According to this section, every supplier whose aggregate turnover in a financial year exceeds the prescribed threshold limit is required to obtain GST registration in the State or Union territory from where he makes taxable supplies of goods or services or both.
In addition, there are certain instances where registration is necessary upon the occurrence of specific events.
In this comprehensive guide, we’ll delve into the provisions of Section 22 and explore the various categories of persons who are liable for registration under GST.
So, let’s get started!
Who is a Taxable Person?
As per Section 2(107) of the CGST Act, 2017, “taxable person” means a person –
- who is registered; or
- liable to be registered under Section 22 or Section 24 of the CGST Act, 2017.
Thus, a person who is liable to be registered but does not take registration and remains an unregistered person shall be treated as a taxable person
Similarly, a person who is not liable to be registered but takes voluntary registration and gets himself registered shall also be treated as a taxable person.
It should be noted that the restriction of being a taxable person is only on the supplier whereas the recipient can either be a taxable person or a non-taxable person.
Who are the Persons Liable for Registration under GST?
As per Section 22 of the CGST Act, 2017, the following persons are liable for registration under GST
- Every supplier whose aggregate turnover in a financial year exceeds the prescribed threshold limit.
- Persons registered under earlier indirect tax laws is liable to be registered under GST.
- The transferee or the successor is liable to obtain fresh registration in case of transfer of business as a going concern.
- The transferee is liable to obtain fresh registration in case of amalgamation or demerger by an order of High Court or Tribunal.
A detailed discussion on various categories of persons liable for registration under GST are given below:
Registration based on Threshold Limit [Section 22(1)]
Every supplier shall be liable to obtain registration in the State or Union territory from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds ₹ 20 lakhs
Therefore, the prescribed threshold limit for registration is ₹ 20 lakhs in a financial year.
Threshold Limit for Special Category States
Where a person makes taxable supplies of goods or services or both from any of the Special Category States, he shall be liable to be registered if his aggregate turnover in a financial year exceeds ₹ 10 lakhs.
Therefore, the prescribed threshold limit for registration in Special Category States is ₹ 10 lakhs in a financial year
Meaning of Special Category States
As per Article 279A (4) (g) of the Constitution, there are 11 Special Category States
- Arunachal Pradesh
- Assam
- Jammu and Kashmir
- Manipur
- Meghalaya
- Mizoram
- Nagaland
- Sikkim
- Tripura
- Himachal Pradesh
- Uttarakhand
- Manipur,
- Mizoram,
- Nagaland, and
- Tripura
Note
The State of “Jammu and Kashmir” no longer exists as a Special Category State. It has been reorganised into the Union territory of Jammu and Kashmir (with legislature) and Union territory of Ladakh vide The Jammu and Kashmir Reorganisation Act, 2019.
Therefore, the prescribed threshold limit for registration in Jammu and Kashmir is ₹ 20 lakhs in a financial year.
Power to Enhance Threshold Limit for Special Category States
The Government may, at the request of a Special Category State and on the recommendations of the GST Council, enhance the aggregate turnover from ₹ 10 lakhs to such amount, not exceeding ₹ 20 lakhs. This shall be subject to such conditions and limitations, as may be so notified
Threshold Limit for Persons Engaged in Exclusive Supply of Goods
The Government is empowered to enhance the aggregate turnover from ₹ 20 lakhs to such amount not exceeding ₹ 40 lakhs in case of supplier who is engaged exclusively in the supply of goods. This shall be subject to such conditions and limitations, as may be notified.
The Central Government vide Notification No. 10/2019-Central Tax dated 07-03-2019 has provided that with effect from April 1, 2019, any person, who is engaged in exclusive supply of goods and whose aggregate turnover in the financial year does not exceed ₹ 40 lakhs is exempt from obtaining registration under GST.
Exceptions to this exemption are as follow:
- persons required to take compulsory registration under section 24;
- persons engaged in making supplies of
- ice cream and other edible ice, whether or not containing cocoa.
- pan masala
- all goods, i.e., Tobacco and manufactured tobacco substitutes
- fly ash bricks or fly ash aggregate with 90% or more fly ash content; fly ash blocks;
- bricks of fossil meals or similar siliceous earths;
- building bricks; and
- earthen or roofing tiles.
- persons engaged in making intra-State supplies in the States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand; and
- Persons who have opted for voluntary registration or such registered persons who intend to continue with their registration under the CGST Act.
Threshold Limit for Registration in case of Exclusive Supplier of Goods
Applicable Threshold Limit
| ₹ 10 lakhs | ₹ 20 lakhs | ₹ 40 lakhs |
|---|---|---|
| Manipur | Arunachal Pradesh | All other States/UTs |
| Mizoram | Meghalaya | |
| Nagaland | Puducherry | |
| Tripura | Sikkim | |
| Telangana | ||
| Uttarakhand |
Note
A person shall be considered to be engaged exclusively in the supply of goods even if he is engaged in exempt supply of services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount.
Persons registered under earlier Indirect Tax Laws [Section 22(2)]
- Every person who was registered or held a license
- under the earlier indirect tax laws (Excise, VAT, Service Tax etc.)
- as on the day immediately preceding the appointed day,
- shall be liable to be registered under this Act with effect from the appointed day
Registration on Transfer of Business [Section 22(3)]
Where a business carried on by a registered taxable person is transferred,
- whether on account of succession or otherwise (including transfer/change in the ownership of business due to death of the sole proprietor),
- to another person as a going concern,
- the transferee or the successor, as the case may be, shall be liable to be registered with effect from the date of such transfer or succession.
Therefore, in case of transfer of business as a going concern, the transferee or the successor is liable to obtain fresh registration.
Registration in case of Amalgamation or Demerger [Section 22(4)]
- In a case of transfer of business pursuant to sanction of a scheme or an arrangement for amalgamation or, as the case may be,
- demerger of two or more companies pursuant to an order of a High Court, Tribunal or otherwise,
- the transferee shall be liable to be registered, with effect from the date on which the Registrar of Companies issues a certificate of incorporation giving effect to such order of the High Court or Tribunal.
Therefore, in case of amalgamation or demerger by an order of High Court or Tribunal, the transferee is liable to obtain fresh registration.
Frequently Asked Questions (FAQ)
Who is a Registered Person under GST?
As per Section 2(94) of the CGST Act, 2017, “registered person” means a person who is registered under Section 25 but does not include a person having a Unique Identity Number (UIN).
Thus, any person who has obtained a Unique Identity Number (UIN) is not a registered person under GST.
What does the term “Threshold Limit” mean in GST?
In the context of GST, the term “threshold limit” refers to the turnover limit beyond which a supplier becomes liable for GST registration.
Different threshold limits have been prescribed for various States and Union Territories based on whether the supplier is engaged in –
- exclusive supply of goods, or
- exclusive supply of services, or
- supply of both goods and services.
These limits have been set to ensure that suppliers whose aggregate turnover in a financial year exceeds the prescribed threshold limit are required to obtain registration under GST, while small suppliers are exempt from the registration requirement.
Thus, the threshold limit acts as a trigger for GST registration. If the aggregate turnover in a financial year exceeds the prescribed threshold limit, a supplier becomes liable for GST registration
Table Of Contents
- 1. Who is a Taxable Person?
- 2. Who are the Persons Liable for Registration under GST?
- 3. Registration based on Threshold Limit [Section 22(1)]
- 4. Persons registered under earlier Indirect Tax Laws [Section 22(2)]
- 5. Registration on Transfer of Business [Section 22(3)]
- 6. Registration in case of Amalgamation or Demerger [Section 22(4)]
- 7. Frequently Asked Questions (FAQ)