GST Registration for Interstate Supply: Applicability and Exemption
GST law has put in place multiple scenarios that can trigger compulsory registration under GST. While the most common include the aggregate turnover exceeding the threshold limit (i.e., Rs. 40 lakhs, 20 lakhs and 10 lakhs), another important criterion for compulsory registration is GST registration in case of interstate supply. GST law has bifurcated supply into two categories i.e., interstate supply and intrastate supply. Let’s check them out!
Interstate Supply and Intrastate Supply
- Interstate Supply: In layman’s terms, interstate supply is the supply of goods or services from one state or union territory to another state or union territory. As per GST law, inter-state supply happens when the location of supplier of goods or services and the place of supply are located in different states or union territories. Further, in case of interstate supply, the supplier shall levy IGST on the supplies made to the recipient.
- Intrastate Supply: In the case of intrastate supplies, both the location of the supplier of goods or services and the place of supply is within the same state or union territory. In simple terms, when the goods or services are supplied within the same state or union territory, then it is the case of intrastate supply. Further, in the case of intrastate supplies, the supplier shall levy CGST and SGST on supplies made to the recipient.
GST Registration Implication in case of Interstate Supply
Following is the applicability of GST registration for interstate supplies in different scenarios:
- Interstate taxable supply of goods: In the case of an interstate taxable supply of goods, it is mandatory for the supplier to obtain GST registration irrespective of the turnover of the supplier.
- Interstate taxable supply of services: In the case of an interstate taxable supply of services, the supplier gets the relaxation of the threshold limit of registration. In other words, if the supplier is engaged in the inter-state taxable supply of services, then he shall be liable to obtain registration only if his aggregate turnover crosses the specified threshold limit.
- Interstate supply of notified goods: A person making an interstate taxable supply of goods shall be liable to obtain compulsory GST registration. However, in the case of interstate taxable supply of notified handmade goods and notified handicraft goods, he can avail the benefit of the threshold limit of registration. Thus, he shall be liable to obtain registration only if his turnover crosses the threshold limit of aggregate turnover in the above case. This benefit is also available to a Casual Taxable Person (CTP) making an interstate taxable supply of notified handmade goods or notified handicraft goods.
- Interstate supply of exempt goods or services: Further, in the case of an interstate supply of exempt goods or services, a person shall not be liable to obtain GST registration. Only in the case of interstate taxable supply, GST registration becomes mandatory.
GST Registration Process for Interstate Supply
The GST registration process for interstate supply shall be the same as the normal process for obtaining GST registration. However, while filling in Part-B of Form GST REG-01, the applicant shall select ‘Interstate supply’ while selecting the reason for obtaining GST registration. The rest of the procedure is the same as all other registration cases.
Summary of GST Registration for Interstate Supply
Let’s summarise the implication of GST registration in the case of interstate supplies:
|Sr. No.||Situations||GST Registration Liability|
|1||Interstate supply of normal goods||Compulsory registration|
|2||Interstate supply of services||Upon crossing the threshold limit|
|3||Interstate supply of notified handmade goods and notified handicraft goods||Upon crossing the threshold limit|
|4||Interstate supply of notified handmade goods and notified handicraft goods by a Casual Taxable Person (CTP)||Upon crossing the threshold limit|
|5||Interstate supply of exempt goods or services||Registration not required|
Above were the explicit provisions governing GST registration in the case of inter-state supplies. However, to determine whether the supply made by you is an inter-state supply or intra-state supply, you need to be aware of Place of Supply rules. Place of Supply rules determine the place in which the supply is made and if that place is located in a different state or union territory than the location of the supplier, then it shall be regarded as interstate supply and vice versa.
Further, it is interesting to note that while it is mandatory to obtain GST registration in case of inter-state supply, inter-state purchase of goods or services does not require registration on the part of the recipient. Only the inter-state supply falls under the compulsory registration criteria and not interstate purchases. If you are going to undertake inter-state supply, then contact your eAuditors now to understand the GST registration requirement on your interstate supply.
Author : Dipen
Date : 21-Jul-2022