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April 24, 2025

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Basics of GST

Taxable Person under GST

The introduction of the GST system in India has streamlined indirect taxation. The most important term in GST is liable to tax. A person running a business, a freelancer, or anyone engaged in a profession needs to assess whether he/ she fall within the definition of a taxable person. This term impacts your obligation to comply with GST registration, tax collection, return filing, and other compliance-related activities.

So, who is a taxable person under GST? What makes a person liable to register? What are the exceptions, if any? This complete guide for 2025 attempts to answer these questions simply and straightforwardly.

Overview Table

Feature	Description
Defined Under	Section 2(107) of the CGST Act, 2017
Core Definition	Any person registered or liable to be registered under GST
Legal Forms Covered	Individuals, HUFs, companies, LLPs, firms, government bodies, AOPs
Turnover Threshold	₹20 lakhs for service providers; ₹40 lakhs for goods suppliers (exceptions apply)
Registration Types	Regular, Casual, Non-Resident, Input Service Distributor
Exceptions	Agriculturists (for supply of produce from land), Exempt suppliers, Reverse charge recipients

What Is a Taxable Person under GST?

Based on Subsection 107 of Section 2 of the Central Goods and Services Tax (CGST) Act, 2017, a taxable person is defined as:

"an individual who has been issued a registration or is required to obtain one under Section 22 or Section 24 of the CGST Act."

Translated into layman's language, anyone supplying services and/or goods and exceeding a set financial operational value or falling under compulsory registration criteria is a taxable person under GST.

Types of Persons Considered "Taxable"

Under GST laws, the term “taxable person” does not only refer to the owner of a business. The following legal entities also qualify as a taxable person:

Individual / Sole Proprietor.

Hindu Undivided Family (HUF).

Company (Private or Public Ltd).

Partnership Firm or LLP.

Trusts and Societies.

Association of Persons (AOPs).

Government Departments (for business activities).

Foreign entities supplying goods/services in India.

What all of these have in common is that they deal with the supply of taxable goods or services in a business context.

Threshold Limits for Becoming a Taxable Person

Under GST, registration is compulsory if the aggregate turnover exceeds:

₹40 Lakhs for suppliers of goods in most states.

₹20 Lakhs for Service Providers across India.

₹10 Lakhs for special category states like Manipur, Mizoram, Nagaland, and Tripura for both goods and services.

Update for 2025: Businesses in certain states are changing the threshold limit to create parity between goods and service providers. All companies are advised to look out for new updates from the CBIC.

When GST Registration Becomes Mandatory (Section 24)

Even if your turnover is below the threshold, you may still be a taxable person under Section 24, which lists situations where registration is compulsory, such as:

Inter-state supply of goods or services.

E-commerce operators (like Amazon, Flipkart sellers).

Casual taxable persons.

Non-resident taxable persons.

Input Service Distributors (ISD).

Persons under the reverse charge mechanism.

TDS/TCS deductors.

Online data access providers from outside India.

In all these cases, turnover is irrelevant — registration is compulsory from day one.

Types of Taxable Persons under GST

1. Regular Taxable Person: Most common category. Businesses that supply goods/services on a regular basis.

2. Casual Taxable Person: Anyone who occasionally supplies goods/services in a state where they don't have a fixed place of business. For example, exhibitors at trade fairs.

3. Non-Resident Taxable Person: A foreign supplier who supplies goods or services in India but doesn’t have a business establishment here.

4. Input Service Distributor (ISD): An office that receives invoices for input services and distributes the input tax credit (ITC) to other branches.

5. E-Commerce Operators: Online platforms facilitating the sale of goods/services.

Responsibilities of a Taxable Person

Once registered under GST, a taxable person is bound by various compliance duties:

Charging GST on taxable supplies.

Issuing tax invoices.

Filing GST returns (monthly, quarterly, and annually).

Maintain detailed records.

Pay taxes on time.

Responding to notices from GST authorities.

Handling reverse charge obligations, where applicable.

Failure to comply can result in penalties, interest and even cancellation of GST registration.

Persons Not Considered Taxable

The following are not treated as taxable persons under GST:

1. Agriculturists: If they supply produce grown from their land (like wheat, rice, sugarcane), they are fully exempt from GST registration.

2. Persons Supplying Exempt/Nil-rated Goods: If all supplies are exempt (such as unbranded fresh milk or education services), registration is not mandatory.

3. Employees: Employees rendering services to their employer (salary-based) are not considered taxable persons.

4. Suppliers of Non-Taxable Goods: Goods not falling under GST (like petrol, diesel, alcohol for human consumption) are outside the GST scope.

What Happens if a Taxable Person Fails to Register?

Failing to register when you are liable can lead to:

A penalty of ₹10,000 or the tax amount evaded, whichever is higher.

Interest on unpaid taxes.

Ineligibility to collect GST from customers legally.

No input tax credit benefit on purchases.

This can seriously harm your business reputation and invite legal issues from the GST Department.

GSTIN: The Identity of a Taxable Person

Once you register, you are assigned a GSTIN (Goods and Services Tax Identification Number) — a unique 15-digit code representing your business.

This number must be:

Displayed at your business premises.

Quoted on all invoices.

Used in all GST returns and communication with authorities.

Special Case: Voluntary Registration

You can voluntarily register under GST even if you fall below the threshold. Many small businesses or Startups do this too,

Build confidence among customers.

Get back input tax credits.

Qualify as suppliers to larger corporations that have a preference for vendors complying with GST.

Nevertheless, if you register voluntarily, you are still subject to all the rules and regulations of GST.

Example Scenarios (2025)

Scenario 1: An independent consultant based out of Delhi who earns ₹25 lakh a year.

Has to compulsorily register under GST and is a taxable person.

Scenario 2: A food vendor based in Assam sells fresh vegetables for ₹12 lakh a year.

Not a taxable person; supply is exempt and below the threshold.

Scenario 3: A manufacturer located in Kerala with a turnover of ₹45 lakh, selling throughout India.

Compulsory GST registration makes them a taxable person under section 24.

Recent Developments for 2025

Changes have been made to e-Invoicing. Taxable persons with a turnover above ₹5 crore should generate invoices through GSTN.

Small taxable persons with a less than ₹5 crore will receive simplified return filing. Quarterly returns can be filed with less information.

Pending returns may be forgiven late fees for some taxable persons in need under the 2025 GST Amnesty Scheme.

Conclusion

Knowing who qualifies as a taxable person under the GST law helps in avoiding legal issues, taking advantage of input credit, and staying compliant. As a developing business, service provider, or even an occasional supplier, awareness of GST obligations protects your business while facilitating growth.

FAQs

Q1. What is a taxable person under GST?

A taxable person means any individual or an entity which is registered or liable to register under GST and is involved in the supply of goods and services.

Q2. Who needs to register as a taxable person under GST?

Anyone with a turnover above ₹40 lakhs (in the case of goods) or ₹20 lakhs (in the case of services), or anyone who comes under the compulsion rules such as inter-state supply or e-commerce selling, has to register.

Q3. Are small businesses with low turnover considered taxable persons?

That's true, but only if their revenue is below a specific threshold and they do not satisfy the compulsory registration requirements. In this case, they are not considered taxable persons.

Q4. Is a freelancer considered a taxable person under GST?

Correct, freelancers providing services subject to tax and have an annual turnover exceeding ₹20 lakhs (₹10 lakhs for special category states) are mandatorily required to register and are termed as taxable persons.

Q5. Are agriculturists taxable persons under GST?

The agriculturists who provide produce generated from the land exclusively are not covered under the GST registration framework and do not fall within the category of taxable persons.

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