GST ON TURNOVER BEFORE THRESHOLD LIMIT

[Guest]

My client applied for voluntary registration effective from, say, 15th May, 2022. Registration was granted and GSTIN receved effective from 1st August, 2022. I have not collected GST till 1st August, 2022. W.R T my turnover upto 1st August, 2022 shall I pay GST without having collected any tax and file August, return including prior turnover. Or can I collect and pay GST from 1st August, and forget prior non-taxed turnover.

[Charu Tyagi]

In case of Voluntary Registration liability to pay GST is effective from the date of Registration. Moreover if the turnover is not beyond the limit of turnover compulsory for registration he is not liable to GST i.e., If turnover does not exceed the limit he is only to liable GST from the date of registration and not from the turnover cross the limit for compulsory registration.

[KASTURI SETHI]

Also read Sections 18 (1) (a) and (2) of the CGST Act with Section 25(3) of CGST Act. The issue is worth examination with these Sections.

[KASTURI SETHI]

The registered person can pay GST on turnover prior to the date of registration and take ITC on inputs and capital goods in terms of Section 18 of CGST Act provided that ITC should not be time barred as per Section 18(2) of CGST Act.

[Shilpi Jain]

Pay tax from date of registration i.e. 1st Aug (provided turnover has not crossed threshold).

ITC on Stocks and Capital goods as on 1st Aug can be availed as per section 18.

[Shilpi Jain]

Section 18(1) reads as under

(b) a person who takes registration under sub-section (3) of section 25 shall be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of grant of registration;

AI Summary

GST Liability Starts from Registration Date Unless Threshold Exceeded: Pay GST on Prior Turnover with ITC Option A client who applied for voluntary GST registration effective May 15, 2022, received their GSTIN on August 1, 2022. They inquired whether they need to pay GST on turnover before August 1, without having collected it. Responses clarified that GST liability starts from the registration date, August 1, unless turnover exceeds the compulsory registration threshold. The client can pay GST on prior turnover and claim Input Tax Credit (ITC) on inputs and capital goods, provided ITC is not time-barred. Sections 18 and 25 of the CGST Act were referenced to support these points.