PPF Interest Rate to be calculated at the time of GST Registration

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What is the GST registration?

As per the GST regime, the businesses whose turnover exceeds Rs. 40 Lakhs (Rs 10 lakhs for NE and hill states) are mandatorily required to register as a normal taxable person. This process is known as GST registration.

The process of GST registration takes 2-6 working days.
You can do GST registration online without any costs.
As you register for GST, you will be provided with a GST number, which is a unique identification number of every business.

How is the thres hold limit for GST registration calculated?

To avail the exemption from GST registration, the aggregate turnover of the business is the crucial parameter. Thus, it becomes significant to understand how is the aggregate turnover of the business determined?

The term “aggregate turnover” implies the aggregate value of all taxable supplies, including exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number. However, one does not include the value of inward supplies on which tax is payable by a person, central tax, State tax, Union territory tax, integrated tax and cess to determine the turnover.

As per the new update, incomes earned from PPF Interest, Bank Savings Account or loan is given to friends and family will also be considered for determining the aggregate turnover.

In a recent ruling, an individual in the Gujarat bench of AAR disclosed that his total receipts in 2018-19 fiscal were about Rs 20.12 lakh, which included rent receipt of Rs 9.84 lakh and the remaining revenue was earned from interest on the bank, PPF deposits and personal loans given to friends/family. He asked the ruling bench whether it would be included to calculate the threshold limit for GST registration. To which the court said, “We conclude that the Applicant is required to aggregate the value of exempted interest income earned by way of extending deposits in PPF & Bank Saving accounts and loans and advances given to his family/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,” the AAR said.

Thus, as per the new ruling, retired persons, freelancers and homemakers who are not engaged in the business can apply for GST registration.

What are the benefits of GST Registration?

With GST registration, one can be legally recognized as a supplier of goods or services.
GST registration can help to claim the input tax credit on taxes paid to other suppliers.
You can easily do a proper accounting of taxes paid on the input goods or services.
You become eligible to avail various other benefits and privileges under the GST laws.

Summary: PPF Interest Rate to be calculated at the time of GST Registration

To calculate the threshold limit for GST registration, the exempted income such as Interest on PPF, Savings Bank Account or a loan given to friends/family will also be considered, said Authority for Advance Ruling (AAR). In a recent ruling, an individual in the Gujarat bench of AAR disclosed that his total receipts in 2018-19 fiscal were about Rs 20.12 lakh, which included rent receipt of Rs 9.84 lakh and the remaining revenue was earned from interest on the bank, PPF deposits and personal loans given to friends/family

He asked the ruling bench whether it would be included to calculate the threshold limit for GST registration. To which the court said, “We conclude that the Applicant is required to aggregate the value of exempted interest income earned by way of extending deposits in PPF & Bank Saving accounts and loans and advances given to his family/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,” the AAR said.

Thus, as per the new ruling, retired persons, freelancers and homemakers who are not engaged in the business can apply for GST registration