Business vertical, as defined under section 2(18) 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 risk and returns that are different from those of the other business verticals.

1. Various factors to be considered are:

1. the nature of goods or services;
2. the nature of production processes;
3. the type or class of customers for the goods or services;
4. the method used to distribute the goods or supply of services; and
5. the nature of regulatory environment (wherever applicable) including banking, insurance or public utilities;

2. A person having multiple business verticals in a state/union territory is permitted to obtain separate registrations for each business verticals.

3. 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. Component cannot become a business vertical based on geographical differentiation.

4. Supplies between business verticals are deemed to be taxable supplies. The option to avail composition scheme is PAN based. Taxpayer cannot opt for composition for a particular business verticals but has to opt for all business verticals.