Normally as per section 22(1) of the CGST Act, 2017, if aggregate turnover of a person does not exceed Rs. 20,00,000 then he is not required to be registered under GST. However, there is a special provision under section 24 of the CGST Act, 2017 that if a person is liable to pay GST under RCM then he is required to get himself registered irrespective of his aggregate turnover.
Even if the aggregate turnover of any person is less than Rs. 20,00,000 he is still required to get himself registered if he receives any goods or services which is covered under reverse charge.
Further, it has been provided in section 24 that a person who is required to pay tax under section 9(5) is required to compulsorily get registered irrespective of turnover. Hence, the ECO who is required to pay tax under section 9(5) needs to take registration.
Example
M/s XYZ Pvt. Ltd., a newly incorporated private limited company, has aggregate turnover of Rs. 8,00,000 in the current financial year.
The company pays sitting fees of Rs. 25,000 to its non-executive director during the month.
As per Notification No. 13/2017-CTR, services provided by a director to a company or a body corporate are taxable under reverse charge.
In this case, M/s XYZ Pvt. Ltd. is the recipient of service and is liable to pay GST under RCM. Hence, even though the company's turnover is below 20 lakh, it has received a supply liable to tax under RCM.
As per Section 24(iii) of the CGST Act, any person liable to pay tax under RCM is required to obtain registration, irrespective of turnover.