Is it compulsory to take gst registration in case of export of service? 'OR' I am a freelancer/professional and also a blogger, I recently setup my adsense account and started earnings in $. Do I need to get GST registration compulsorily?

 

Provision of Law:- 

As per section 24(i) of cgst Act,2017 Every Person making any interstate taxable supply of service is compulsorily liable to take GST registration.

As per Section 22 of cgst Act, 2017 Every supplier shall be liable to be registered under this Act in the State from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds Rs. 20 Lacs.

Is there any contradiction? 

Yes, As per section 24(i) if a person of Maharashtra supplies services in Madhya Pradesh, he has to compulsorily gets registered under GST.

Whereas, as per section 22 only if aggregate turnover exceeds Rs 20Lacs, a person has to take GST registration.

This issue was partially resolved by the notification issued on 13-10-2017.

Through this notification Government has given relief to persons making interstate taxable supply  of services (not Goods) if aggregate turnover is upto Rs. 20 Lacs to take compulsory GST registration.

Ans

No its not compulsory to take GST registration in case of export of service if your aggregate turnover is less than Rs 20 Lacs.

Even if you are a Blogger and a Professional, check your aggregate turnover to take GST registration(if crosses Rs 20 Lacs).

You are out of ambit of compulsory GST registration under GST Act. 

Pain Point for Supplier of Goods.

Even if you are small trader, turnover below Rs 40 Lacs(earlier Rs 20 Lacs) and you wish to make sale in other states you have to compulsorily take GST registration.

Important Pointers:-

Every Export of service is considered as interstate supply of service, so IGST will be charged and not CGST or SGST in invoice.

Before GST Law, there was no need to take registration in case of 100% export of services, unless you need to claim export benefit under any scheme from government.

Google is a giant and has many companies incorporated under different countries. Generally for Indian Bloggers Google deals via Singapore based company Google Singapore PTE Ltd. 

For Services to be classified as Export of service, following conditions needs to be satisfied:-

Place of Supply- Outside India

Location of supplier - In India

Payment to be received in convertible foreign exchange

Enjoy Reading!!!

 

For any suggestion or queries you can reach out to me at caakshatmodi@gmail.com or at 9028912025.

Disclaimer :- This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting Advice. You should consult your own tax, legal and accounting Advisors before engaging in any transaction.

HOW BLACK MONEY IS USED IN PROPERTY TRANSACTIONS?

 

Hello everyone..

 

Today’s topic is of very keen interest for everyone, reason is quite simple it involves the hot topic of discussion in every get together or social gatherings i.e. Black Money and Property.

By this article i will try to unfold in simple language the modus operandi by which people route their black money to purchase property.

 

Let’s understand this by a hypothetical example..

Mr. Malhotra is a renowned business man dealing in trading of readymade garments. His turnover is Rs. 1 crore p.a. for past 10 years. His actual profit margin is 20% but in his income tax return he declared only 5 % (by claiming some dummy expenses).

In absolute terms instead of showing actual income of Rs. 20 Lacs and paying roughly Rs. 4 Lacs as income tax, Mr. Malhotra suppressed his income and declared only Rs. 5 Lacs as income and hence paid Rs. 0 as income taxes.(after claiming rebate of Rs. 12500 under section 87A. Upto Rs. 2,50,000 there is no income tax liability from 2,50,000 to 5,00,000 there is 5% tax liability but with rebate under section 87A).

 

Q) Why did Mr. Malhotra suppressed his income to Rs. 5 Lacs instead of declaring Rs. 20 Lacs?

 

Ans) To save income tax worth Rs. 4 Lacs per anum.

 

Moving forward, now in 10 years. Mr Malhotra has generated Rs.1.5 crore (20 Lacs-5 Lacs*10 years.) worth black money/ undisclosed income.(income on which income tax is not paid).

This has to kept in cash form, since it’s a black money it cannot be deposited in bank account.

Assuming personal expenses worth Rs. 5 Lacs every year, over the period of 10 years Mr. Malhotra should have saved Rs. 1 crore in cash.

 

In many states it is generally found that stamp duty value of property is far less than market value of property.

Meaning for a plot of land in richest area of a city, Government stamp duty value/Market value as per Government might be Rs.. 40 Lacs only but actual market price prevailing in market can be as high as Rs. 1 crore.

 What happens next is Mr. Malhotra approaches a broker to buy a property where stamp duty value is far less than the market value like we have seen in above example.

Broker shows him the property where stamp duty value is Rs. 30 Lacs and market value is Rs. 1.1 crore. The property was located in a premium location and the deal was locked.

(Mr. Malhotra was overwhelmed, thinking now life is set)

Let’s try to find out why Mr Malhotra is so happy getting this deal.

Q) how this deal will take place on record?

Ans) Since total price of the land is Rs. 1.1 crore, and stamp duty value of land is only Rs. 30 Lacs. The registry will take place at Rs. 30 Lacs only, meaning Mr. Malhotra will give Rs. 30 Lacs through banking channel either cheque, DD, neft, rtgs etc and rest 80 Lacs he will pay in cash. Stamp duty @ 6% will be paid on 30 Lacs only.

(Stamp duty is to be paid on every exchange of hand in property transaction.)

Remember on this 80 Lacs Mr. Malhotra didn’t paid any income tax and this black money which he can’t deposit in his bank account is now routed in economy through this deal.

So now on paper he is owner of land worth Rs. 30 Lacs only but actually he is owner of property worth Rs. 1.1 crore.

His unaccounted cash/undisclosed income is utilized and is now part of the economy.

 

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Disclaimer :- This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisor before engaging in any transaction.