A business is required to register under the goods and services tax (GST) even if it qualifies to be exempted according to the GST Act, but has liability to collect tax under the reverse charge mechanism (RCM), the authority for advanced ruling (AAR) on GST in Delhi said in a ruling. The GST Act provides exemption to businesses with less than Rs 20 lakh annual revenue from paying indirect taxes. Further, exemption from registration is also available to companies which are exclusively engaged in supply of goods and services that are not liable to tax or are completely exempt from tax.\u00a0 For instance, a firm dealing in supply of non-packaged rice would not be required to register as the commodity is not taxed under the GST. However, the authority read section 24 of the GST Act, along with the other sections on exemption from registrations, and concluded that businesses required to collect tax under RCM are liable to register even if it is exempted on the other two counts. \u201cThe applicant is liable for registration if it has GST liability under reverse charge mechanism irrespective of the situation that it has no liability to pay GST as supplier of goods and\/or services,\u201d the ruling said. This means that a rice dealer in the above example would also be liable to register on the GST Network portal if he employs a goods transport agency (GTA) or an advocate. According to the GST Act, a supplier is liable to collect tax from GTA or a lawyer and deposit the same to the government. This type of tax collection where the liability to deposit tax shifts from the supplier of goods and services (GTA and advocate) to the recipient (business) is called RCM. RCM is an effective tool to track transactions and curb evasion. \u201cThis ruling would adversely impact businesses exclusively engaged in exempt supplies and agriculturists also, who would now be pushed for a registration irrespective of their business operations if they procure any supplies liable to reverse charge. Basic supplies like goods transport agency and advocate services are enlisted in schedule for payment of reverse charge, making the registration virtually binding on every business entity,\u201d Rajat Mohan, partner, AMRG & Associates, said.