GST Glossary: Definition and meaning of “Taxable Person” under GST Model law

Section 2(96) read with section 9 of Model GST Law defines the taxable person as

“(1) Taxable Person means a person who carries on any business at any place in India
/State of ____ and who is registered or required to be registered under Schedule III of
this Act:
Provided that an agriculturist shall not be considered as a taxable person.
Provided further that a person who is required to be registered under paragraph 1 of
Schedule III of this Act shall not be considered as a taxable person until his aggregate
turnover in a financial year exceeds [Rs ten lakh]
Provided further that a person who is required to be registered under paragraph 1 of
Schedule III of this Act shall not be considered as a taxable person until his aggregate
turnover in a financial year exceeds [Rs five lakh]
[This threshold of 5 lacs will apply only if a taxable person conducts his business in any
of the NE States including Sikkim.]
(2) The Central Government, a State Government or any local authority shall be
regarded as a taxable person in respect of activities or transactions in which they are
engaged as public authorities other than the activities or transactions as specified in
Schedule IV to this Act.
(3) The following persons shall not be considered as taxable persons for the purposes
of this Act –
(a) any person who provides services as an employee to his employer in the course of,
or in relation to his employment, or by any other legal ties creating the relationship of
employer and employee as regards working conditions, remunerations and employer’s
liability;
(b) any person engaged in the business of exclusively supplying goods and/or services
that are not liable to tax under this Act;
(c) any person, liable to pay tax under sub-section (3) of section 7, receiving services of
value not exceeding ______ rupees in a year for personal use, other than for use in the
course or furtherance of his business.” (Text from Model GST Law)

Analysis: Following points are important to determine a Taxable person under GST Model Law

1. A taxable person should carry any business at any place in India and he should be registered/liable to be registered under schedule III of GST Model Law.
2. Schedule III Provide for threshold limit of Rs. 9 lac/4 lac(for north east states) for liability to take registration. Section 9 further provide that a person who is registered/liable to be registered under schedule III will not be a taxable person until his turnover exceeds Rs. 10 lac/ 5 lac in a financial year. Thus a person whose turnover is more than 9 lac/4lac but less than 10 lac/5 lac will be liable to be registered but won’t be a taxable person under GST model law.
3. Threshold limit of Rs 9 lac/4 lac or Rs 10 lac/4 lac is for a financial year. If a person is registered on say, march of 2017 and his turnover in 2017-18 is less than 10 Lac he will not be a taxable person under GST model Law.
4. An agriculturist is specifically excluded from the definition of Taxable person. Although definition of Goods include agriculture produce but exclusion of an agriculturist from definition of taxable person has kept the farmers  out of the preview of GST.
5.  Limit of Rs.10 lac/5 lac is only for person registered/ liable to be registered under para 1 of Schedule III. Supplier required to be registered under other paras of Schedule II will be  a taxable person even without the threshold limit.
6. Para 3,4,5,of schedule III of Model GST Law covers the case of succession, transfer,arrangement, amalgamation, merger, de merger ,under supervision of High court and person need to get registered without threshold limit will be a taxable person without any threshold limit.
7. Para 2 of schedule III of Model GST law is already subject to para 1.
8. The Central Government, a State Government or any local authority shall be regarded as a taxable person in respect of activities or transactions in which they are engaged as public authorities other than the activities or transactions as specified in Schedule IV to this Act.
9. Exclusion from Taxable person:
   1. Employees
   2. Supplier engaged exclusively in supply of exempted Goods and/or services.
   3. Person covered under reverse charge up to a limit to be prescribed by appropriate government.