Does a Voice Artiste need to register for GST even if she or he falls below the 20 Lacs turnover in a year threshold?
This Voice Industry Blog from Sugar Mediaz tries to understand an important aspect about GST with reference to freelance Voice Artistes. Thank you Dipen Lathi from Lathi & Co Chartered Accountants and Darrpan Mehta from Sugar Mediaz for your valuable inputs!
Dear Voice Artistes,
India is about to witness the most transformational tax reform that the country has seen in several decades.
Goods and Services Tax (GST) not only replaces multiple indirect taxes, but is also expected to broaden the tax base, increase tax compliance and reduce economic distortions caused by inter-State variations in taxes.
While there are multiple ways and resources to help one register for GST and file returns regularly, either through self help based tutorials available online or through the services of a Chartered Accountant or Indirect Tax Consultant, one important aspect deserves special attention when it comes to Voice Artistes and GST Registration.
To answer this question, let us understand some important guidelines about GST with reference to Small Service Providers including Freelance Voice Artistes
The threshold limit under GST, as you are aware is Rs.20 Lakhs in most states barring north eastern states where it is Rs.10 Lakhs. Thus, a person with a turnover/gross receipt of less than the threshold limit need not register under GST, However, if such person wishes to voluntarily register and charge/pay GST he is entitled to do so.
There is a composition scheme for small businesses under GST where the business need not charge GST on sales but only pay a 1%, 2% or 5%. The said scheme is only for manufacturers, traders and hotels who do not have any interstate transactions. In the given case the Composition scheme will not apply because the freelancer Voice Artistes are service providers.
One important aspect of the GST law is that a registered person who procures any goods or services from an unregistered vendor will have to pay a GST under reverse charge provisions. This is quite like URD purchases under the erstwhile sales tax law where the purchaser of goods from an unregistered dealer (URD) was required to pay sales tax on such purchases.
In order to pay tax on purchases from unregistered persons, the registered entity will have to follow a procedure which will involve creating a voucher, recording the unregistered purchase and paying tax thereon followed by flagging the said payment in order to claim GST credit in the subsequent month or months.
Needless to say, this imposes an additional compliance burden on registered entities. Hence, it is widely felt that most companies and large corporations will instruct their staff not to make procurement of goods or services from unregistered persons.
This may have two fold effect –
Unregistered persons may find it in their advantage to register, or,
If they choose not to register, such persons will lose business because most of the registered, tax compliant entities will desist from dealing with unregistered persons.
If such persons do register, they may have to rely on a consultant/CA for filing regular returns. This is because; all the taxpayers will get a GST compliance rating. Poor compliance will mean a poor rating. A poor rating will again discourage prospective clients from dealing with such freelancers. A consultant may help in regular compliance to keep them in good rating.The freelancer may have to incur additional cost for the consultant, which given his already fragile income source, he may find difficult.
To sum up, GST regime seems to be unkind to small service providers.
THE FINAL ANSWER
One can visit www.gstindia.com for tons of resources and details about GST, filing or returns and any other query that one may have about GST.