Core business activity in GST?

A new feature “core business activity” is introduced in GSTN. By using this option, a taxpayer needs to select his one core business activity on the GST Portal. Core business activity means the business your primary business that you need to select.

Let’s say, if you are a trader then you may select the “trader” category in the Core Business Selection.

core business activity in GST

core business activity under GST is the main or essential activity that is carried out as a major business.

even if you are engaged in various types of activities, you have to select any one major type of activity that is your core business. This can be identified on the basis of its turnover.

Let’s say, you are a manufacturer of textiles and also doing a trading activity of chemicals. Suppose your turnover of the manufacturing business is 2 crores. whereas the trading turnover is only 1 crore

per year. Therefore, in that situation, you have to choose as a manufacturer as manufacturing is your core business activity.

Read more about ITC on Marketing Expenses/Sales Promotion Scheme 

Read more about: All about GST Offenses, Penalties & Appeals

“core business” category can be

3 options are available Manufacturer, Trader, Service Provider, and Other-

  1. Manufacturer- A manufacturer is those persons who by using the raw materials and components produce the new products using equipment and sell them to the distributors, retailers, wholesalers or others.
  2. Trader- A trader is persons who only deal in the buying and selling of goods. They can be Wholesaler or Distributor and Retailer.
  3. Service Provider and Other- A service provider is those people who provide services to the recipient
  4. Others- it will consist of activities like work contracts and other miscellaneous items.

Exemptions for core business activity are available

  • GST Practitioners
  • OIDAR
  • embassies
  • TDS deductors etc.

selection of core business activity

  1. log in GST portal.
  2. Select your core business activity out of the following option
  • Manufacturer
  • Trader
  • Service provider and others

3. Select the submit option after the selection of core business activity.

The feature enables LUT filing on the GST Portal.

Letters of undertaking for the FY 2021-2022 can now be provided in the GSTN portal, as the new functionality has been activated for all taxpayers, and this has been done for taxpayer convenience.

change in core business activity

If a taxpayer selects any core business by mistake then he can change his core business activity by following the simple step mentioned below –

  1. The first step is to go to my profile
  2. Then select the core business status option after selecting his profile.
  3. After that option for changing the core business activity is shown. we can change the core business activity at them by giving a reason up to 1000 words.
  4. After that, we just need to click submit button.

Reason for implementation of core business activity

  • When an entity acknowledges its core business activity, tax authorities can encounter it if it raises high-value invoices for unrelated services.
  • A GSTN spokesperson says the idea behind the new feature is to check the practice of circulation of ITC within a company.
  • “Typically, a manufacturer sells to its sister company, which claims to be in the trading business, and receives services from another sister concern, which claims to be in the provision of a specific service, so that the ITC is kept circulating within the group.”
  • The government has introduced a countrywide ITC crackdown on fake bills and firms. As per official sources, the crackdown on bogus firms reduced the number of registered entities with GSTN.
Rajput Jain & Associates

Rajput Jain & Associates is a Chartered Accountants firm, with it's headquarter situated at New Delhi (the capital of India). The firm has been set up by a group of young, enthusiastic, highly skilled and motivated professionals who have taken experience from top consulting firms and are extensively experienced in their chosen fields has providing a wide array of Accounting, Auditing, Taxation, Assurance and Business advisory services to various clients and their stakeholders. Rajput jain & Associates, a professional firm, offers its clients a full range of services, To serve better and to bring bucket of services under one roof, the firm has merged with it various Chartered Accountancy firms pioneer in diversified fields. We have associates all over India in big cities. All our offices are well equipped with latest technological support with updated reference materials. We have a large team of professionals other than our Core Team members to meet the requirements of our prospective clients including the existing ones. However, considering our commitment towards high quality services to our clients, our team keeps on growing with more and more associates having strong professional background with good exposure in the related areas of responsibility.

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