Revenues to be considered for the GST Registration Threshold – AAR Karnataka
by ReinHeads Team | May 13, 2020
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Revenues to be considered for the GST Registration Threshold* – AAR Karnataka
| Facts |
- Anil Kumar Agrawal (‘the Applicant’) is an unregistered person under the GST Law
- The Applicant is in receipt of various types of income/ revenue viz. as salary as partner from partnership firm, salary as director from a private limited company, interest on capital and other securities, rental income etc.
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| Issue before the Authority for Advance Ruling (‘AAR’) |
- Which all revenue shall be considered for computation of ‘aggregate turnover’ for calculating the threshold of the GST registration?
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| Discussion and Findings of the AAR |
- Under Section 2(6) of the Central Goods and Services Tax Act, 2017 (‘the CGST Act’) ‘aggregate turnover’ is defined as the aggregate of value of all taxable supplies, exempt supplies, exports, inter-state supplies, etc., of goods or services or both etc. As a result, any income to be included in ‘aggregate turnover’, needs to be related to any transaction that amounts to ‘supply’ under Section 7(1)(a) of the CGST Act
- Based on the same, the AAR held as follows:
| Nature of Income |
Treatment under GST Law |
Rationale |
Whether included in ‘aggregate turnover’ for registration |
| Interest income received from different sources |
Supply of services by way of extending deposits, loans or advances (HSN 9971) are exempt from GST |
Exempted Supply (Entry No. 27(a) of the Notification No. 12/ 2017 – CT(R) dated 28.06.2017) |
Yes |
| Salary as a partner in his Partnership Firm |
Neither a supply of goods nor services |
Outside the purview of GST (Clause 1 of Schedule III of the CGST Act) |
No |
| Amount towards share of profit |
Outside the purview of GST |
Share of profit is application of money |
No |
| Executive director’s salary (employee) from a Company |
Neither a supply of goods nor services |
Services are by an employee to an employer (Schedule III of the CGST Act) |
No |
| Non-executive (nominated) director’s remuneration from a Company |
Remuneration is liable to GST under Reverse Charge Mechanism in the hands of the Company |
Provision of Services to the Company (Entry No. 6 of the Notification No. 13/ 2017 – CT(R) dated 28.06.2017) |
Yes |
| Rental income from commercial property |
Lease of commercial property is a supply of service (HSN 997212) |
Taxable supply of service under Section 7(1)(a) of the CGST Act |
Yes |
| Rental income from residential property |
Lease of residential property (HSN 997211) is exempt from GST |
Exempted Supply (Entry No. 12 of the Notification No. 12/ 2017 – CT(R) dated 28.06.2017) |
Yes |
| Dividend on shares, capital gains/ losses on sale of shares |
Qualify as ‘securities’ and therefore, excluded from definition of ‘goods’ or ‘services’ |
Income earned is application of money |
No |
| Maturity proceeds of life insurance policies |
No supply of services |
On completion of contract/ maturity of policy, there is no service involved between the Policy Holder and the Insurance Company |
No |
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*Advance Ruling No. KAR ADRG 30/ 2020 dated 04 May 2020 (The Authority for Advance Ruling, Karnataka) |
