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Applicability of Threshold Exemption, Goods and Services Tax - GST

Issue Id: - 114392
Dated: 10-12-2018
By:- Kaustubh Karandikar
Applicability of Threshold Exemption

  • Contents

XYZ is having turnover in the financial year 18 - 19 above ₹ 20 Lacs and therefore paying GST. In the year 19 -20, he will be continuing to pay GST and if his turnover will be below ₹ 20 Lacs, will he be exempted from paying GST and claim refund of GST already paid in 19 -20 or otherwise how it works?

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Showing Replies 1 to 15 of 15 Records

1 Dated: 10-12-2018
By:- Ganeshan Kalyani

The threshold limit is applicable to register under GST Act. In the year of registration the tax shall be applied on the turnover in excess of the exemption limit. In the second year onward the tax is to be charged from the first supply itself.


2 Dated: 10-12-2018
By:- KASTURI SETHI

Dear Sir,

The issue is to be examined deeply. The word, 'preceding ' before 'year' is missing in Section 22 of CGST Act, 2017. The word, 'preceding' used to be in every small scale exemption notification of Service Tax.

SECTION 22. Persons liable for registration. - (1) Every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees :

Provided that where such 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 ten lakh rupees.

From the above, your view appears to be correct. I expect views from experts.


3 Dated: 11-12-2018
By:- Ganeshan Kalyani

In 18-19 , when the threshold exceeded the GSTIN was taken. Tax was paid above ₹ 20 lacs turnover. In 19-20 the GSTIN is existing and hence GST is applicable even if the turnover does not exceed the threshold in the year.


4 Dated: 11-12-2018
By:- DR.MARIAPPAN GOVINDARAJAN

In my view there is no provision for cancelling the registration when the aggregate turnover reduces below the threshold limit.


5 Dated: 12-12-2018
By:- KASTURI SETHI

Dr.Govindarajan Sir,

I agree with you to the extent that there is no provision for cancellation of registration because of reduction turnover below threshold limit.

In pre-GST era, there was a word,"Preceding" financial year in every small scale exemption notification of Service Tax. Now in GST regime, "preceding" is missing and replaced by "a financial year'. What is impact of this ? Will you please offer your views ?

Thanks & regards.

K.L.SETHI


6 Dated: 12-12-2018
By:- DR.MARIAPPAN GOVINDARAJAN

I agree with you. The GST council is to bring clarification in this regard to avoid such confusions.


7 Dated: 14-12-2018
By:- Ganeshan Kalyani

In my view, by the word a financial year it means the turnover of the current year also shall be considered in case the turnover in the preceeding year was below threshold .


8 Dated: 14-12-2018
By:- KASTURI SETHI

Sh.Kalyani Ji, Where is the word, Preceding, which was earlier in every notification in pre-GST era. It is a flaw in the law. In such situation we cannot imply. It should be brought to the notice of GST Council.


9 Dated: 14-12-2018
By:- Ganeshan Kalyani

The intention of the law maker is to cover both the year for the purpose of determining the threshold. However as you say there needs a clarification in the flaw law.


10 Dated: 15-12-2018
By:- KASTURI SETHI

Intention of Govt. may be but we are discussing what law says. We must know the difference among the phrases, '' a financial year, the financial year and the preceding financial year".


11 Dated: 24-12-2018
By:- Siva Rama

There is a rumour among experts in market that Law says about ₹ 20 lakhs threshold limit only registration purpose only. But not for paying tax. That is, If turnover for FY1718 is ₹ 21 lakhs, GST registration has to be taken on crossing 20 lakhs, but tax has to be paid on full 21 lakhs.

When contacted Helpdesk, they also said tax to be paid on 21 lakhs.

But I dont find any logic in paying tax on full 21 lakhs when any registration is not required upto 20 lakhs in FY1718.

Experts view awaited.

Regards,

Siva


12 Dated: 25-12-2018
By:- kollengode venkitaraman

THIS QUESTION IS VERY RELEVANT. SEC 22. PRESCRIBES THE TURNOVER LIMIT FOR REGISTRATION. BUT I COULD NOT FIND ANY SECTION WHICH GRANTS THE BASIC EXEMPTION OF RS.20 LAKHS. IN KERALA VALUE ADDED TAX ACT SEC.6 PROVIDES THE BASIC EXEMPTION LIMIT AND A PERSON BECOMES LIABLE TO PAY TAX, ONCE THIS LIMIT IS EXCEEDED. SUCH A PROVISION IS ABSENT IN CGST ACT. IS IT ACCIDENTAL OR PURPOSEFUL? AS SIVA OPINES, ONE LI LIABLE TO PAY GST WITHOUT ANY EXEMPTION!


13 Dated: 25-12-2018
By:- KASTURI SETHI

See Board's Flyer No.1. Any person is required to apply for registration when that person is liable to pay tax. You are liable to pay tax after crossing ₹ 20 lakhs. Threshold exemption is substantive right. Tax is to be paid on ₹ 1 lakh (21 lakh - 20 lakh). When any person crosses threshold exemption limit, one is to apply for registration with in 30 days from the date of crossing exemption limit. None can deny threshold exemption limit of ₹ 20 lakhs if he fulfills all other conditions laid down for eligibility. This is legally wrong to say that tax is to be paid on 21 lakhs. No doubt about.


14 Dated: 26-12-2018
By:- KASTURI SETHI

It is neither the intention of legislature nor Govt. to deny threshold exemption of Rd.20 lakhs in the situation explained above.


15 Dated: 26-12-2018
By:- KASTURI SETHI

Has any person received Show Cause Notice denying threshold exemption of ₹ 20 lakhs and demanding GST on ₹ 21 lakhs ? If so, email me. Any reader of this query should come forward and email me for clearing the air. Thus concept will be clear to all.


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