Who Qualifies for GST?

In India, an indirect tax known as the Goods and Services Tax (GST) is imposed on the provision of goods and services. Value Added Tax (VAT), Service Tax, Central Excise Duty, and various state-level levies have all been replaced by GST. The value addition of products and services is subject to the destination-based GST tax. All company models, including sole proprietorships, partnership firms, limited liability partnerships (LLP), and corporations, are covered.

A business must have a revenue of more than Rs. 20 lakhs annually to be eligible for GST registration. The threshold limit for northeastern and hilly states is Rs. 10 lakhs annually. Businesses who have a turnover below the threshold must register for GST, but they are not forced to. They can, however, freely register for GST and benefit from the input tax credit. Who Must Register for the GST?

The requirement to register for GST applies to everyone who makes a taxable supply of goods or services and has an annual revenue of more than Rs. 20 lakhs (Rs. 10 lakhs for northeastern and hilly regions). In addition, regardless of their annual revenue, firms that offer products and services outside of their state of operation must register for GST. In order to facilitate the supply of goods and services, e-commerce providers, aggregators, and marketplaces must also register for GST.

Yes, LLP is subject to GST. A limited liability partnership is known as an LLP. If its annual turnover exceeds Rs. 20 lakhs (Rs. 10 lakhs for northeastern and hilly regions) per annum, it must register for GST as a separate legal entity. The debts and responsibilities of the LLP are not individually owed by its partners. However, they are obligated to follow GST laws and submit GST returns on the LLP’s behalf.

If an LLP’s yearly turnover reaches Rs. 40 lakhs or its partner contribution surpasses Rs. 25 lakhs, it is required to have its accounts audited every year. This audit is comparable to the Companies Act audit of corporations. The LLP’s yearly return must be submitted simultaneously with the audit report.

A sole proprietorship can become an LLP, so the answer is yes. Obtaining a digital signature certificate, applying for name reservation, and applying for conversion are all required steps in the procedure. The LLP Act of 2008 and the Income Tax Act of 1961 must be followed in order for a sole proprietorship to be converted into an LLP. The sole proprietor joins the LLP as a partner upon conversion, making the LLP a distinct legal entity with limited responsibility.

In conclusion, all business kinds, including sole proprietorships, partnership firms, LLPs, and corporations, are subject to the Goods and Services Tax (GST). Businesses must register for GST if their yearly revenue exceeds Rs. 20 lakhs (Rs. 10 lakhs in northeastern and mountainous states). LLPs must have their accounts audited every year if their yearly revenue exceeds Rs. 40 lakhs or their partner contributions surpass Rs. 25 lakhs. By adhering to the requirements of the Income Tax Act of 1961 and the LLP Act, 2008, a sole proprietor can change the legal structure of his company into an LLP.