Turnover Limit for GST Registration in India: Limits for Goods, Services and Special Category States

Many small business owners in India start selling without asking a basic question: Do I need a GST number yet? It is contingent upon the turnover limit for GST registration applicable to you, and that limit varies with what you sell and where you operate.

This guide explains the GST registration limit in plain words, shows how your turnover is counted, and lists the cases where you must register even with very low sales. It’s written by the team at VenturEasy, where our Chartered Accountants and Company Secretaries help founders with tax and compliance daily. 

Quick Answer

The turnover limit for GST registration is ₹40 lakh a year for suppliers of goods and ₹20 lakh for suppliers of services in most states. In special category states, the limit is Rs. 10 lakh for services, and some states and union territories follow Rs. 20 lakh limit for goods. Once your aggregate turnover exceeds the applicable limit, you have to register.

For goods, the ₹20 lakh threshold is applicable for intra-state supplies in Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura and Uttarakhand. (Notification No. 10/2019-Central Tax) 

What Is Aggregate Turnover?

The turnover limit for GST registration is tested against your aggregate turnover, not just your invoice total.  Aggregate turnover means the aggregate value of:

• Taxable supplies

• Exempt supplies

• Exports of goods and services

• The interstate supplies you made

It does not include the GST charged in invoices (CGST, SGST, IGST and cess) and supplies on which your customer pays tax under reverse charge.

Turnover is calculated on a PAN basis all over India. If you have a shop in Indore and a consulting practice in Pune with the same PAN, they get aggregated.

For instance, a Jaipur-based trainer earns ₹14 lakh from taxable coaching sessions and ₹7 lakh from courses sold to students abroad. Aggregate turnover is Rs 21 lakh. Exports matter. That is a service registration, and that crosses the ₹20 lakh mark.

Turnover Limit for GST Registration for Goods Suppliers

In most states, if you are only selling goods, the GST registration limit is ₹40 lakh per year. If you make intra-state supplies in the above-mentioned ten States and UTs, it is Rs 20 lakh.

There are two points easily overlooked. First, the ₹40 lakh limit is for those who supply goods alone. If you are rendering services also, the limit is ₹20 lakh on your aggregate turnover. Secondly, suppliers of ice cream, pan masala and tobacco products have to register irrespective of their turnover. 

Turnover Limit for GST Registration for Service Providers

The GST threshold limit for freelancers, consultants, agencies, designers, coaches and other service businesses is Rs 20 lakh a year and Rs 10 lakh in special category states. These are largely the North-Eastern and hilly states.

A helpful point for service providers. If you provide services to a customer in another state, you generally do not have to register until you exceed this limit. Goods are different, as we shall see in the next section. 

When Is Registration Mandatory Even Below the Limit?

Some businesses are required to have mandatory GST registration from the first rupee of sales. These are dealt with in section 24 of the CGST Act:

• Supply of taxable goods between states (in most cases)

• Casual taxable persons, e.g. a person conducting a stall at a trade fair in another state

• Non-resident

• Reverse charge taxable person

• Service providers of input

• Who is liable to deduct TDS or collect TCS under GST

• Suppliers of goods through e-commerce platforms (generally)

If you are selling on Amazon, Flipkart, or similar sites, before your first sale, check the current rules as the conditions for e-commerce sellers have changed more than once. 

Voluntary GST Registration

You can register even if your sales are below the threshold. Section 25(3) of the CGST Act provides for voluntary registration under GST.

Why people opt for it:

• Business Purchases Claim Input Tax Credit.

• Business buyers tend to favour a registered supplier.

• Banks and online marketplaces use a GSTIN.

• Exports are zero-rated and may lead to claims for refunds.

What you need to know:

• You are required to charge GST and file returns on time, even if there are no sales in a month.

• Your registration continues to be valid, and you can continue to meet requirements. Think before you apply.

Composition Scheme for Small Businesses

The composition scheme allows small taxpayers to pay tax at a low fixed rate and file fewer returns. Its ceiling is different from the turnover limit for GST registration. It is up to ₹1.5 crore for goods traders and manufacturers (lower in some special category states). It is up to ₹50 lakh for service providers who opt under the separate service scheme.

Input Tax Credit cannot be claimed, and GST cannot be charged separately on the return invoices. It works for small retailers that buy low. It does not often work for businesses that sell to other GST-registered buyers, as they cannot claim credit on your invoices. 

How to Register After Crossing the Limit

You must apply within 30 days of crossing the turnover limit for GST registration under Section 25 of the CGST Act, within 30 days from the date you cross the threshold limit. The liability date is the date on which you exceed the limit of your turnover, not the end of the financial year.

1. Add your total turnover this year across all your businesses under your PAN.

2. Be prepared with your documents (see list below).

3. Open gst.gov.in. Go to Services > Registration > New Registration.

4. Fill Part A with PAN, mobile number, and email, and verify with the OTPs.

5. Part B is to be filled with business information, documents uploaded, and submission done using Aadhaar authentication or digital signature.

6. Note the application reference number (ARN) and trace it. Approval is generally within 3-7 working days.

Usually Needed Documents:

• Business PAN card/ PAN card of Proprietor

• Aadhaar card and Passport-size photograph

• Proof of business address (rent agreement with electricity bill or property papers)

• Bank account proof (cancelled cheque or statement)

• Digital signature and Incorporation certificate, for companies and LLPs

If you are still deciding on your business structure, read about Private Limited Company registration and LLP registration with VenturEasy.

What Happens If You Do Not Register on Time?

It is costly to cross the turnover limit for GST registration and remain unregistered. (Section 122(1) of the CGST Act) The penalty for non-registration is ₹ 10,000 or the amount of tax evaded, whichever is higher. Section 50 – Interest on Late Payment of Tax (18% per annum)

The bigger hit is that you have to pay tax from the date you became liable. If you never charged GST to your customers, you might have to pay GST yourself. 

Practical Tips from Our Work with Small Businesses

• Track sales against the turnover limit for GST registration every month and not once a year. When you get to about 80% of the limit, start getting ready.

• Don’t split one business into several names to stay within the limit. Then officers look at the pattern, and a planned split can be questioned.

• When you’re registered, compare your invoices with your books. Filing with clean records is easier, and our business accounting team can help you do this.

• Don't go by some generic number; find out what the rule is in your state.

Need Help With GST Registration?

The choice to register now, wait, or take the composition scheme depends on your sales mix, state, and customers. VenturEasy’s Chartered Accountants & Company Secretaries handle GST registration & filings for startups & small businesses so that you can concentrate on selling.

Unsure whether your turnover requires GST registration? Schedule a free 15-minute call with VenturEasy.

Disclaimer: This article is general information and not tax advice. Please check the latest position on the official GST portal or with a qualified professional before proceeding, as GST rules and notifications are subject to change.