GST Registration Limit: Do You Need to Register? Check in 2 Minutes

The GST registration limit is Rs 40 lakh of yearly turnover if you sell only goods, and Rs 20 lakh if you provide services, with lower limits in some States. But the limit does not protect everyone. Sell to a buyer in another State, or through a marketplace, and registration is usually needed from the first sale.

What is the limit in your State?

There are two questions. Do you sell only goods, or do you provide any taxable service as well? And from which State do you supply? The table below is built from section 22 and the notification that raised the goods limit from 1 April 2019.

Two cautions on this table. The Rs 40 lakh limit does not apply to sellers of ice cream, pan masala and tobacco products, and the list of excluded goods is reported to have grown since 2019. And the last row is our reading of the section 22 definition of special category States; if you are in the North East, confirm the figure with your State tax office or a CA before relying on it.

What counts as turnover?

The law uses the term aggregate turnover. It is the value of all your taxable sales, exempt sales, exports and inter-State sales added together, for every business under the same PAN, anywhere in India. GST itself is left out. Purchases on which you pay tax under reverse charge are left out too.

So it is not profit. It is not only the taxable part of your sales. And it is not counted shop by shop. If you run a garment shop and a tuition centre in your own name, both sit under one PAN and both count.

When does the limit not matter at all?

Section 24 lists people who must register whatever their turnover. The ones a small business usually meets are:

• anyone making an inter-State taxable supply, for example a seller in Jaipur sending goods to a customer in Delhi;
• anyone selling through an e-commerce operator that has to collect tax at source, such as Amazon, Flipkart or Meesho;
• a casual taxable person, such as a trader taking a stall at an exhibition in another State;
• anyone who has to pay tax under reverse charge;
• an agent who supplies on behalf of other taxable persons.

There is one relief for marketplace sellers. Since 1 October 2023, notification 34/2023-Central Tax lets a person sell goods through a marketplace without registration, if turnover is within the limit, the sales stay inside one State and an enrolment number is taken on the GST portal. We explain that route in selling on Meesho without GST. A similar relief is reported for service providers who supply across States below Rs 20 lakh; we did not open that notification, so check it before you rely on it.

How do you check in 2 minutes?

1. Add up every sale made under your PAN since 1 April of this financial year. Include exempt sales and sales from every branch or side business.
2. Ask whether any of it is a taxable service. If yes, your limit is the services column, even if services are a small part.
3. Find your State in the table and read your limit.
4. Ask whether you ship goods to other States yourself, or plan to sell on a marketplace with a GSTIN. If yes, the limit does not help you.
5. If your total has crossed the limit, or step 4 applies, note the date. You have 30 days from that date to apply.

A worked example

Rohan makes leather bags in Jaipur and sells them from his own shop. His sales this year are Rs 26 lakh, all to walk-in customers in Rajasthan. He sells only goods, Rajasthan is not one of the excluded States, so his limit is Rs 40 lakh. He does not need to register.

Now change one thing. Rohan starts a repair and polishing service and earns Rs 3 lakh from it. He is no longer selling only goods, so his limit drops to Rs 20 lakh. His turnover is Rs 26 lakh plus Rs 3 lakh, that is Rs 29 lakh. He is over the limit and has to register.

Change another thing instead. Rohan keeps to bags, but couriers one bag worth Rs 2,500 to a buyer in Delhi. That is an inter-State taxable supply, and section 24 applies whatever his turnover.

The mistake people usually make

They watch the big number and miss the small trigger. A seller at Rs 12 lakh a year feels far from Rs 40 lakh, and so sends a few parcels to another State or adds a small service on the side. The turnover limit was never the test for that seller.

The second mistake is counting only taxable sales. A shop selling Rs 30 lakh of exempt goods and Rs 12 lakh of taxable goods has an aggregate turnover of Rs 42 lakh, not Rs 12 lakh.

What happens once you cross it?

Section 25 gives you 30 days from the day you become liable to apply for registration, in each State from which you make taxable supplies. If you apply within that time, the law lets you take input tax credit on the stock you hold on the day before you became liable. Apply late and that benefit is at risk, and tax is still due from the day you became liable. If a 30 day clock has already run out for you, speak to a CA before you file.

You can also register voluntarily below the limit. Sellers do this to sell across States on marketplaces or to give tax invoices to business buyers. Once registered, every rule applies to you, including monthly or quarterly returns. The steps are in our guide to the GST registration process online, and the paperwork is in documents for a proprietorship.

Frequently asked questions

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