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GST Implications for Selling to Schools without GST Number

T S Khurana

T S Khurana   |402 Answers  |Ask -

Tax Expert - Answered on Oct 18, 2024

A certified management accountant since 1993, T S Khurana is a fellow member of The Institute of Cost Accountants of India. His areas of expertise are income tax, specifically litigation cases, and GST.

Since the last 21 years, he has also been providing expert advice on financial matters, including investments and diversification of funds, and wealth building in the long term to his clients.
He believes that investment in real estate is the safest way for better returns and wealth generation over a period of time.

A former chairman of the Chandigarh Chapter of Institute of Cost Accountants of India, T S Khurana has also served as member of its technical committee.... more
Asked by Anonymous - Jul 12, 2024Hindi
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Dear Sir, I am running a proprietor firm registered under GST and trading in Office stationery. I have a query. When I supply items to registered gst clients, I add my profit amount to the cost price of the item and then add required gst amount to it. This is normal and clear to me. But, recently, I got to sell items to a school which does not have gst number and does not come under ambit of gst. So, I have to supply items with zero gst added to the final product price. In such a transaction, how I will calculate my profit margin and what will be tax implication for my firm. Pls advise. Thanks.

Ans: Any material supplied to Un-Registered Dealer (in this case School), is liable to pay GST, which you add in your Bill/Invoice.
Your bill should be with GST as applicable. School is obliged to pay you inclusive of GST.
School is not under the ambit of GST means, any supplies from school to the children is not subject to GST.
How to adjust your profit is your internal matter & has noting to do with GST.
Most welcome for any further clarifications. Thanks.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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I'm sole trader doing business with a turnover of not more than 10 lac per anum. When I supply food items they insist on gst. I dont have. What to do
Ans: Hello Muthu,

I hope you're doing well.

As a sole trader, if your turnover is not more than 10 lakh per annum, you are exempt from registering for GST. However, if your customers are insisting on GST, it may be because they are registered under GST and are required to collect and remit GST on the goods they purchase.

In this case, you may want to consider registering for GST voluntarily. Voluntary registration will allow you to collect GST from your customers and remit it to the government. It may also allow you to claim input tax credit on your purchases.

To register for GST, you can visit the GST portal and follow the registration process. You will need to provide your business details, PAN card, and bank account details. Once you are registered, you will be issued a GSTIN and can start collecting and remitting GST.

It is important to note that once you are registered for GST, you will be required to file regular GST returns, even if you have no sales or purchases during the period. Failure to file GST returns can result in penalties and interest.

Therefore, you should evaluate whether registering for GST is in your best interest, taking into account the administrative burden of compliance and the impact on your pricing and competitiveness. If you decide not to register for GST, you may want to consider finding customers who are not registered under GST.

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I'm a Legal professional engaged as a Consultant with a Company and getting INR 1,50,000/- per month (Annual - INR 18.00 Lakh) as Consultancy Fee. In addition to Consultancy Fee., I've been provided with free accommodation in the township. the value of accommodation as per IT Act/Rules is assessed at INR 9,500/- per month (Annual - 1,14,000/). TDS is also deducted !10% on the Consultancy Fee as also on free accommodation under Section 194R (perquisites). My Total Income from Professional is !8 Lakh + 1.14 Lakh (value of perquisites) = 19.14 Lakh. Am I required to get registration under GST and raise GST Invoice on the Company? Kindly clarify. Shall be grateful for the help. Regards, Rakesh Tiwari
Ans: Dear Rakesh, Basis your question, let us unbundle the situation , one after the other.

1) I have understood that you are not an "employee" of the company and so, provisions of "Income under the head Salaries" under the provisions of the Income - Tax Act, 1961 of India, would not be attracted. And so, your income won't fall under the head salaries.

2) Again, as mentioned by you, the TDS is deducted under @10.00% on consultancy fees (under provisions of Sec 194J ) and also on free accommodation.

Section 194 R is a newly inserted section, and it is applicable from July 1, 2022. The wording of this section reads, ... It mandates a person responsible for providing any benefit or perquisite to a resident to deduct tax at source at a rate of 10% of the value or aggregate value of such benefit or perquisite before providing it to the resident......

.......The provision of this section shall not apply to an individual or a Hindu Undivided Family (HUF) whose total turnover/sales/receipt doesn’t exceed INR 1 crore in case of business or INR 50 lakh in case of profession....

TDS deducted under provisions of Sec 194R itself infer that, you are not an employee of the company, else the TDS of such "benefits" would have been deducted under provisons of "Salaries".

In most cases, the deductor of the tax may not be aware about the actual income of yours ( since you are a lawyer, TDS @ 10.00% under section 194R would not have been deducted, if the income from profession is less than ₹50.00 lacs per annum. The deductor might felt to comply with these provisions and may have deducted the TDS AT 10.00% }

To summarise, as explained above,

a. Your income from consultancy fees and as consultant is liable to be taxed under the provisions of "Income from Business Profession" { Section 28 of Income tax Act, 1961}, considering the fact you are a legal professional and getting consultancy fees is your main source of income, under normal course of business.

b. You can claim other legitimate expenses against this income, which you might have incurred to earn this income, as legitimate deduction. Eg. conveyance expenses, stationery expenses, salary payment to your staff,electricity bill, etc.

3) Coming to GST provisions:

There a concept of reverse charge in case of GST , which is applicable to certain class of service providers and legal professional is one of them. As per my reading of the law, if legal services are provided to a corporate body with turnover exceeding Rs 40 lakh, then GST is applicable on reverse charge basis. You are requested to verify, if the consultancy provided by you as consultant to the receiver of the serivices is a corporate & whoes turnover exceeds ₹40.00 Lacs, then, then, it would be the responsibility of the receiver of the services, to honour the GST liability arriving due to payment of consultancy fees to you , as a legal professional, under reverse charge mechanism & if the turnover of such service recipient, is less than ₹40.00 Lacs & if the total receipt under business professional of the service provider exceeds ₹20.00 Lacs, then it is mandatory to obtain GST registration and the onus to collect the GST from the service receiver lies with the servicer provider and to pay to the exchequer.

In either case, GST registration is mandatory, once the turnover exceeds ₹20.00 Lacs in a particular financial year.

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Ramalingam

Ramalingam Kalirajan  |8103 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 04, 2025

Asked by Anonymous - Aug 08, 2024Hindi
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Hello sir Very very afternoon How To Claim Tax Amount With Out GST Number.
Ans: If you do not have a GST number, you cannot claim GST input tax credit (ITC) or get a refund of GST paid on purchases. However, depending on your situation, there are some ways to manage taxes:

1. If You Are a Salaried Employee
You don’t need a GST number to file income tax returns.
You can claim deductions under Section 80C, 80D, HRA, and other sections to reduce taxable income.
If TDS is deducted, file ITR to claim excess tax refund.
2. If You Are a Business Owner or Freelancer (Without GST Number)
If your turnover is below Rs 20 lakh (service) or Rs 40 lakh (goods), GST registration is not mandatory.
You cannot charge GST on invoices or claim input tax credit on business expenses.
Instead, show expenses as deductions under income tax rules.
3. If You Paid GST but Do Not Have a GST Number
If you have paid GST on any purchase, but you don’t have a GSTIN, you cannot claim ITC.
However, you can include those expenses as business costs to reduce income tax.
4. If You Are Eligible for GST Registration
If your business turnover exceeds the GST threshold, register for GST to claim ITC.
If you voluntarily register for GST, you can claim ITC on future purchases.
5. If You Want a GST Refund Without a GST Number
GST refunds are usually only for registered businesses.
If you are an exporter or have made a zero-rated supply, you need a GST number to claim refunds.
If you were wrongly charged GST, you can request the seller for a refund or avoid paying GST on exempted items.
Final Insights
Without a GST number, you cannot claim GST input tax credit.
For salaried employees, claim deductions under income tax laws.
For businesses, show expenses to reduce taxable income.
If eligible, register for GST to claim ITC and get refunds.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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