Understanding the Concept of a Taxable Entity Under GST Law

Under the Goods and Services Tax (GST) framework, a 'taxable person' refers to any individual or entity conducting business in India who is either registered or legally required to register under the GST Act. This broad definition encompasses all those involved in economic activities, including trade and commerce. The term 'person' extends to various legal structures such as individuals, Hindu Undivided Families (HUFs), companies, partnerships, Limited Liability Partnerships (LLPs), Associations of Persons (AOPs), Bodies of Individuals (BOIs), corporations, government entities, foreign body corporates, cooperative societies, local authorities, trusts, and artificial juridical persons.

Recent Updates Regarding GST Registration Eligibility

1. Budget 2023 Amendment (Effective 1st July 2017): The 2023 Budget retroactively amended Section 23 of the CGST Act, clarifying that certain individuals or entities are exempt from GST registration requirements, even if they would otherwise fall under conditions outlined in Sections 22(1) and 24.
2. Mandatory Aadhaar Authentication (Effective 1st January 2022): The Central Board of Indirect Taxes and Customs (CBIC) mandated Aadhaar authentication for applications to revoke cancelled GST registrations, as per CGST Rule 23 in REG-21.
3. Extended Revocation Period (August 2021): Taxpayers whose deadline for revoking a cancelled GST registration fell between 1st March 2020 and 31st August 2021 were granted an extension until 30th September 2021. This applied to cancellations under Section 29(2) clause (b) or (c) of the CGST Act.
4. Application Deadline Extension (May 2021): The deadline for submitting applications for revocation of registration, originally between 15th April 2021 and 29th June 2021, was extended to 30th June 2021.
5. Time Limit Extension for Rule 9 Actions (May 2021): The period for actions, replies, or order passing under Rule 9 of the CGST Rules, 2017, falling between 1st May 2021 and 31st May 2021, was extended to 15th June 2021.
6. Enhanced ARN Search (March 2021): The functionality for searching Application Reference Numbers (ARNs) for registration after logging in with a Temporary Reference Number (TRN) was improved for taxpayers.

Who is Required to Obtain GST Registration?

Mandatory GST registration applies to the following categories:

• Businesses supplying goods with an annual turnover exceeding Rs. 40 lakhs in normal states (or Rs. 20 lakhs in special category states).
• Businesses supplying services with an annual turnover exceeding Rs. 20 lakhs in normal states (or Rs. 10 lakhs in special category states).
• Entities previously registered under other tax laws (e.g., Excise, VAT, Service Tax).
• Transferees of a registered business, effective from the transfer date.
• Individuals or entities involved in inter-state supplies.
• Casual taxable persons.
• Non-resident taxable persons.
• Agents working on behalf of a supplier.
• Taxpayers liable under the reverse charge mechanism.
• Input Service Distributors.
• E-commerce operators or aggregators.
• Individuals supplying goods or services through e-commerce aggregators.
• Providers of online information and database access or retrieval (OIDAR) services from outside India to unregistered persons in India.

It is important to note that these requirements do not apply if the turnover is solely from exempted goods or services. Additionally, the Budget 2023 amendment to Section 23 of the CGST Act, effective retrospectively from 1st July 2017, clarifies that certain persons are not required to obtain registration even if they meet conditions under Sections 22(1) and 24. While some normal category states maintain the Rs. 20 lakh limit, some special category states have adopted the Rs. 40 lakh limit. E-commerce sellers or aggregators are exempt from registration if their total sales are below Rs. 20 lakh, as per Notification No. 65/2017 – Central Tax dated 15th November 2017.

Defining a Casual Taxable Person in GST

A casual taxable person is an individual or entity that occasionally provides goods or services in a GST-applicable region without maintaining a permanent business establishment there. For instance, if a business based in Bangalore offers taxable consulting services in Pune, where it lacks a fixed office, that business would be considered a casual taxable person in Pune.

Understanding a Non-Resident Taxable Person Under GST

A non-resident taxable person is defined as an individual or entity from outside India who sporadically supplies goods or services within a GST-governed territory, without possessing a fixed business location in India. This concept mirrors that of a casual taxable person, with the key distinction being the non-resident's absence of a permanent establishment within India.

Role of an Input Service Distributor (ISD)

An Input Service Distributor (ISD) refers to an office of a goods or services supplier that processes tax invoices for incoming input services. Its primary function is to issue tax invoices to distribute the credit of CGST, SGST, or IGST paid on these services to its branches that share the same Permanent Account Number (PAN). It is crucial to note that an ISD can only distribute credit for 'input services,' not for input goods or capital goods. This mechanism is optional for taxpayers and might be a new concept for those not previously registered as ISDs.

Understanding a Composition Taxpayer

A composition taxpayer operates under the GST composition scheme, which exempts them from collecting GST at standard rates from their customers. Instead, they remit tax to the government at a reduced or nominal rate, based on their quarterly turnover or receipts, using Form CMP-08. Eligibility for this scheme comes with specific conditions. Initially, only goods suppliers with an annual turnover up to Rs. 1.5 crore could opt for the composition scheme under Section 10 of the CGST Act. However, starting 1st April 2019, service providers also became eligible for a comparable scheme, provided their annual aggregate turnover does not exceed Rs. 50 lakh.

The Quarterly Return Monthly Payment (QRMP) Scheme

Taxpayers registered under GST, who must file GSTR-3B and had an aggregate turnover of up to Rs. 5 crore in the prior financial year, qualify for the Quarterly Return Monthly Payment (QRMP) Scheme. This scheme allows for quarterly filing of GSTR-1 and GSTR-3B, while requiring monthly tax payments via Form PMT-06. For businesses that need to upload B2B sales invoices on the GST portal monthly, the Invoice Furnishing Facility (IFF) is available.

GST Registration Guidelines Based on Taxable Person Categories

• Timely Application: Every individual or entity subject to GST registration must apply in each state where they incur liability within 30 days of becoming eligible.
• Special Provisions for Casual/Non-Resident Taxpayers: Casual or non-resident taxable persons are required to submit their registration application at least five days prior to starting their business operations.
• PAN-Based Registration: GST registration numbers are linked to an applicant's Permanent Account Number (PAN), making a valid PAN a mandatory requirement for registration.
• State-Specific Registration: Registration under GST is state-specific, necessitating separate registrations for each state where a business operates.
• Business Vertical Option: Taxpayers also have the flexibility to obtain distinct registrations for each of their separate 'business verticals' within the same state.

Special GST Registration Rules for Casual and Non-Resident Taxable Persons

Specific rules govern GST registration for casual and non-resident taxable persons. These individuals or entities must apply for registration a minimum of five days before commencing their business activities. Section 24 outlines these special provisions, allowing them to secure a temporary registration for an initial period of 90 days, which can be extended for another 90 days. Furthermore, any person registered under Section 24 is mandated to make an advance deposit of GST, calculated based on their estimated tax liability.