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GST liability when turnover exceeds 20 lacs

Chhalani and Associates (CA - www.cachhalani.com) (142 Points)

05 March 2024

We are a service provider and crossed our turnover of Rs. 20 lacs in March 22. We took registration in Oct 23. Now for 21-22, is the GST liability be only for turnover above 20 lacs?

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APURBA CHATTERJEE (QUALIFIED CHARTERED ACCOUNTANT) (602 Points)
Replied 05 March 2024

GST liability will be applicable only from the date mentioned in GST Registration certificate.

Reddy Shekar P (9 Points)
Replied 05 March 2024

When you crossed the turnover limit of Rs. 20 lakhs in March 2022, you should've registered for GST within 30 days but ended up registering in October 2023. Technically, you're supposed to pay GST for the amount above Rs. 20 lakhs starting from when you exceeded the limit. Because of the delay in registration, you might face penalties and need to pay GST retroactively for the period you were unregistered.

Chhalani and Associates (CA - www.cachhalani.com) (142 Points)
Replied 05 March 2024

Just beacuse of delay in registration, can gst be levied on the entire turnover of 21-22 or it needs to be paid only on turnover above 20 lacs..

Money Money (383 Points)
Replied 05 March 2024

Let’s address your GST liability based on the turnover and the delay in registration:

Threshold for GST Registration:
According to the CGST Act, every supplier (including service providers) is liable to be registered in the state or union territory if their aggregate turnover in a financial year exceeds Rs. 20 lakhs12.
If your aggregate turnover crossed Rs. 20 lakhs during the financial year, you were required to apply for GST registration within 30 days from the date the turnover exceeded this limit1.
Delay in Registration:
In your case, you took registration in October 2023, which means there was a delay in obtaining GST registration.
The law recognizes that there might be a time lag between the date of grant of the certificate of registration and the date of liability to obtain registration.
For supplies made during this intervening period (between the turnover crossing the threshold and obtaining registration), the law allows issuance of a revised invoice within one month from the date of registration1.
GST Liability for 2021-22:
Since you obtained registration in October 2023, your liability to collect and pay GST would apply from that date onward.
For the financial year 2021-22, you need to consider the following:
Turnover Before Registration: Any turnover generated before obtaining GST registration is exempt from GST. You are not liable to pay tax on that turnover34.
Turnover After Registration: Once registered, you must issue tax invoices and collect GST from recipients on all invoices.
Penalty for Delayed Registration: If you fail to obtain GST registration within the prescribed time limit, you may be charged a penalty under Section 122 of the CGST Act, amounting to Rs. 10,000 or an amount equal to the tax not paid to the government1.
Income Tax Considerations:
Regarding income tax, you have two options:
Presumptive Scheme: If your aggregate gross receipts in the year are up to Rs. 50 lakhs, you can opt for presumptive taxation (Section 44ADA). Under this scheme, 50% of total turnover/gross receipts is considered as income, and no further expenditure can be claimed1.
Normal Tax Provisions: If you opt for normal tax provisions, maintain prescribed books of accounts, and compute income by deducting all relevant expenditures from receipts