When is GST liabilty arises?

[sakshi goyala]

I have GST registration from September 2023 but will cross the threshold in January 2024.

Will the GST liability arise in September 2023(Date of registration) OR in January 2024 (date of crossing threshold limit) OR the First month of rent received(April 2023)? Please clarify with legal provisions.

[KASTURI SETHI]

Dear Querist,

Pl. read the reply conjointly. (Sections 22 and 18 of CGST Act). Sections 23 and 24 are also to be read for crystal clear picture.

(i) Section 22 (1) says "______if his aggregate turnover in a financial year exceeds twenty lakh rupees. In Service Tax regime it was 'preceding financial year'.

(ii) Literal meaning of 'a' is something for the first time. You are entitled to threshold exemption for first twenty lakh rupees in a financial year. As per Section 22 (1) you are liable to pay tax when you exceed twenty lakh rupees and not prior to the date of registration.

(iii) Now if you obtain GST registration voluntarily before crossing first turnover of twenty lakhs, you will be liable to pay tax from September, 23. (the date of registration).

(iv) As per Section 18(2) of CGST Act, you can take ITC on the strength of tax invoices within one year from the date of issue of tax invoice.

Section 18(2)  "A registered person shall not be entitled to take input tax credit under sub-section (1) in respect of any supply of goods or services or both to him after the expiry of one year from the date of issue of tax invoice relating to such supply.

(v) Now if you want to avail ITC (if otherwise eligible ) for the period prior to the date of registration, pay tax from April, 23 (rent received) and take ITC.

Disclaimer : These are my personal views for academic and education purposes and not for legal and court purposes.

[KASTURI SETHI]

(i) Also read the procedure for registration laid down in Section 25 of CGST Act.

(ii) You cannot think of paying GST from January, 24.

[Padmanathan KV]

Once you have taken Voluntary Registration (in sept 2023) before crossing Rs.20 Lakhs, then you will be liable to tax from Sept 2023 itself.

To put it differently, if one wants to avail the benefit of Rs.20 / 40 lakhs limit, then registration must be taken only on exceeding the Rs.20 / 40 lakhs. Once voluntary registration is taken, then there is no threshold limit benefit.

AI Summary

GST Liability Starts Upon Voluntary Registration, Not Threshold Exceeding; Input Tax Credit Available Within One Year A user inquired about when GST liability arises, given their GST registration in September 2023 but expected to surpass the threshold in January 2024. Responses clarified that GST liability begins upon registration if done voluntarily before exceeding the threshold. According to Section 22 of the CGST Act, liability starts when the turnover exceeds twenty lakh rupees unless registered earlier. Voluntary registration in September 2023 means liability starts from that date, not January 2024. Section 18 allows input tax credit within one year of the tax invoice. If registration is before the threshold, the threshold benefit is forfeited.