Last updated: April 15th, 2019 5:00 PM

Distinct Person Under GST

The English language describes distinct as something which is different in nature, albeit the similarities in its kind. In the realms of GST, distinct person refers to any assessee who is separated in terms of registration. This article explores the concept of a distinct person and its provisions which every taxpayer must be aware of.

Who is a Distinct Person

The basic rules of GST registration state that businesses whose turnover is above 20 lakhs and/or engaged in inter-state operations must enroll themselves into GST by obtaining prior registration. Furthermore, the rules provide that a business operating with multiple units in the same state need not obtain separate registrations; whereas entities operating with operational units located in another state must be registered separately, despite being a part of the same establishment. These separately registered units will be identified as a separate entity for tax purposes, irrespective of the similarities between them. Know more about GST registration for multiple offices.

Taxability of Transactions

GST is a destination based tax, which means that taxes will be levied on the supply of goods. A transaction between distinct persons, with or without any consideration, is considered as a supply under GST. The value of a transaction will usually be determined by the open market value of the supply. If the open market value isn’t available, it will be determined by the value of goods or services of a similar kind and quality. If both the scenarios aren’t applicable, the value shall be equal to 110% of the cost of production or residual value. Note: - If the recipient of the transaction qualifies for Input Tax Credit, the value declared in the invoice will be considered as the open market value.

Export of Services

One of the many regulations concerning export state that an export isn’t constituted merely because the supplier and receiver in an international transaction are establishments of a distinct person. This effectively means that these transactions cannot be treated as a zero-rated supply, and hence would be taxed under GST. For your understanding, we have presented the Indian export rules, in conformity with which a transaction is considered as an export. A transaction is considered as an export if:

• The supplier of services is located in India.
• The recipient of services is located outside India.
• The place of supply is in foreign territory.
• Payment of services is received in convertible foreign exchange.
• Suppliers and receivers of service are not merely establishments of a distinct person.

Maintenance of Accounts and Records

The type of establishment may be the same, but every distinct person is required to maintain separate records for their place of business. Besides, every distinct person is subject to audit in their respective place of business. Know more about GST accounts maintenance.