TaxTMI 
TaxTMI 
TaxTMI 
I am writing this article in the interest of those very very small businessmen who deal in supply of taxable services and goods both and their aggregate turnover is below ₹ 60 lakhs per annum and they are availing threshold limit of ₹ 20 lakh for the purpose of exemption from registration as prescribed under Section 22 (1) of CGST Act, 2017. It is pertinent to mention that in pre-GST era, separate exemption threshold limits for registration were available in Central Excise and Service Tax sectors for small scale manufacturers and small scale service providers.
There are two types of threshold exemption limits under GST laws. One threshold exemption limit is for the purpose of registration and the other is for the purpose of exemption from GST. Initially, threshold limit was ₹ 20 lakhs for exemption from GST as well as registration i.e. for both purposes. The supplier of goods or services or supplier of goods and services both could avail threshold limit of ₹ 20 lakhs. W.e.f. 1.4.19, threshold limit for exemption from GST was raised to ₹ 40 lakhs (other than special category States) exclusively for supply of goods vide Notification No.10/19-Central Tax dated 7.3.19 (effective from 1.4.19) whereas there was no change in respect of supply of services except the bar of inter-state supply of services was removed w.e.f. 13.10.17. Threshold limit for supply of services was not raised and it remained stuck at ₹ 20 lakhs till date which is clear from Section 22(1) of CGST Act which reads as under :-
“SECTION 22. Persons liable for registration. - (1) Every supplier shall beliable to be registered under this Act in the State or Union territory, other thanspecial 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 :”
A perusal of above reveals that a person who supplies goods and services both can avail threshold limit of ₹ 20 lakhs only for exemption from registration whereas that person is entitled to exemption from GSTseparately for goods and services which is ₹ 40 lakhs and ₹ 20 lakhs respectively. In other words, a person who deals in goods and services both cannot avail both threshold limits for the purpose of exemption from registration under GST laws. In pre-GST era separate threshold exemption limits were available for registration purpose and for exemption from Central Excise duty and Service Tax. For example ; In Central Excise sector, SSI exemption for turnover ₹ 1.50 crore and in Service Tax sector small exemption of ₹ 10 lakhs were admissible. The assessees were required to apply for registration only after crossing aggregate turnover of ₹ 1.40 Crore in Central Excise and ₹ 9 lakhs in Service Tax sector. Both kinds of threshold exemption limits were available i.e. exemption from registration and exemption CE duty & Service Tax. Per contra, in GST regime this benefit is not available. Only single exemption from registration is available and that is exemption limit of ₹ 20 lakhs for the purpose of registration. A person who supplies goods and services both can avail single exemption of ₹ 20 lakhs for the purpose of registration and not for ₹ 60 lakhs (₹ 40 lakhs for goods and ₹ 20 lakhs for services). The very purpose of raising threshold limit to ₹ 40 lakhs for goods is defeated inasmuch as the supplier is legally bound to obtain registration as soon as he crosses aggregate turnover of ₹ 20 lakhs (may be Rs. ten lakhs for supply of services and ten lakhs for supply of goods) as per Section 22 (1) of CGST Act. Despite having aggregate turnover much below ₹ 60 lakhs, that person is statutorily required to obtain registration under GST laws and maintain all records and file GST returns. Threshold limit of ₹ 60/- (₹ 40 lakhs for goods and Rs.twenty lakhs for services) is stand nowhere as compared to small scale exemptions in pre-GST era. Such small businessmen have to hire C.A. or Accountant for the purpose of filing GST returns and maintenance of records. It is an unaffordable burden on small businessmen. It is a bitter fact that filing of GST returns and maintenance of records is very complex and time consuming. These small businessmen can get relief from this unnecessary burden of hiring a person, if Govt. raises threshold limit for ₹ 60 lakhs for those persons who deals in goods and services both.
I hope that Govt. will do the needful in the interest of very very small businessmen.
(K.L.SETHI)
CONSULTANT(GST&ST)
The views of this article are author’s personal views and for academic interest only