What type of businesses can be registered under GST?

Goods and Services Tax (GST) was introduced to simplify indirect taxes and unify the Indian market. Apart from this benefit, this tax brought many benefits for services and commodities businesses like a lesser tax on certain goods, centralized regulation, elimination of border taxes, etc. Moreover, the tax filing process under the GST regime was simpler as the multiplicity of the taxes were eliminated. This allowed small businesses to file GST every quarter easily.

But now the question is about the term “business under GST”, which means what type of businesses should/can be registered under GST. Let’s try to find the answer to the question in this blog.

What do we mean by the term “business”?

Any activity that is carried out by a person or group person with a common objective to earn profit, goodwill, or similar thing regardless of its volume, continuity, and frequency of such transaction is called business. A single transaction of supply (A farmer sells his crop to Mr. B) or one-time trade (as Mr. X sells finds a piece of gold/jewelry and sells it to Mr Z) is called considered as business.

But according to the standard definition, there is one more constraint that is added to this definition, and this is the phrase “in course or in furtherance of”, which clearly signifies that anything is done in relation to business while continuing the activities of the business or simply revenue-generating activity. For example, the sale and purchase of goods to achieve the common objective to continue the same business in the future.

What is the meaning of business under GST?

According to the definition in sec 2 (17) of CGST Act, 2017, the term “business” means the following:

1. Whether or not it is a monetary benefit, any trade, commerce, manufacture, profession, adventure, wager, vocation, or similar activity performed.

Examples:

• Banks provide their financial services to their customers
• Companies manufacturing cars for local sale and export
• A singe earning income through his performances
• Charitable hospitals offer free medicines and treatment of patients

2. Any activity or transaction which has a connection with or is incidental to the activities above
• Locker services offered by the bank to their customer on a rental basis
• Automobile company letting out R&D facilities for the product improvement

3. Any activity or transaction that is similar to point (a) (in nature) whether or not there is volume, regularity, continuity, etc. of such transaction
• Mr. ABC gambles in Derby and wins
• Sale of the old newspaper by a company
• Sale of bananas by a farmer in a flea market

4. Supply or acquisition of the goods (including capital assets & services) for commencement/closure of the business
• Services rendered by a corporate lawyer for company incorporation

5. Provision by a club, society, association, or similar entity of the facilities/benefits to its members for a subscription or any other thing
• Formation of cooperative societies to offer lending services to a specific group lie farmers, working women, etc.

6. Admission or consideration to any premises
• Entry to the museum or movie theatre after paying for its entry or ticket

7. Services offered by a person who is also a holder of business in the course or furtherance of his trade, profession or vocation.
• Consultants offering services to the company

8. Services offered by a race club
9. Any activity/transaction performed by government/local authorities in which they act as public authorities
• Acquisition of land for metro construction by the state government from the people and paying compensation for the same

Hence organizations or individuals which perform such activities and whose turnover exceeds 40L (20L for the service provider) in the financial year need to register for GST. If you need help in GST registration or GST return filing in Delhi NCR or nearby region, then you can contact Inside Tax. We have helped many organizations in the same process and can even help in saving taxes.