The Goods & Services Tax (GST) is a multi-stage, destination-based tax that is imposed at every instance of value addition to the product.
What does this mean?
Every item goes through multiple steps in the production chain. Purchasing of raw materials that are needed to make a product is the initial stage. Then comes the production or the manufacture. Next, is the warehousing of the materials, the sale of the product to the retailers and the final stage is when a retailer sells this product to the end of finishing the cycle. The GST is levied at each and every stage of this process and hence it is referred to as a multi-stage tax.
If one is looking to avoid the GST registration within the parameters of the law then this article is definitely for you. With all the news on registration under the GST, the article below will guide you how not to register under GST. Here we will be discussing how one can avoid registration under the tax.
But, before that one needs to first understand why and when GST registration becomes mandatory.
When is GST registration compulsory?
Given below are few examples that explain when it is mandatory for you to register under GST-
1. When crossing the threshold (an annual turnover above 20 lakhs)
2. Doing an interstate supply (i.e. supplying from one state to another)
3. The supply of exempted and non-exempted goods (together)
Kindly note that if it is interstate or e-commerce then the turnover is not important you certainly have to register under the GST.
How can one avoid when you have crossed the threshold under GST
If you are a supplier/retailer/ service provider with an annual turnover above Rs.20 lakh, then it is compulsory for you to register under the tax. Moreover, the annual collective turnover is calculated for one pan across India.
Therefore, if one issues the invoices against the different PAN, then the exemption limit is multiplied by two. For example: if one owns three different entities, a proprietorship, partnership and the HUF. In this case, one has the total basic exemption of 60 lakh, i.e. 20 lakh for each business.
As discussed earlier, if one has multiple entities and doing the intrastate transaction, then one can avoid the GST registration up to a certain limit.
How to avoid GST when one has made interstate supply?
All those who supply either goods or services from one state to another has to register under the GST. The turnover has no role to play in this. For example, if the income is below 20 lakhs but one is doing an interstate supply, then it becomes essential for you to register under the tax.
Presume, that you are making an interstate supply to Delhi from Uttar Pradesh, in this case you can choose to open another entity in the Delhi. When one registers another entity in the Delhi and starts supplying goods from there only, then you cease to supply the interstate supply and hence one can enjoy another threshold limit and can skip the GST registration for both Delhi and Uttar Pradesh.
How does one avoid GST when you have supplied exempted and non-exempted goods?
If an individual is supplying exempted goods only then the GST registration is not needed, but if that same individual is supplying exempted goods along with non-exempted good then the exemption will cease to exist and the individual will have to register under the GST.
Here’s how one can avoid from the registration and compliance –
One can continue supplying the exempted goods under their name, the only difference will be to supply non-exempted goods under another entity.
It is imperative to register if one is coming under the compulsory registration or else there will be consequences.
FAQs on GST Threshold
Does the GST apply to you?
GST, is an indirect tax, it is applicable to the businesses, professionals, freelancers and also service providers. However, It does not apply to the salaried individuals.
Does one have to register?
One must register if any of the following applies to you:
1. If the annual turnover (sales) exceeds ₹20 lakh (₹10 lakh if you are in the North-eastern states).
2. If you make an inter-state sale i.e. if you are based in one state and you sell goods to a receiver in another state. For example, you are based in Delhi and you sell to Mumbai then it is considered an interstate sale.
3. If you sell online. One can sell through their website or through an operator like for instance Flipkart or Amazon.
4. If you are selling goods on behalf of another taxable person (i.e. you are an agent).
5. If you deal in goods/services on which reverse charge applicable—where the buyer deposits tax instead of the seller.
To whom does GST NOT apply?
The GST does not apply to agriculturists. For example: If you grow flowers and then sell them, then GST does not apply to you.
If you are dealing in exempted goods/services, then GST does not apply to you.
What should one know about GST registration?
One has to apply for the registration, in every state in which they will be conducting their business, within 30 days from the date on which they are liable for registration (For example, the day the annual sales crosses ₹20 lakhs). One must obtain a separate registration for each state, as registration under the GST will be state-wise. The registration number in the GST (GSTIN) will be PAN-based and therefore, having a PAN will be a prerequisite for obtaining the registration. One can also opt to willingly register for the GST even if their sales are less than ₹20 lakhs. This will help to avoid any restrictions like no interstate sales, no selling online etc.
What is considered a “casual taxable person?”
A person who intermittently supplies the goods and/or services in a territory where the GST is applicable but doesn’t have a fixed place of business in the said state is treated as a casual taxable person as per GST. For example, an individual who has place of business in Kolkata gives consulting services in Bangalore (where he has no place of business), then he would be treated as casual taxable person in Bangalore.
What is a special registration for casual taxable person?
A casual taxable person may obtain a temporary registration for a period of 90 days (extendable for additional 90 days).
If one obtains the above registration, they will have to deposit tax in advance (based on their estimated tax liability).
Who can collect the GST?
Only a registered taxable person can collect the GST. One must prominently show the GST amount on tax invoices.
What is the Reverse Charge?
The Reverse charge means that the liability to pay tax is by the recipient of goods/services instead of the supplier. The Reverse charge is applicable for both services as well as the goods.
What are the situations under which the reverse charge will apply?
An unregistered dealer selling to a registered dealer: Under such a circumstances, the registered dealer has to pay the GST on the supply. For instance if you are registered under the GST and you are buying from an unregistered dealer then the reverse charge will apply, i.e. you, the buyer, will have to pay the GST.
The services through an e-commerce operator: If an e-commerce operator supplies services then the reverse charge will apply on the e-commerce operator. He will be liable to pay the GST.
For example, take a company that provides services of teachers, plumbers, electricians, beauticians etc. This company is liable to pay the GST and collect it from customers instead of the registered service providers.
Note: The Centre or State Government may notify the other scenarios where the reverse charge will apply.