2020 (5) TMI 221 - AAR - GST

Income sources affecting GST registration: Non-Executive Director fees, property rentals, interest. Exclusions: securities-related incomes.

In Re: M/s. Anil Kumar Agrawal

In Re: M/s. Anil Kumar Agrawal - 2020 (36) G.S.T.L. 596 (A. A. R. - GST - Kar.) , [2020] 81 G S.T.R. 55 (AAR) Issues Involved:1. Inclusion of various income sources in Aggregate Turnover for GST registration.2. Classification of income sources as supply under GST law.3. Applicability of GST on different types of income.Issue-wise Detailed Analysis:1. Inclusion of Various Income Sources in Aggregate Turnover for GST Registration:The applicant sought to determine which types of income should be included in the Aggregate Turnover for GST registration. The definition of 'Aggregate Turnover' under Section 2(6) of the CGST Act, 2017, includes the aggregate value of all taxable supplies, exempt supplies, exports, and inter-State supplies, excluding inward supplies on which tax is payable on a reverse charge basis and certain taxes and cess.2. Classification of Income Sources as Supply under GST Law:The judgment examined whether each type of income received by the applicant constitutes a supply under Section 7(1)(a) of the CGST Act, 2017, which requires the transaction to involve a supply of goods or services, for consideration, and in the course or furtherance of business.3. Applicability of GST on Different Types of Income:Interest Income from Various Sources:Interest income from deposits, loans, and advances is considered an exempt service under Entry No. 27(a) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. Therefore, these amounts are included in the Aggregate Turnover for registration.Partner’s Salary from Partnership Firm:If the applicant is a working partner receiving a salary, it is not considered a supply of goods or services under Schedule III of the CGST Act, 2017. If the salary is a share of profit, it is also not under the purview of GST. Thus, it is not included in the Aggregate Turnover.Salary as Director from a Private Limited Company:The judgment distinguishes between an Executive Director (employee) and a Non-Executive Director (independent contractor). If the applicant is an Executive Director, the salary is not considered a supply of services. If a Non-Executive Director, the remuneration is taxable under reverse charge mechanism and is included in the Aggregate Turnover.Rental Income on Commercial Property:Rental income from commercial property is considered a taxable supply of service and is included in the Aggregate Turnover.Rental Income on Residential Property:Rental income from residential property is an exempt supply but still included in the Aggregate Turnover as per the definition of Aggregate Turnover, which includes exempt supplies.Maturity Proceeds of Life Insurance Policies, Dividend on Shares, and Capital Gains/Losses on Sale of Shares:These incomes are related to securities, which are excluded from the definition of goods and services under the CGST Act. Therefore, they are not included in the Aggregate Turnover.Ruling:1. Incomes from salary/remuneration as a Non-Executive Director, renting of commercial property, renting of residential property, and interest from deposits/loans/advances are included in the Aggregate Turnover for registration.2. Income from renting residential property is included in the Aggregate Turnover, even though it is an exempt supply.