Guidelines for Reporting Purchases from Unregistered Dealers under GST (CGST Act Section 94)
Introduction to GST and the Threshold Limit
In India, the Goods and Services Tax (GST) has been introduced to harmonize the tax structure for all goods and services. One of the key provisions under the GST framework is the threshold limit, which categorizes businesses based on their turnover and the need to register and report under the GST regime. Specifically, the threshold limit under the GST regime is India is designed to exempt small businesses from the obligation to register and file returns if certain conditions are met. This article will help you understand how the purchase of goods or services from unregistered dealers is handled under GST rules, with a focus on the CGST Act Section 94.The Threshold Limit and Its Implications
Under the Goods and Services Tax (GST) regime in India, there is a threshold limit that determines when a business must register and start compliance under the GST laws. For purchases from unregistered dealers, the threshold limit is set at Rs. 5000 per day. If your business's total purchases from unregistered dealers do not exceed Rs. 5000 in a single day, you are exempted from the requirement to show these purchases in your GSTR-3B return. These transactions are considered exempt from GST, and therefore, do not need to be reported under your GSTR-3B return.Exempt Inward Supply under Section 94 of CGST Act
Section 94 of the Central Goods and Services Tax (CGST) Act defines certain transactions as exempt inward supply. This means that if the value of goods or services purchased from unregistered dealers does not exceed Rs. 5000 per day, these purchases are exempted from GST under the GSTR-3B return. Typically, exemptions like these apply to goods and services that would otherwise be taxable but are specifically exempted under the GST regime.For GSTR-3B returns, exemptions are generally required to be reported separately. However, if the purchases from unregistered dealers are below the Rs. 5000 threshold, they may not need to be reported as they fall below the mandatory reporting limit. This makes these transactions 'exempt' in the context of reporting under GSTR-3B.