Whether registration compulsory for a small service provider

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 June 2017 Dear Sir/Madam,

Please let me know whether a person providing professional services to a company @ Rs.45,000/- per month needs to get registered under the GST Act likely to be coming into force from 01-07-2017.

Thanks.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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14 June 2017 no. the registration is required only after your turnover crosses 19 lakhs.

Querist : Anonymous

Querist : Anonymous (Querist)

14 June 2017 Thanks. Please note that he is a service provider and not a supplier of goods. So, whether the threshold limit is applicable for service providers also?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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14 June 2017 already noted. there is no distinction between service provider and supplier of goods in GST.

Querist : Anonymous

Querist : Anonymous (Querist)

14 June 2017 Thank you so much!

One more thing: Whether in this case, the company is responsible for paying GST under reverse charge method.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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03 August 2025 Here’s a clear explanation of your question in the context of GST laws as applicable from 1 July 2017:

✅ Scenario:
A professional service provider (individual, unregistered) is billing a company ₹45,000/month (i.e., ₹5.4 lakhs annually).

You’re asking:

Is GST registration compulsory for this provider?

Is the company liable to pay GST under Reverse Charge Mechanism (RCM)?

🔹1. Is GST Registration Compulsory?
👉 Under Section 22 of the CGST Act, registration is compulsory if aggregate turnover exceeds ₹20 lakhs in a financial year (₹10 lakhs in special category states).

✅ Your case:
Annual turnover = ₹45,000 × 12 = ₹5.4 lakhs

This is well below the ₹20 lakh threshold

Answer:
❌ GST registration is not compulsory for the service provider as long as turnover remains below ₹20 lakhs.

🔹2. Is the Company Required to Pay GST under Reverse Charge?
Initially, under Section 9(4) of CGST Act, RCM applied to purchases from unregistered suppliers, but...

✅ This provision was deferred/suspended from 13 October 2017 onward.
✅ And it was made applicable only in specific cases notified by the government.

🔍 But for the period 1 July 2017 to 12 October 2017:
If the company (registered) availed services from an unregistered professional, it was liable to pay GST under RCM during this brief window.

✅ Your case:
If services were received between 01.07.2017 and 12.10.2017, and:

The service provider was unregistered

The recipient (company) was registered

Then:
👉 Yes, the company had to pay GST under RCM.

After 12.10.2017:
👉 ❌ RCM on unregistered purchases is not applicable unless specifically notified.

✅ Final Summary:
Question Answer
Is the professional required to register under GST? ❌ No, if turnover < ₹20 lakhs
Should the company pay GST under RCM? ✅ Yes, but only from 1 July 2017 to 12 October 2017
After 12 October 2017 – RCM applicable? ❌ No, not unless notified for specific cases

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