2017 is the historical year in the tax system of India. This is the year when the Goods and Services Tax Act came into force. After this law the entire tax system of India witnessed a holistic change in the indirect taxation of India. Through GST all the indirect taxes become one and uniform in all the states of the country. Through this law the GST government fixed a minimum turnover for GST registration. Businesses which fall under this limit need to register themselves under the Goods and Services Tax Act of 2017. Ignorance of registration can lead to heavy fines and penalties, hence must obtain this if your business falls under the same.
What is GST Registration?
All those businesses which fall under the minimum turnover for GST registration need to register themselves under the goods and services law. Without registering for GST, businesses cannot collect GST from the consumers. For registration of the goods and services tax, an application form has to be filled. After successful submission of the application form, a GSTIN or GST Identification number is received. This number is a unique number which all the businesses who registered under the GST get. This number proves that the business is registered under the GST and collects the GST from the consumers. GST registration depends on the minimum turnover for GST registration.
Understanding of GST Turnover Limit in India
There is a minimum turnover for GST registration. Turnover of a company or business means its total income. Here, the turnover is calculated annually or yearly. So looking at the income of the business, the liability falls on it for GST registration. There is a limit set for the turnover. All the businesses who fall below that set limit, do not need to register for GST. However, those who fall under the set threshold limit have to mandatorily register for the Goods and Services tax. The GST council is responsible for setting up this limit. The limit is not the same for all types of business. The limit changes with the kind of business as well as the place of business.
What is the Minimum Turnover Limit for GST?
The GST registration is required for minimum turnover of a business.Now let us see how the limit of turnover for GST varies from business to business and region to region. The GST turnover for the business which provides goods is 40 Lakhs whereas the business which falls under the category of special states, the turnover limit for goods is 20 Lakhs. The GST turnover for the business which provides services is 20 Lakhs, whereas the business which falls under the category of special states, the turnover limit for services is 10 Lakhs.
What are the Key Factors Affecting Minimum Turnover of GST?
There are various factors which affect the minimum turnover for GST registration in India. Some of them include but are not at all limited to business type, place of transaction, mode of business etc. Business type here means whether a business is related to goods or services, depending on the same turnover. As per the place of business as well there will be variation in the minimum threshold limit of the GST because there are certain special categories of states on which a different limit is applicable. In case of interstate transactions or transactions through e-commerce there will be no turnover limit applicable. In such transactions the turnover limit doesn’t even matter. All such transactions need to pay GST. Hence there are a number of factors which affect the minimum turnover of the GST.
Taxable and Non Taxable Activities under GST
Under the GST Act of 2017 both the taxable as well as non taxable activities have been mentioned. One who wants to register under this act must know about these activities in order to determine whether their activity needs to be registered or not. Supply of goods and services as well as sale of goods and services. These two activities are subject to taxation under GST. With these, any other activities which aim for raising commerce and import of commodities into India are also subject to GST Taxation.
Non taxable activities means those activities which are exempted from goods and services tax registration. This means they do not need to take this registration for GST. Some of the examples of the non taxable goods and services include but are not at all limited to Healthcare Services, Educational Services, Agricultural Services, Postal Services, Religious Services etc.
Importance of Minimum Turnover for GST Registration
The GST turnover limit is very important. The GST council decides the minimum turnover for GST registration. The businesses need to know this limit provided by the GST council. If the income is up to or more than that limit, then GST registration has to be done by that business. The businesses which do not cross the above mentioned turnover, do not have to register for GST. This saves the small business from spending their income on paying taxes. In short, this is a protection given to small businesses. Some of the benefits of setting this limit on the GST are:
- A threshold for the registration has been provided
- Compliances related to the goods and services becomes simple
- Small businesses growth has been promoted
- Key focus is on the large taxpayers
- Compliances will be cost effective
Conclusion
Many people have this myth that Goods and Services Tax or GST is applicable on all the businesses but that’s not the truth. There is a minimum turnover for GST registration, and only those businesses falling under this turnover limit need to register mandatorily under the goods and services taxation. Although a voluntary registration option is also there where a businesses owner can register themselves even though they are not falling under the criteria of the minimum turnover for GST registration. It is suggested to take expert advice before doing anything with respect to GST. It will make your work easy and cost effective.
