Who is Liable for GST Registration?

While GST aims to create a unified tax system, not every business or individual needs to register for GST. Liability for registration depends primarily on turnover and the nature of business activity.

Threshold Limits for Liability

The GST law sets a threshold limit for registration based on aggregate turnover. This means that if a business's aggregate turnover exceeds the specified limit, it is liable to register under GST.

Aggregate Turnover: Includes the value of all taxable supplies, exempt supplies, exports, and inter-state supplies. It excludes the value of inward supplies on which reverse charge is applicable.
Threshold Limit:
- ₹20 lakhs: For most states in India.
- ₹10 lakhs: For special category states (North Eastern states, Himachal Pradesh, Jammu and Kashmir, and Uttarakhand).

Rationale: The threshold limit is designed to exempt small businesses with lower turnovers from the compliance burden of GST registration. This helps reduce the administrative load on both businesses and the government.

Categories of Persons Liable for Registration

Besides the threshold limit, certain categories of persons are liable for GST registration irrespective of their turnover. This is because their business activities pose a higher risk of tax evasion or require special monitoring. These categories include:

Inter-State Suppliers: Any business making inter-state supplies of goods or services must register, even if their turnover is below the threshold. This ensures that tax revenue is correctly attributed to the consuming state.
Casual Taxable Person: Someone who occasionally undertakes business activities in a state where they do not have a fixed place of business (e.g., event organizers, exhibition participants). They must register even if their turnover is below the threshold, as they might be operating for a limited period.
Non-Resident Taxable Person: A person who occasionally undertakes business in India but does not have a fixed place of business here. Similar to casual taxable persons, they need to register regardless of turnover.
Input Service Distributor: A business that receives invoices for services used by its branches in different states and distributes the input tax credit to those branches. Registration is mandatory for proper accounting and distribution of ITC.
E-commerce Operators: Operators of e-commerce platforms are liable for registration, regardless of turnover. This ensures that online transactions are brought under the GST ambit and tax is collected effectively.
TDS/TCS Deductors/Collectors: Entities required to deduct or collect tax at source under GST are liable for registration. This allows the government to track tax deducted/collected at source and ensure compliance.
Suppliers under Reverse Charge: If a business is liable to pay tax under the reverse charge mechanism, it must register, even if its turnover is below the threshold. This ensures that the recipient of goods or services pays the GST when the supplier is unregistered.

Rationale: These provisions ensure that businesses engaged in specific activities, which might pose higher risks of tax evasion or require special monitoring, are brought under the GST framework, regardless of their turnover. This helps maintain the integrity of the tax system and ensures wider tax compliance.