REGISTRATION UNDER GST

[PANKAJ CHUGH]

KINDLY ADVISE,

WHERE A PROFESSIONAL HAS PROFESSIONAL INCOME OF RS 17 LAC AND EXEMPT INCOME (INTEREST FROM BANK) OF RS 4 LAC IN A FINANCIAL YEAR, WHETHER HE IS REQUIRED TO GET HIMSELF REGISTERED UNDER GST ?

THANKS IN ADVANCE

[KASTURI SETHI]

If interest income of ₹ 4 lacs relates to professional income, you are required to obtain registration certificate under Section 22 (1) of CGST Act. If interest income relates to domestic saving/FDR/family saving, it cannot be clubbed with your professional income.

See the definition of 'aggregate turnover' in Explanation to Section 22(1) of CGST Act

the expression “aggregate turnover” shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals

[PANKAJ CHUGH]

Dear Sir,

Thanks for your prompt reply.

The definition of aggregate turnover given in the act is as follow:

(6) “aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess;

As per my understanding, the aggregate value includes value of Exempt supplies, which in our case is the interest on Bank FDRs. The definition no where talks about "Taxable Person". So the professional should be liable for registration as the aggregate turnover in the state is ₹ 21 lac (Taxable 17 lac+ Exempt 4 Lac).

[KASTURI SETHI]

From your reply it appears that bank interest of ₹ 4 lacs is related to your professional income. So registration is required. You are required to apply for registration within 30 days from the date of crossing turnover of ₹ 20 lakhs.

[PANKAJ CHUGH]

Dear Sir,

Clarification on fact :

Taxable Income being Professional income ₹ 17 Lac

Exempt Income being Bank Interest on Savings/Fixed Deposits : ₹ 4 Lac (not related to profession but out of savings)

Thanks & Regards

[KASTURI SETHI]

You are to see expression, 'Aggregate turnover' explained in Explanation under Section 22(1)which is relevant for you. I have already highlighted the word, 'taxable person'. If you as a professional earns interest from your bank account (maintained for business purpose), then this interest income is to be clubbed for the purpose of registration under CGST Act, otherwise not.

AI Summary

Aggregate turnover: include business-related exempt interest when testing GST registration threshold and filing obligation. A professional must include exempt receipts such as bank interest in aggregate turnover for GST registration only if those receipts arise from accounts or deposits maintained for or incidental to the profession; personal savings interest unrelated to the profession is excluded. Where business-related exempt income is includible, the computed aggregate turnover must be tested against the registration threshold and the professional must apply for registration within the prescribed period after crossing that threshold.