GST India Forum – Goods and Services Tax (GST) in India › Forums › Bare Law › Sec 2(18) – Business Vertical
- AdminKeymasterApril 14, 2017 at 2:22 AMPost count: 130Topics: 129
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“business vertical” means a distinguishable component of an enterprise that is engaged in the supply of individual goods or services or a group of related goods or services which is subject to risks and returns that are different from those of the other business verticals.
Explanation.–For the purposes of this clause, factors that should be considered in determining whether goods or services are related include–
(a) the nature of the goods or services;
(b) the nature of the production processes;
(c) the type or class of customers for the goods or services;
(d) the methods used to distribute the goods or supply of services; and
(e) the nature of regulatory environment (wherever applicable), including banking, insurance, or public utilities;Priya MadrechaModeratorMay 22, 2017 at 5:23 PMPost count: 280Topics: 4
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A person having multiple business verticals in a State/ Union Territory is permitted to obtain separate registrations for each such business vertical. Therefore, the person will have an option to avail a single registration (covering all business verticals in a State or Union Territory) or separate registration for each business vertical in a State or Union Territory.
The following aspects need to be noted:
• The component must be a distinguishable component of the person, which is capable of being transferred or to function without affecting any other business of that person. A component cannot become a ‘business vertical’ merely based on geographical differentiation;
• The supplies made one business vertical unit should be:
(a) individual goods or services or a group of related goods or services; and
(b) subject to risks and returns different from those of the other business verticals;
• The risk and returns of supplies forming part of a business vertical should be same;
• Supplies between business verticals are deemed to be taxable supplies;
• Lastly, the option to avail composition scheme is PAN-based and hence, a person has to opt for composition scheme for all the business verticals across India. He cannot opt for the scheme only in a particular business vertical;
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