GST Threshold Exemption

[Kaustubh Karandikar]

XYZ (franchise) selling products under brand of PQR (Franchisor). PQR not taking any royalty from franchise. XYZ not allowed to sell product other than of PQR. E.g., MRP of product ‘X’ is ₹.100/-, ‘Franchisor’ charging XYZ ₹.90 + ₹.2 GST= ₹.92 by issuing a tax invoice. XYZ making payment to franchisor against this. XYZ re - selling product to customer at MRP of ₹.100/- thereby getting a profit of ₹.8 (100 – 92). Can XYZ claim exemption up to ₹ 20 Lacs or need to pay GST from day one?

[KASTURI SETHI]

In my view, no threshold exemption is available Covered under compulsory registration under Section 24 (vii) of CGST Act. Emphasis is supplied on the expression, "or otherwise".

[Ganeshan Kalyani]

I agree with the views of Sri Kasturi Sir.

AI Summary

Compulsory GST registration required where exclusive franchised supplies are invoiced, so threshold exemption is not available. An exclusive franchising arrangement where the franchisor issues tax invoices and the franchisee is limited to selling franchisor goods falls within compulsory registration under Section 24(vii) of the CGST Act; the franchisee cannot claim the threshold exemption and must register for GST from the first taxable supply.