GST Registration Limit: Minimum Turnover for GST Registration
GST Registration Limit: Minimum Turnover Limit for GST
Updated on: 06 Sep, 2024 11:36 AM
GST, or Goods and Services Tax, was implemented in India in 2017 as a unified indirect tax system to bring about transparency, simplicity, and uniformity in the Indian taxation system. GST replaced various indirect taxes like service tax, VAT, excise, octroi, etc. The GST rates on different products are set by the GST council, which consists of the Finance ministers of each state.
Entities crossing the minimum turnover threshold have to register themselves under GST and file a GST return. The turnover threshold limit varies for different types of businesses and different states. This article will help you understand the GST registration limit for all businesses, the new and the old threshold limits, how to calculate turnover, etc.
What is the Minimum Turnover Limit for GST Registration?
Businesses are required to register for GST and pay tax on their annual turnover if their annual revenue exceeds Rs.40 lakhs in the case of goods supplied and Rs.20 lakhs for the supply of services. Although it is not mandatory for businesses with a turnover less than the specified threshold to register for GST, they can still choose to register themselves voluntarily, as it can help them claim their input tax credits and other benefits.
However, there are some exceptions to this threshold. Here is a table that provides a clear overview of the GST registration threshold and registration status.
Turnover
Category of States
Registration Requirements
Previous Turnover Limits for Sale of goods/services
More than Rs.20 lakhs -
Normal Category States
Registration Mandatory
More than Rs.10 lakhs
Special Category States
Registration Mandatory
New Turnover Limits for Sale of Goods
More than Rs.40 lakhs
Normal Category States
Registration Mandatory
More than 20 lakhs
Special Category States
Registration Mandatory
Threshold Limit for Provision of Services
There has been no change in the GST threshold limits for service providers. They need to register under GST of their aggregate turnover exceeds Rs.20 lakhs for normal category states and Rs.10 lakhs for special category states.
Classification of States for the Applicability of New GST Turnover Limits
Given below is the classification of states for the applicability of new GST turnover limits -
Normal Category States with a GST Threshold of Rs.40 lakhs
Normal Category States that Chose Status Quo
Special Category States with new GST threshold of Rs.40 lakhs
Special Category States with new GST threshold of Rs.20 lakhs
Andaman and Nicobar islands
Bihar
Chandigarh
Andhra Pradesh
Chattisgarh
Dadra and Nagar Haveli
Daman and Diu
Gujarat
Goa
Delhi
Haryana
Jharkhand
Kerala
Karnataka
Himachal Pradesh
Lakshwadeep
Madhya Pradesh
Maharashtra
Orissa
Punjab
Rajasthan
Uttar Pradesh
West Bengal
Tamil Nadu
Telangana
Assam
Jammu and Kashmir
Ladakh
Arunachal Pradesh
Manipur Meghalaya
Mizoram
Nagaland
Puducherry
Sikkim
Tripura
Uttarakhand
Who are Compulsorily Required to Register for GST?
Given below is a list of category of taxpayers who are compulsorily required to register under GST -
Casual taxable persons
Non-resident taxable persons
Interstate suppliers
Persons required to deduct TDS/TCS
Persons taxable under the reverse charge basis
Input service distributors
E-commerce companies offering suppliers a platform to produce supplies.
Providers delivering items via online retailers are responsible for withholding taxes at the source
Individuals acting as Agents or Principals in a transaction on behalf of another person.
Internet service providers offering services to unregistered individuals in India from overseas.
How to Calculate GST Threshold Limit?
GST threshold refers to the minimum annual turnover that your business must have during a year for GST -
Some factors that need to be considered to calculate the annual threshold are -
Annual Turnover - Determine the total value of goods or services offered by you in a financial year, including both taxable and non-taxable supplies.
Aggregate Turnover - This should include the sum of turnover of all business entities with the same PAN. If the overall turnover exceeds the minimum threshold for GST registration, considering the type of supply and the state category, then the entity has to register itself under GST.
Export Earnings - It refers to the revenue generated from international sales. These earnings need to be converted into local currencies for accounts and tax purposes.
Interstate Supplies - This refers to the sale of goods and services to another state in India and the IGST rates applicable to it.
If your annual business turnover exceeds the minimum threshold, make sure you get yourself registered under GST to avoid legal consequences. Even if you are not mandatorily required to register for GST, you can still register for GST voluntarily to claim your input tax credit and avoid penalty and late fees.
Q- Is the GST registration limit 20 lakhs or 40 lakhs?
Enterprises in India must register for GST if their annual turnover exceeds Rs. 40 lakhs (or Rs. 20 lakhs for businesses in certain special category states). The GST Council raised the minimum turnover threshold for GST registration from Rs. 20 lakhs to Rs. 40 lakhs.
Q- What happens if you fail to register after crossing the threshold limits?
Noncompliance can lead to serious consequences, including heavy penalties, legal action, and damage to a firm's credibility and reputation.
Q- What is the new GST limit?
The GST exemption limit was increased from Rs. 20 lakhs to Rs. 40 lakhs at the 32nd GST Council Meeting.
Q- What is the turnover limit for composite GST?
In India, the annual turnover limit for composition schemes is Rs. 1.5 crore. Small enterprises with annual sales up to Rs. 1.5 crore can opt for voluntary composition schemes, allowing them to pay fixed tax rates instead of the regular GST rates.
Q- Is GST mandatory for small businesses having a turnover below 20 lakhs?
If a company's annual sales are below Rs. 40 lakhs for goods or Rs. 20 lakhs for services, or if the startup deals in exempt items or services, it is not required to register for GST.
Q- Can I cancel GST registration if turnover is less than 20 lakhs?
If a taxpayer’s annual turnover falls below the GST threshold limit and is not required anymore, then the taxpayer can apply for cancellation of the GST registration.
Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.
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