When Turnover Exceeds Rs. 20 Lakhs: Registration and GST Compliance in India
Under the Goods and Services Tax (GST) regime in India, the threshold for registration and compliance varies based on the type of supply and the location of the supplier. This article will delve into the rules and implications for businesses whose total turnover exceeds Rs. 20 lakhs, providing clarity on GST registration and taxation.
Threshold Limit
The threshold limit for GST registration in India is set at Rs. 20 lakhs for regular states and Rs. 10 lakhs for special category states. Once a supplier's aggregate turnover exceeds this limit, they are required to obtain GST registration. This ensures that businesses are compliant with national tax regulations and can efficiently manage their financial records and payments.
GST on Total Turnover
Once registered, the supplier must charge GST on all taxable supplies made. However, it is essential to understand that GST is not paid on the total turnover but specifically on the value of taxable supplies made during the period. This distinction is critical for accurate tax calculation and compliance.
Exempt Supplies: When a business engages in both taxable and exempt supplies, GST is only applicable to the taxable portion. The total turnover includes all supplies, both taxable and exempt, but GST is calculated only on the taxable part.
Composition Scheme
For small taxpayers with an aggregate turnover up to Rs. 1.5 crores (Rs. 150 lakhs) for regular states and Rs. 75 lakhs for special category states, there is an option to opt for the composition scheme. Under this scheme, the fixed percentage of the turnover is paid as GST instead of applying regular tax rates to each supply. This simplifies tax computation and compliance for businesses meeting these criteria.
Scenarios
Scenario 1: If your business has not taken GST registration and your aggregate turnover has crossed 20 lakhs, you must take registration immediately. You will then be liable to pay tax on any amount of turnover over 20 lakhs for the current year, and Rs. 1 lakh from the next year onward.
Scenario 2: If your business has voluntarily taken GST registration, you will be required to pay GST on all turnover from the date of registration onwards.
When Total Turnover Exceeds 20 Lakhs: Under the GST regime, being a registered entity means you are liable to take GST registration and comply with it. This applies regardless of whether you have voluntarily registered before crossing the threshold limit.
Voluntary Registration
If You Get Registered Voluntarily Before Crossing 20 Lakhs: Voluntary registration before reaching the turnover threshold can be advantageous. It provides protection for non-taxable sales, ensuring they remain exempt from tax. This proactive step can offer several benefits, such as enhanced business credibility and tighter financial control.
By understanding and following these guidelines, businesses can ensure they remain compliant with the complex yet comprehensive GST regulations in India. Proper record-keeping, timely registration, and compliance with tax obligations are crucial for long-term success in the Indian market.