The government is preparing for a July-1 launch for GST, which will change the concept of levy of indirect taxes. With a little more than two months to go, it is important businesses understand this levy and start identifying whether and how it applies to them.
If you are a business, it is nearly certain you deposit some tax other than income tax. It could be in the form of service tax, excise duty, VAT or some version of custom duty. These taxes are called indirect taxes. Nearly all of these taxes will now be replaced with GST.
Does GST apply to you?
GST, being an indirect tax, is applicable to businesses, professionals, freelancers and service providers. It does not apply to salaried individuals.
Do you have to register?
You MUST register if any one of the following applies to you:
- If your annual turnover (sales) exceeds ₹20 lakh (₹10 lakh if you are in the Northeastern states).
- You make inter-state sales i.e. you are based in one state and sell goods to a receiver in another state. For example, you are based in Mumbai and you sell to Delhi then it is considered an interstate sale.
- You sell online. You can sell through your website or through an operator like Flipkart or Amazon.
- You sell goods on behalf of another taxable person (i.e. you are an agent).
- You deal in goods/services on which reverse charge applies—where the buyer has to deposit tax instead of the seller.
For points 2-5, your annual sales are irrelevant. GST will apply to you even if your sales are less than ₹20 lakh (₹10 lakh for NE states) per year.