QUESTION

Mr. A is a partner in ABC & Co. LLP. He has following income from this firm:

Profit share- Rs 25 lacs
Salary – Rs 10 lacs
Interest on capital- Rs 5 lacs
Apart from the aforesaid income from the LLP, he has following other income:

Rental income of Rs. 13 lacs from the commercial properties
Interest income from fixed deposit with banks amounting to Rs 4 lacs.
Dividend from Companies – Rs. 60,000

Query: 1) Whether income received from ABC & Co LLP by Mr. A will be included in his turnover to work out the aggregate turnover for the purpose of GST registration under section 22 of the CGST Act

2) Whether Mr. A is required for GST registration?

ANSWER

FACTS OF THE CASE:

Whether income received from LLP will be included in turnover to work out the aggregate turnover for the purpose of GST registration.

LAW APPLICABLE:

As per Notification No. 22/2017 Central Tax (Rate) dt. 22.08.2017 "Limited Liability Partnership" formed and registered under the provisions of the Limited Liability Partnership Act, 2008 (6 of 2009) shall also be considered as a partnership firm or a firm".

Further as per Section 7 of CGST Act, the expression 'supply' includes''
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;---------

INTERPRETATION:

Income received from Partnership firm i.e. profit share, salary, interest on capital will be treated as part of salary and will not be considered as supply under section 7 of CGST Act because for any transaction to be considered as supply, there must be flow of service from one person to another for a consideration. Service to self will not be considered as supply under GST. Therefore income from Partnership firm will not be considered in computation of aggregate turnover for the purpose of Registration in GST.

However other income apart from income received from LLP will be considered for computation of aggregate turnover.

CONCLUSION:

Since other income amounts to Rs 17,60,000/- i.e. less than threshold limit of 20 lakhs, therefore Mr A is not required to take Registration in GST. (Reply dt. 05/05/2022)