GST apply to me?

Does GST Apply to me?

Last Update Date : May 04, 2019
Estimated Read Time: 4 min

GST apply to me?

The most talked GST finally rolled out on 1 July 2017. GST is anticipated to have an extreme reaching impact. The introduction of GST has embarked a remarkable change in existing laws. With the introduction of GST i.e. Goods and Services Tax, the existing taxes like excise duty, VAT, service tax, several local taxes and levies have been phased out.

Most of the people are still in doubt whether GST apply to them or not and if yes, till what extent. The single answer is whether you run a business or provide a service, be it on a small scale or a large scale, most likely GST is going to impact you.

Application of GST to you

In the below all circumstances, GST very much applies you:

  • If you are an interstate supplier of goods and services
  • If you are a taxable person who is into supplies but does not hold any specific or fixed place of business
  • If your annual turnover for a particular financial year exceeds INR 20,00,000 (and INR 10,00,000 for NE states)
  • If you are non-resident taxable person who is into supplies but does not hold any specific or fixed place of business
  • If you are a tax payer under RCM (reverse charge mechanism)
  • If you are an agent or any other similar person acting on behalf of a supplier
  • If you are an input service distributor
  • If you are an ecommerce operator or an aggregator supplying service under his brand name
  • If you are a person who supplies via ecommerce operator

In short, GST is applicable to all businesses and all persons except for agriculturists. In the context of agriculture, only horticulture, floriculture, sericulture, crops raising and gardening is considered for GST exemption. Whereas other activities like rearing of crops, dairy farming and poultry are not exempted from GST laws.

Businesses include: Persons include:
·         Commerce

·         Manufacturing

·         Profession

·         Trade

·         Vocation

·         AOPs

·         Companies

·         Cooperative societies

·         Firms

·         Hindu Undivided Families

·         Individuals

·         LLPs

·         Trusts

Registration for GST

As seen above, GST is applicable to almost all and hence it is very much vital to get registered on GST portal. To get through the procedure of GST registration, it is mandatory to have PAN for all Indian residents. In case on non-resident registrations, they can get registered on GST portal based on other than PAN documents as prescribed by the government. A single registration shall be required for each state, separate registrations may be required for different businesses within the state.

Example of GST Calculation

Suppose the rate of GST is set at 20% and the manufacturing cost of a Product X is INR 100

Hence, after GST the total amount would be:
=INR 100 + INR 20 (20% of cost)
= INR 120

If the seller sells the product by adding 2.5% profit on cost i.e. INR 30, the selling price of Product X would be INR 150

In this case, the GST will charge another 20% on just the difference amount on INR 30 i.e. INR 6 of Rs. 150 and Rs. 120 i.e. only 20% on Rs. 30 which is equal to Rs. 6. So the final price is Rs. 150 + Rs. 6

Hence, the final selling price charged to the customer will be INR 150 + INR 6 = INR 156

Frequently Asked Questions

1.) I am a salaried person; do I need to register under the GST?
No, GST is an indirect tax applicable to businesses, professionals, freelancers and service providers.

2.) My income is below Rs. 20 lakh but I am an inter-state supplier, is GST applicable to me?
If a person who is making inter-state supplies of taxable services and his/her turnover is less than Rs. 20 lakhs, in financial year, then he/she is exempted from registration. In cases of inter-state supply of goods, the turnover is irrelevant and registration is compulsory.

3.) I am an online dealer, selling my goods through Amazon and Flipkart. My turnover doesn’t cross Rs 20 lakh, Do I need registration under GST?
Yes, it is mandatory for all the e-commerce dealers to obtain the registration under GST, the turnover limit is irrelevant in this case.

4.) I am an agriculturist, does GST apply to me?
Agriculturists are exempted under GST. Services like: horticulture, floriculture, sericulture, crops raising and gardening are given an exemption under the GST Act.

5.) My turnover is near to reach the exemption limit, when will I be liable to obtain the registration?
The threshold limit for registration has been prescribed as Rs 18 lakh of annual turnover. ( Rs 9 lakhs for specified states)

Since the GST will be applied at each step of value creation, it would be challenging for the owners of black money to join anywhere in the value chain with the GST without accounting for all other transactions.  As per the estimations, the GST is expected to provide an instant boost of 0.9% – 1.4% of the GDP.
The Goods and Services Tax (GST) will be levied at multiple rates ranging from 0 per cent to 28 per cent.

GST Council finalised a four-tier GST tax structure of 5%, 12%, 18% and 28%, with lower rates for essential items and the highest for luxury and de-merits goods that would also attract an additional cess.  For all your GST related queries, GST registration, compliance and reconciliation enlist the aid of the experts at H&R Block India.

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CA Chetan Shinde
CA Chetan Shinde
Chetan is the Lead Tax Advisor at H&R Block (India) with an experience of almost half a decade in audit and taxation. His professional areas of interest are GST advisory and statutory audit. Apart from taxation, he is passionate about social causes and works extensively towards rural school development and literacy.