GST Registration: ₹40 Lakh, ₹20 Lakh or Compulsory? A Plain Answer for Small Businesses
GST registration is required above ₹40 lakh aggregate turnover for goods and ₹20 lakh for services in most states, and ₹20 lakh and ₹10 lakh in special category states. Turnover is counted PAN-wide, including exempt supplies and exports. Inter-state sellers of goods and some others must register at any turnover.
"Do I need GST registration?" is one of the most searched tax questions in India. The answer depends on what you sell, where, and to whom.
The turnover limits
| You supply | Most states | Special category states |
|---|---|---|
| Only goods | ₹40 lakh | ₹20 lakh (some states have opted for ₹40 lakh) |
| Services, or goods and services | ₹20 lakh | ₹10 lakh |
The ₹40 lakh limit for goods is not available to some suppliers, such as those selling certain items like ice cream and pan masala, or in states that did not adopt it. Check your state.
How turnover is counted
Aggregate turnover is the total for your PAN across India, including:
- ✓taxable supplies, exempt supplies and exports;
- ✓inter-state supplies between your own branches.
It excludes GST itself and inward supplies taxed under reverse charge. A business with ₹15 lakh of taxable services and ₹10 lakh of exempt services has crossed ₹20 lakh.
Compulsory at any turnover
Registration is needed regardless of turnover for, among others:
- ✓inter-state supply of goods (inter-state services below the limit are exempted);
- ✓casual taxable persons and non-resident taxable persons;
- ✓persons liable to pay tax under reverse charge;
- ✓e-commerce operators and persons required to deduct or collect tax at source;
- ✓sellers through e-commerce platforms, subject to exemptions now available for small sellers of services and, under conditions, small intra-state sellers of goods;
- ✓input service distributors.
Should you register voluntarily?
Register if:
- ✓your customers are mostly GST-registered businesses that want to claim credit;
- ✓you buy a lot of taxable inputs and want credit on them;
- ✓you plan to sell on marketplaces or across states soon.
Wait if:
- ✓you sell mostly to consumers, and adding GST would raise your prices;
- ✓your turnover is well below the limit and compliance cost would outweigh the credit.
Once registered, you must file returns even in months with no sales.
A worked example
An Ahmedabad graphic designer earns ₹14 lakh a year from local clients and ₹4 lakh from a Mumbai client. All services, total ₹18 lakh, below ₹20 lakh. Inter-state services below the limit are exempt, so no registration is required yet. When a large client insists on a GST invoice, she registers voluntarily and claims credit on her laptop and software.
Frequently asked questions
Is the limit based on the financial year?
Yes. Once turnover crosses the limit in a financial year, apply within 30 days.
Do exports count towards the limit?
Yes. Exports are part of aggregate turnover.
Can I cancel registration if turnover falls?
Yes, you may apply to cancel if you are no longer required to be registered.
Sources
- ✓GST registration limits, Razorpay
- ✓GST registration threshold limit, TaxGuru
- ✓GST registration questions clients ask, Patron Accounting
This is a summary, not legal advice. Confirm with your chartered accountant.
Written by
Founder, Airwix Technologies (Sleet)
Vatsal Sutariya is the founder of Airwix Technologies in Ahmedabad, the company that builds Sleet: SleetHR for HR and payroll, and Sleet Accounting for GST billing and books. He writes about GST, invoicing, business tax and choosing software for Indian businesses, and checks each rule against the official notification before it is published.
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