The
Authority for Advance Ruling (AAR) has said the value of exempted
income, like interest on PPF, savings bank account and loans given to
family or friends, will now be included along with taxable supplies
while calculating the threshold limit for obtaining GST registration.
For
businesses and individuals, they are required to obtain GST
registration if their aggregate
turnover is Rs 20 lakh or more, under
the GST (Goods and Services Tax) law.
It may be noted that an
individual, not engaged in any business, had filed an application before
the Gujarat bench of AAR, asking whether interest received from the
savings bank, PPF, and loans and advances to the family would be
considered for the purpose of calculating the threshold limit of Rs 20
lakh for registration under GST law.
The individual, in his
application, had disclosed that his total receipts in the 2018-19 fiscal
were about Rs 20.12 lakh, including rent receipt of Rs 9.84 lakh, while
the remaining was interest on the bank, PPF deposits and from personal
loans extended to friends or family.
The AAR, while ruling that
interest income would be included for calculating registration
threshold, said that the applicant is required to consider the value of
both taxable supply, i.e. “renting of immovable property” and exempted
supply of service provided by way of extending deposits, loans or
advances for which he earned interest income, to arrive at “aggregate
turnover” to determine the threshold limit for the purpose of obtaining
registration under the GST Act.
The AAR said, “We conclude that
the Applicant is required to aggregate the value of exempted interest
income earned by way of extending deposits in PPF and Bank Saving
accounts and loans and advances given to his family or friends along
with the value of the taxable supply i.e. Renting of immovable property
for the purpose of calculating the threshold limit of Rs 20 lakh for
obtaining registration under GST law.”
Commenting on this ruling,
AMRG and Associates Senior Partner Rajat Mohan said that this ruling may
lead to homemakers, retired persons, and freelancers taking GST
registration. He further added, “The Authority failed to distinguish
between earnings made in the individual capacity and in the business capacity".