The thresholds and eligibility criteria are generally laid on the basis of aggregate turnover of an assessee. Under GST law, it provides certain exemptions from paying tax, applying for registration, eligibility criteria to avail composition scheme, applicability of TDS provisions and requirement of mentioning the HSN/ SAC codes, all of which is based on the aggregate turnover.
Here, we are providing a complete guide to the thresholds and eligibility criteria that are mentioned in GST law
Thresholds and Eligibility criteria
- Exemption from payment
- Composition scheme
- HSN/ SAC codes
Exemption from payment of tax
- Taxpayers with an aggregate turnover of Rs. 20 lakhs would be exempted from tax. For, North Indian states and Sikkim, the exemption would be Rs. 10 lakhs.
- Aggregate turnover shall include the aggregate value of all taxable and non-taxable/ non-GST supplies, exempt/ Nil-rated supplies and exports of goods and/or services and exclude taxes under GST.
Every supplier shall be liable to be registered under GST Law in the State from where he/she makes a taxable supply of goods and/or services if his/her aggregate turnover exceeds thresholds mentioned above. However, certain categories are required to get registered mandatorily irrespective of the thresholds:
- Persons making any Inter-State taxable supply (e.g. from Delhi to Maharashtra)
- Casual Taxable person (No fixed place where GST is applicable)
- Non-resident Taxable person (No fixed place in India)
- Persons who are required to pay tax under Reverse Charge
- Persons who are required to deduct tax at source
- Agents of a supplier
- Input Service Distributor
- Persons who supply goods or services through E-commerce Operator
- Every E-commerce Operator (e.g. Flipkart, Amazon)
- An aggregator who supplies services under his brand name
- Any Specialized Agency of the UN or any Multilateral Financial Institution
Any person with the aggregate turnover not exceeding Rs. 75 lakhs (Rs. 50 Lakhs for North Eastern States) shall be eligible to pay tax by composition scheme
No permission shall be granted to a taxable person under certain conditions:
- who is engaged in the supply of services (except service of restaurant); or
- who makes any supply of goods which are not leviable to tax under this Act; or (c) who makes any inter-State outward supplies of goods; or
- who makes any supply of goods through an e-commerce operator who is required to collect tax at source or
- who is a manufacturer of such goods as may be notified
Tax Deduction at Source
Provisions for tax deduction at source shall apply as notified under the act if the value of supply under a contract exceeds Rs. 2.5 lakhs. The value of supply shall be taken as the amount excluding the tax indicated on the invoice.
Deductor for the above purpose can be:
- Department or Establishment of the Central or State Government, or
- Local authority, or
- Governmental Agencies, or
- such persons or category of persons as may be notified
The tax shall be deducted at the rate of 1% of payment made to the supplier.
HSN/ SAC codes
HSN/SAC code shall be mentioned in Tax Invoice as well as furnished in Table 12 of FORM GSTR-1. The taxpayers who have turnover below the limit of Rs 1.5 Crore will have to mention the description of goods/service in place of code. Whereas, the description is optional for taxpayers who are required to furnish HSN/ SAC codes on the basis of aggregate turnover as below:
- Less than Rs. 1.5 crores – HSN/SAC code is not mandatory (Hence, composition dealers may not be required to specify HSN at 2-digit level also).
- Rs. 1.5 crores to Rs. 5 crores – HSN code at minimum 2 digit chapter level is mandatory. SAC code is mandatory.
- Above Rs. 5 crores – HSN code at minimum 4 digit chapter level is mandatory. SAC code is mandatory.
- For export turnover, 8-digit HSN code is mandatory irrespective of any of the above 3 categories.
Thresholds and eligibility criteria mentioned by the India Government is to boost up and benefit the small and medium enterprises (SME’S). These SME’S will contribute to country’s GDP and will help in eradicating the unemployement.
In case you are confused about GST as a business owner, feel free to consult the GST experts at LegalRaasta. You can get comprehensive assistance on GST Registration online and GST Return Filing. You can also use our GST compliance software for doing end-to-end GST compliance.