online. They must file the GST to have a certificate. They require a GST account for selling and supplying goods online. Whatever turnover you have, you should have a GST registration certificate.

Nonresident taxable person

A lot of people reside outside India. If they want to start a business or want to send some goods to any Indian, they should apply for a GST registration certificate. They can visit the government portal to fill out the form and experience easy and flawless goods or service provision. So, these people need to file GST whatever amount they deal with the products does not matter. They have to pay specific taxes to the government.

Suppliers’ Agents

The agents and representatives who are engaged in supplying goods or services on behalf of another person must register for GST. They are liable to pay taxes to pay the tax. If any agent takes a franchise from a reputed business, these agents require GST registration.

E-Commerce Suppliers

Don’t mingle with e-commerce sellers and suppliers. If you notice the differences, you will see that e-commerce sellers are B2B (Business to Business) or B2C sellers (business to customers/end users). The suppliers are the people or agents that supply goods to the sellers on e-commerce platforms. They require GST registration. They also do not have any minimum turnover for GST.

Online service providers

As you learned all online sellers require GST registration, and all the online service providers also require GST registration from the government portal. Here also, there is no minimum turnover for GST. They must register for GST.

VAT Registered Entities/Migrated Taxpayers

Before the implementation of GST, the taxation system of the government would run with VAT (Value Added Tax). However, the taxation was multiple-layered, and the final cost of any product would reach a great height. These people who want to continue the business must file their registration under GST through the GST portal. If the business turnover crosses the threshold for GST registration, they are required to fill out the form to get a GST registration certificate. This type of taxpayer is called a migrated taxpayer.

GST Exemptions

It is important to know which services or goods are taxable and which are not. The suppliers of the following items mentioned are not subject to GST charges. So, they do not need to have a GST account. The people of the following businesses are exempt from GST: 

Types of Goods

Examples of Goods

Fish

Fresh or frozen fish

Meat

Fresh and frozen meat of sheep, goats, pigs, horses, cows, etc.

Natural products

Fresh and pasteurized milk, honey, cheese, eggs, etc.

Live trees and plants

Bulbs, foliage, roots, flowers, etc.

Vegetables

Tomatoes, onions, potatoes, etc.

Dry fruits

Cashew nuts, walnuts, etc.

Fruits

Bananas, apples, grapes, etc.

Tea, coffee and spices

Tea leaves, Coffee beans, turmeric, ginger, etc.

Grains

Wheat, barley, rice, oats, etc.

Seeds

Oil seeds, Flower seeds, cereal husks, etc.

Products of the milling industry

Flours of different types

Sugar

Sugar, jaggery, etc.

Water

Tender coconut water, mineral water,  etc.

Baked goods

Bread, puffed rice, pizza base, etc.

Drugs and pharmaceuticals

Contraceptives, human blood, etc.

Fossil fuels

Electrical energy

Fertilizers

Goods and organic manure

Beauty products

Kumkum, Bindi, kajal, etc.

Waste

Municipal waste, sewage sludge,  etc.

Ornaments

Glass bangles, plastic etc.

Printed items

Newspapers, printed books,  maps, etc.

Newsprint

Judicial stamp paper, rupee notes, envelopes, etc.

Fabrics

Silkworm cocoon, Raw silk , Khadi, etc.

Hand tools

Hammer, Spade, etc.

Pottery

Clay lamps, earthen pots, etc.

   


So, you have learned who should register for GST. All these sellers, service providers, or RCM taxpayers require GST registration. Obviously, GST exempted category does not require even filing any form for GST registration. Some of them have a minimum turnover for GST, and others do not. If you have any query to solve, you can directly contact Online Legal India. We will solve all your unsolved queries. Call us now and get assistance.


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