Under the Goods and Services Tax (GST) regime in India, the term “taxable person” plays a critical role in determining who is liable to register, collect, and pay GST. A taxable person is an individual or entity engaged in the supply of goods, services, or both, where such supply is taxable under the GST Act. Let’s delve deeper into its definition, applicability, and exemptions.
Definition of Taxable Person
According to Section 2(107) of the GST Act, a taxable person is someone who is registered or required to be registered under the GST law. This includes individuals, partnerships, companies, trusts, and other entities engaged in business activities within India.
Key Features of Taxable Persons
- Threshold Limits for Registration:
- For goods: Businesses with an aggregate annual turnover exceeding ₹40 lakh (₹20 lakh for special category states) must register under GST.
- For services: The threshold limit is ₹20 lakh (₹10 lakh for special category states).
- Mandatory Registration: Certain individuals/entities, such as e-commerce operators, interstate suppliers, or businesses under the reverse charge mechanism, must register regardless of turnover.
- Composition Scheme: Small businesses with a turnover up to ₹1.5 crore can opt for a simplified GST compliance mechanism by registering under the Composition Scheme.
- Casual and Non-Resident Taxable Persons: These include individuals or entities who occasionally supply goods/services in a state or union territory where they do not have a fixed place of business.
Exemptions
Certain categories, like agriculturists (to the extent of supply of produce) and businesses dealing exclusively in exempt goods/services, are not classified as taxable persons.
In conclusion, understanding the concept of a taxable person is vital for GST compliance. It determines whether you need to register, charge, or remit GST, ensuring adherence to tax laws and avoiding penalties.
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