Person and Taxable Person, Categories, Registration, Liabilities, Responsibilities, Exemptions and Special Cases

Under the Goods and Services Tax (GST) law, the term “Person“ is defined under Section 2(84) of the Central Goods and Services Tax (CGST) Act, 2017. It includes an individual, Hindu Undivided Family (HUF), company, firm, Limited Liability Partnership (LLP), association of persons (AOP), body of individuals (BOI), corporation, government, local authority, trust, society, artificial juridical person, and every other legal entity capable of carrying on business or making taxable supplies. The broad definition ensures that all eligible entities engaged in the supply of goods or services are covered under the GST law and are required to comply with registration, tax payment, return filing, and other statutory provisions, wherever applicable.

Meaning of a Taxable Person:

A taxable person under the Goods and Services Tax (GST) is a person who is registered or liable to be registered under the provisions of the Central Goods and Services Tax (CGST) Act, 2017. A taxable person supplies taxable goods or services in the course or furtherance of business and is required to collect and pay GST to the government. Such a person must comply with GST provisions relating to registration, invoicing, maintenance of records, payment of tax, and filing of returns. However, persons exclusively dealing in exempt supplies or those specifically exempt under the GST law are generally not treated as taxable persons.

Categories of Persons under GST:

1. Individual

An individual is a natural person engaged in the supply of goods or services in the course or furtherance of business. If an individual crosses the prescribed GST registration threshold or falls under compulsory registration provisions, they must obtain GST registration and comply with GST laws. Individuals include sole proprietors, professionals, freelancers, consultants, and traders. A registered individual is required to collect GST on taxable supplies, issue tax invoices, maintain proper records, file GST returns, and pay tax to the government. Individuals are also eligible to claim Input Tax Credit (ITC) on eligible business purchases, subject to GST provisions.

2. Hindu Undivided Family (HUF)

A Hindu Undivided Family (HUF) is recognized as a separate person under Section 2(84) of the CGST Act, 2017. An HUF carries on business through its Karta for the benefit of its members. If the HUF is engaged in taxable supplies and meets the conditions for GST registration, it becomes liable to register and comply with GST provisions. A registered HUF must issue tax invoices, collect GST, maintain books of accounts, file returns, and pay tax. It may also claim Input Tax Credit on eligible inward supplies used for business purposes.

3. Company

A company is a legal entity incorporated under the Companies Act and is treated as a separate person under GST law. Companies engaged in the supply of taxable goods or services are required to obtain GST registration if they satisfy the applicable conditions. A registered company must collect GST, issue tax invoices, maintain proper accounts, file GST returns, and pay taxes within the prescribed time. Companies can also claim Input Tax Credit on eligible business purchases. The GST system ensures uniform taxation and compliance for companies operating across different states in India.

4. Partnership Firm

A partnership firm is treated as a separate person under the GST law. When a partnership firm supplies taxable goods or services and becomes liable for registration, it must obtain GST registration in the firm’s name. The firm is responsible for collecting GST, issuing tax invoices, maintaining records, filing returns, and paying tax. Partners are jointly responsible for ensuring compliance with GST provisions. The partnership firm can also claim Input Tax Credit on eligible business inputs and services, helping reduce the overall tax burden while carrying on business activities.

5. Limited Liability Partnership (LLP)

A Limited Liability Partnership (LLP) is recognized as a separate legal person under GST. An LLP engaged in taxable business activities must obtain GST registration if it satisfies the prescribed conditions. It is responsible for collecting GST, issuing tax invoices, maintaining books of accounts, filing returns, and paying taxes to the government. An LLP enjoys the benefit of limited liability while fulfilling all GST compliance requirements. It is also entitled to claim Input Tax Credit on eligible purchases and input services used in the course of business, subject to GST provisions.

6. Association of Persons (AOP) or Body of Individuals (BOI)

An Association of Persons (AOP) or Body of Individuals (BOI) consists of two or more persons who come together for a common purpose or business activity. Under the GST law, an AOP or BOI is treated as a separate person. If it supplies taxable goods or services and is liable for registration, it must comply with GST provisions. It is required to collect GST, issue tax invoices, maintain proper accounts, file returns, and pay tax. It can also claim eligible Input Tax Credit in accordance with the GST law.

7. Government and Local Authority

The Central Government, State Governments, Union Territories, and Local Authorities are recognized as persons under the GST law. They are liable to pay GST on taxable supplies made in the course of business or commercial activities, except where exemptions apply. Government departments must comply with GST provisions relating to registration, tax payment, and return filing wherever applicable. Certain government services remain exempt from GST, while others are taxable. Government entities are also subject to specific provisions relating to the Reverse Charge Mechanism (RCM) in notified cases.

8. Trust, Society, and Other Artificial Juridical Persons

A trust, society, or artificial juridical person recognized under law is treated as a person under GST. If such an entity carries on business or provides taxable goods or services and meets the registration requirements, it must obtain GST registration. These entities are responsible for collecting GST, issuing tax invoices, maintaining records, filing returns, and paying tax. They may also claim Input Tax Credit on eligible business purchases, subject to GST provisions. This category ensures that all legally recognized entities engaged in taxable activities are brought within the scope of GST.

Registration of a Taxable Person:

GST registration is the process through which a taxable person obtains recognition under the Goods and Services Tax (GST) law. A person who is liable to register under the CGST Act, 2017 must apply for registration and obtain a Goods and Services Tax Identification Number (GSTIN). Registration enables the person to collect GST on taxable supplies, claim Input Tax Credit (ITC), issue tax invoices, and comply with GST provisions. It is mandatory for persons who satisfy the prescribed threshold limits or fall under compulsory registration categories specified under the GST law.

• Eligibility for Registration

A person is required to obtain GST registration if the aggregate turnover exceeds the threshold limit prescribed under the GST Act or if compulsory registration is applicable. Certain persons, such as interstate suppliers, e commerce operators, non resident taxable persons, casual taxable persons, and those notified by the government, must register irrespective of turnover. Voluntary registration is also permitted for persons who are not legally required to register but wish to avail the benefits of GST registration and Input Tax Credit.

• Application for Registration

A taxable person must submit an application for GST registration through the official GST portal. The application requires details such as the legal name of the business, Permanent Account Number (PAN), business address, bank account details, nature of business activities, and information about promoters or partners. Relevant supporting documents must also be uploaded. After verification of the application and documents by the GST authorities, registration is granted if all prescribed conditions are fulfilled.

• Issue of GSTIN

After successful verification of the registration application, the GST authorities issue a Goods and Services Tax Identification Number (GSTIN) to the applicant. GSTIN is a unique 15 digit identification number allotted to every registered taxpayer. It is used for tax payment, return filing, invoicing, Input Tax Credit claims, and all communications with the GST department. The GST Registration Certificate is issued electronically through the GST portal, allowing the business to operate as a registered taxable person under the GST law.

• Responsibilities of a Registered Taxable Person

A registered taxable person is required to comply with all provisions of the GST law. These responsibilities include collecting GST on taxable supplies, issuing proper tax invoices, maintaining books of accounts, filing periodic GST returns, paying tax within the prescribed time, and maintaining relevant records. The registered person must also display the GSTIN at the principal place of business and mention it on tax invoices. Compliance with these obligations ensures transparency, proper tax administration, and eligibility to claim Input Tax Credit.

• Benefits of Registration

GST registration provides several benefits to a taxable person. It enables the collection of GST legally, allows the claim of Input Tax Credit on eligible purchases, and facilitates interstate business operations. Registered businesses gain greater credibility in the market and can participate in government tenders and contracts where GST registration is required. Registration also ensures compliance with GST laws, avoids penalties for non registration, and provides access to the online GST portal for return filing, tax payment, and refund applications.

Liabilities of a Taxable Person:

1. Liability to Obtain GST Registration

A taxable person is required to obtain GST registration if the aggregate turnover exceeds the prescribed threshold limit or if compulsory registration provisions apply under the CGST Act, 2017. Registration must be obtained within the prescribed time to avoid penalties. A registered person receives a Goods and Services Tax Identification Number (GSTIN) and becomes responsible for complying with all GST provisions relating to taxable supplies.

2. Liability to Collect and Pay GST

A registered taxable person is liable to collect GST on the supply of taxable goods or services at the applicable rates. The tax collected from customers must be deposited with the government within the prescribed due dates. Failure to pay GST on time may result in interest, penalties, and other legal consequences under the GST law.

3. Liability to Issue Tax Invoice

Every registered taxable person must issue a valid tax invoice for the supply of taxable goods or services. The invoice should contain prescribed particulars such as GSTIN, invoice number, date, description of goods or services, taxable value, GST rate, and tax amount. Proper invoicing ensures transparency and enables the recipient to claim eligible Input Tax Credit.

4. Liability to Maintain Books of Accounts

A taxable person is required to maintain accurate books of accounts and records relating to purchases, sales, stock, Input Tax Credit, tax liability, and tax payments. These records must be preserved for the period prescribed under the GST law. Proper record maintenance helps ensure compliance, facilitates audits, and supports the verification of GST returns.

5. Liability to File GST Returns

Every registered taxable person must file GST returns within the prescribed due dates through the GST portal. Returns contain details of outward supplies, inward supplies, tax liability, Input Tax Credit, and tax payments. Timely filing of returns ensures legal compliance, avoids penalties, and enables proper reconciliation of tax records by the GST authorities.

6. Liability to Pay Interest and Penalty

A taxable person is liable to pay interest and penalties if GST is not paid within the prescribed time or if there is non compliance with GST provisions. Penalties may also be imposed for delayed registration, late filing of returns, incorrect information, or failure to maintain proper records. Compliance with GST requirements helps avoid additional financial liabilities.

7. Liability to Cooperate with GST Authorities

A registered taxable person must cooperate with GST authorities during inspections, audits, assessments, and investigations. The person should provide required documents, books of accounts, invoices, and other information whenever requested by the authorities. Full cooperation ensures smooth verification of compliance and helps avoid legal disputes or penalties under the GST law.

8. Liability to Display GST Registration Details

A registered taxable person must display the GST Registration Certificate prominently at the principal place of business and every additional place of business. The GSTIN should also be mentioned on tax invoices, bills, and other prescribed business documents. Displaying registration details promotes transparency, builds customer confidence, and ensures compliance with the provisions of the GST Act.

Responsibilities of a Taxable Person:

1. Registration Responsibility

A taxable person whose aggregate turnover exceeds the threshold limit (₹40 Lakhs for goods, ₹20 Lakhs for services in most states, or ₹10 Lakhs for special category states) must compulsorily register under GST. Registration is PAN-based and state-specific. Voluntary registration is also permitted. Once registered, the taxpayer must display the GSTIN (Goods and Services Tax Identification Number) on all invoices, business premises, and official documents. Failure to register despite liability attracts penalties, interest, and denial of Input Tax Credit to the purchaser.

2. Invoice and Document Issuance

Every taxable person must issue a tax invoice for all taxable supplies of goods or services. The invoice must contain prescribed particulars: GSTIN of supplier and recipient, HSN/SAC codes, quantity/value, rate and amount of CGST/SGST/IGST, place of supply, and digital signature. For supplies below ₹200, a bill of supply suffices. In case of continuous supplies, invoices must be issued within prescribed timelines. Proper record-keeping of all invoices, debit/credit notes, and delivery challans is mandatory for audit trail.

3. Tax Payment and Return Filing

A registered taxable person must compute and pay the applicable GST liability on outward supplies by the 20th of the following month (or 20th of next quarter for composition taxpayers). Returns must be filed monthly/quarterly GSTR-1 (outward supplies) by 11th, GSTR-3B (summary return with payment) by 20th. Even if no transactions occur, a NIL return is mandatory. Delayed payment attracts 18% interest per annum, and late filing fees are ₹50 per day (₹25 each for CGST/SGST).

4. Input Tax Credit (ITC) Compliance

A taxable person claiming ITC must ensure that the supplier has actually paid the tax to the government. ITC can be claimed only for goods/services received and used in the course of business. The claimant must possess a valid tax invoice, ensure the supplier has filed GSTR-1 and GSTR-3B, and that the invoice is reflected in GSTR-2B. ITC on exempt supplies, personal consumption, and blocked items (motor vehicles, food/beverages, etc.) is strictly disallowed. Reversal of ITC is required if annual returns show excess claim.

5. Record Keeping and Accounts

Every taxable person must maintain true and accurate books of accounts, registers, and documents relating to production, stock, inward/outward supplies, ITC availed, and output tax liability at their principal place of business. All records must be retained for 8 years from the end of the financial year. Digital records are acceptable but must be tamper-proof. The taxpayer must also file an annual return (GSTR-9) and a reconciliation statement (GSTR-9C, if audited) by 31st December of the following year.

6. E-Way Bill Compliance

For movement of goods exceeding ₹50,000 in value (inter-state or intra-state in notified states), a taxable person must generate an E-Way Bill on the GST portal before transportation commences. The EWB contains details of consignor, consignee, transporter, and invoice. It is valid for a specific distance (1 day per 100 KMs for normal goods). The taxpayer must carry a physical or digital copy of the EWB along with the invoice during transit. Failure attracts a penalty of ₹10,000 or tax evaded, whichever is higher.

7. Reverse Charge Mechanism (RCM) Compliance

Under RCM, the recipient of goods/services is liable to pay GST instead of the supplier. A taxable person receiving supplies from an unregistered dealer or from specified notified services (e.g., transport, legal, advocacy) must self-invoice the transaction, pay tax on the due date, and claim ITC only after payment. RCM liability must be discharged in cash—ITC cannot be used to offset RCM output liability. Strict records of all RCM transactions must be maintained separately for accurate return filing and audit purposes.

8. Audit and Assessment Cooperation

A taxable person must cooperate with tax authorities during scrutiny, audit, or assessment proceedings. They must provide all books, records, and documents demanded within the specified time. Annual accounts must be audited by a CA/CMA if turnover exceeds ₹5 Crores. The audit report (GSTR-9C) must be filed along with the annual return. Any discrepancies detected during departmental audit must be rectified immediately by paying the shortfall with interest. Non-cooperation or obstruction invites penalties and prosecution proceedings.

9. Amendment and Cancellation Intimation

Any change in business details—legal name, address, mobile number, email, bank accounts, authorized signatory, or business constitution—must be intimated to the GST authorities within 15 days via the GST common portal. If the business is discontinued, transferred, merged, or demerged, the taxable person must apply for cancellation of registration within 30 days. Until cancellation is approved, all return filing and payment obligations continue. Failure to inform changes results in penalties and potential suspension of registration.

Exemptions and Special Cases under GST:

1. Exemption for Small Taxpayers

Under the GST law, small businesses whose aggregate turnover does not exceed the prescribed registration threshold are generally not required to obtain GST registration, unless they fall under compulsory registration provisions. This exemption reduces the compliance burden on small traders, service providers, and start up businesses. Such persons are not required to collect GST or file GST returns. However, they are also not eligible to claim Input Tax Credit (ITC) on their purchases. The exemption encourages small businesses to operate with lower compliance costs while ensuring that larger businesses remain within the GST framework.

2. Exempt Supply of Goods and Services

Certain goods and services are exempt from GST through notifications issued by the Government on the recommendations of the GST Council. No GST is charged on the supply of exempt goods or services, and suppliers dealing exclusively in exempt supplies are generally not required to register under GST, subject to the provisions of the Act. Examples include specified healthcare services, educational services provided by recognized institutions, certain agricultural services, and essential goods notified by the Government. These exemptions reduce the tax burden on essential sectors and promote public welfare.

3. Composition Scheme

The Composition Scheme is a special provision for small taxpayers having turnover within the prescribed limit under the CGST Act, 2017. Eligible taxpayers can pay GST at a fixed percentage of their turnover instead of the normal GST rates. The scheme simplifies tax compliance by reducing record keeping and return filing requirements. However, taxpayers under the Composition Scheme cannot collect GST separately from customers or claim Input Tax Credit. This scheme is designed to reduce the compliance burden and encourage voluntary tax compliance among small businesses.

4. Casual Taxable Person

A Casual Taxable Person is a person who occasionally supplies taxable goods or services in a State or Union Territory where they do not have a fixed place of business. Such persons are required to obtain GST registration before commencing business in that State or Union Territory. Registration is generally granted for a temporary period and may be extended if necessary. Casual taxable persons are required to pay GST, file returns, and comply with all applicable GST provisions during the period of registration.

5. Non Resident Taxable Person

A Non Resident Taxable Person (NRTP) is a person who occasionally undertakes taxable transactions in India but does not have a fixed place of business or residence in the country. Such persons are required to obtain GST registration before making taxable supplies in India. Registration is granted for a limited period and may be extended on request. Non resident taxable persons must comply with GST provisions relating to tax payment, invoicing, maintenance of records, and return filing, ensuring proper taxation of supplies made within India.

6. Reverse Charge Mechanism (RCM)

Under the Reverse Charge Mechanism (RCM), the liability to pay GST shifts from the supplier to the recipient of goods or services in specified cases. The recipient is responsible for paying GST directly to the Government instead of the supplier. Reverse charge applies to notified goods, services, and transactions as specified under the GST law. This mechanism helps improve tax collection, prevents tax evasion, and ensures compliance in sectors where suppliers may not be adequately organized or registered under GST.

7. Supplies to Special Economic Zones (SEZs)

Supplies made to Special Economic Zones (SEZs) for authorized operations are treated as zero rated supplies under the IGST Act, 2017. Although GST is not ultimately borne on such supplies, the supplier may supply goods or services under a bond or Letter of Undertaking without payment of IGST or pay IGST and claim a refund. This special provision promotes exports, encourages investment, and supports the development of Special Economic Zones by reducing the tax burden on eligible supplies.

8. Government Notified Exemptions

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p style=”text-align: justify;” data-start=”4248″ data-end=”4774″>The Central Government and State Governments, on the recommendations of the GST Council, may notify exemptions for specific goods, services, or classes of taxpayers under the GST law. These exemptions may be granted in the public interest, to support essential sectors, or to promote economic and social welfare. Such notifications specify the conditions, scope, and duration of the exemption. Taxpayers must carefully comply with the prescribed conditions to claim the benefit of these exemptions under the GST framework.