In the current digital era, numerous small service providers and freelancers offer their services online, catering to clients both within their home states and abroad, all from the comfort of their homes. However, it’s essential to consider the tax implications associated with conducting business in this virtual landscape. So first question comes in mind is about GST registration for interstate supply of services. So, lets discuss further:
📢Is GST registration mandatory for interstate supply of services?
A very common and important question arises whether such interstate supply of services required GST registration if turnover is below ₹ 20 lakh or (₹ 10 lakh for special category states)?
Common understanding is GST registration is not mandatory if aggregate turnover in a financial year
does not exceeds threshold limit. But this understanding is not apply to
certain cases u/s 24 of CGST Act. The section 24(i) of the GST acts mandate registration for person making interstate supply. However, government has specifically excluded few supplies from application of section 24(i) by issue of notifications.
CBIC issued Notification No. 10/2017 – Integrated Tax dated 13/10/2017 to address the above concern of small service providers. Crux of the notification is as follows:
Person making interstate supply of taxable services and having all India pan basis turnover up to threshold of ₹ 20 lakh (*₹10 lakh for special category states) in a financial year have been exempted from obtaining compulsory GST registration.
Lets say, freelance journalists, engineer professionals, visiting faculty to foreign universities, etc. who are engaged exclusively in supply of services, need not take registration if their aggregate turnover is below the threshold limit.
Now , second important aspect is supply of service through e-com operators.
📢Is GST registration compulsory for supplying services through E-Commerce Operators?
Vide notification 65/2017-Central tax dated 15/11/2017, if person making taxable supply of services [except supplies specified u/s 9(5)] through e-commerce operator and having aggregate turnover below ₹ 20 lakh or (₹ 10 lakh for special category states*), in a financial year has been exempted from obtaining compulsory GST registration.
However, please note this relaxation is not available for supply of goods. Hence, person making interstate supply of goods (except notified handicraft goods as per Notification No. 56/2018-Central Tax dated 23.10.2018) requires compulsory GST registration irrespective of quantum of aggregate turnover.
Conclusion of the above is if you are supplying services whether or not through e-commerce operator and your turnover is below threshold you are not required to register under GST.
*Special category states referred above: Manipur, Mizoram, Nagaland & Tripura. For the special category states threshold limit is ₹ 10 lakh.
Notification No. 10/2017 – Integrated Tax dated 13/10/2017
