GST Registration Threshold Limits

As per the GST Regime, businesses or business owners whose turnover exceeds more than Rs. 40 lakhs is required to register under GST as a normal taxable person and Rs 10 lakhs threshold limit for businesses operated in NE and hill states. The process of registration under the GST Regime is called GST registration.

It is mandatory to register under GST for almost all the business. If the company or business carries on business activities without registering under GST, it is considered an offence as per the GST rules and heavy penalties will be levied.

CBIC has announced the increase in threshold turnover for the business from Rs 20 lakhs to Rs 40 lakhs and it came into effect from 1st April 2019. It takes about 2 to 6 working to complete the GST registration process and we can help you to complete your GST registration just in 3 easy steps. 

On considering the demands raised by MSME, the GST Council increased the threshold turnover limits for GST registration. This increase in the threshold turnover limits helps to ease compliance under the GST regime. The states have an option to choose to continue with the existing limits or to a higher limit. This article explains the GST Registration Threshold limits and the persons or businesses to which it applies.

New GST Registration Threshold Limit

Goods Registration Threshold Limit

For Normal Taxpayer

It was Rs. 20 lakhs of threshold limit for the supplier of goods only under the original GST regime declared by the government in July 2017. To make it more clear, suppliers or dealers of goods whose annual turnover of up to Rs 20 Lakhs are not required to register under the GST regime. Therefore, suppliers or dealers of goods with threshold turnover of Rs 20 Lakhs and above are required to register under GST compulsorily. This exemption threshold annual limit, however, has been doubled in the 32nd GST Council meeting from Rs. 20 lakhs to 40 lakhs .

Moreover, this exemption threshold limit of up to Rs 40 Lakhs is not applicable for taxpayers who are:

It is mandatory to register under Section 24 of the CGST Act

Involved in business of supply of goods such as:

• Ice cream and other edible products related to ice whether or not containing cocoa
• Tobacco and tobacco manufactured substitutes
• Pan masala

For Special Category States

The threshold limit under GST registration for north eastern and hilly states was Rs. 10 lakhs in the previously followed GST regime.

The Special Category States include:

• Assam
• Jammu and Kashmir
• Meghalaya
• Arunachal Pradesh
• Manipur
• Sikkim
• Tripura
• Mizoram
• Nagaland
• Himachal Pradesh
• Uttarakhand

The threshold limit of this State has been raised from Rs. 10 lakhs to Rs. 20 lakhs for supply of goods according to the 32nd GST Council meeting. However, the north eastern and hilly states were given an option, i.e. the businesses could either choose GST Limit Rs. 40 lakhs or Rs. 20 lakhs as the annual turnover limit for GST exemption in case of provider of goods.

GST Registration Limit for Services

For Normal Taxpayer

AS per the original GST structure declared by the government in July 2017 by the turnover limit for suppliers of services was Rs. 20 lakhs excluding the special category states. However, this exemption limit for GST for service providers stays unchanged i.e. Rs. 20 lakhs as declared in the 32nd GST Council Meeting.

For Special Category States

During the initial GST regime, the exemption limit for service providers in hilly and North eastern states was Rs. 10 lakhs. However, this exemption limit stays unchanged, thus it is Rs 10 lakhs as per the 32nd GST Council Meeting.

Composition Scheme Registration Limit

The GST Registration Limit for businesses or taxpayers registered under Composition Scheme varied depending on the category of taxpayers, as follows:

For Traders and Manufacturers

As per the GST law, all the traders and manufacturers that hold the annual turnover of up to Rs 1 Crore in the preceding financial year could register under GST as composition dealers. The rate of 1% GST is applicable on such traders and manufacturers. However, the GST Registration Limit for traders and  manufacturers registered under the category of composition dealers has increased as announced in the 32nd GST Council Meeting

Consequently, manufacturers and traders having a conglomeration annual turnover of up to Rs 1.5 Crores in the preceding financial year can register under GST as composition dealers. 

But, the GST rate of 1% applicable on such manufacturers and traders remains unchanged.

For Restaurant Service Only

Under the GST law. service providers, i.e. restaurant services only with an aggregate turnover of up to Rs 1 Crore in the preceding financial year could register GST as composition dealers. And the rate of GST applicable on these kinds of service providers was 5%.

However, the GST Registration Limit for Restaurant service providers registered as composition dealers has also been raised as announced in the 32nd GST Council Meeting. Therefore Restaurant service providers holding an aggregate annual turnover of up to Rs 1.5 Crores in the predating financial year can now register  under GST as composition dealers. And the rate of 5% GST was applicable on such restaurant service providers stays unchanged.

For other Service Providers

Service providers excluding restaurant related services, could not opt for a Composition dealer under the original GST structure. However, as per 32nd GST Council Meeting, a new Composition Scheme shall now be available for Mixed Suppliers or Suppliers of Services with a Tax Rate of 6% (3% CGST +3% SGST). And these service providers should hold the threshold annual turnover up to Rs 50 lakhs in the preceding Financial Year.

Compulsory Registration Under GST

There are certain categories of taxpayers who must register under GST compulsorily. Listed below are those categories as per Section 24 of the CGST Act, 2017. Accordingly:

• Individuals or businesses that involves inter-state taxable supply
• Individuals who required to pay tax under Casual taxable
• Individuals who required to pay tax under reverse charge
• Individuals who required to pay tax under sub-section (5) of section 9
• Non-resident taxable Individuals
• Individuals who are required to pay TDS (Tax Deducted at Source) under section 51. This is impertinent of the fact that whether separately registered under the Act or not, whether the Individuals are separately registered under the Act or not.
• Input Service Distributor who separately registered under the Act or not.
• Individuals making taxable supply of services or goods on behalf of other taxable Individuals as an agent or differently.
• Individuals supplying services or goods other than supplies defined under sub-section (5) of section 9. Such supplies are done via an electronic commerce operator who is necessitated to collect tax at source as per the section 52.
• Individuals notified by the government on the recommendations of the Council.
• All the electronic commerce operator
• Individuals who supply online information and database access or retrieval services from  one place to outside India. Such services are provided to an individual other than a registered individual in India.

States accepting New GST Registration Limit

As per the 32nd meeting of the GST Council, an option has been provided to the hilly and north eastern states to select either Rs. 20 lakhs or Rs. 40 lakhs as the GST exemption turnover limit in case of supplier of goods.

Therefore, following is the status of the States adopting the various thresholds for GST registration in case of supply of goods.

Currently, Delhi and Puducherry are not considered special category states for the purposes of GST structure. Therefore, there would be 31 States in which SGST + CGST would be imposed and 5 Union Territories in which UTGST + CGST would be imposed.

Importantly, as per section 24 of the CGST Act, 2017, registration of a taxpayer is mandatory but an individual who is making inter-state supplies of handicraft goods up to an aggregate turnover of Rs 20 Lakhs will come under the exemption from registration category. However, it’s Rs 10 Lakhs for states like Manipur, Mizoram, Nagaland and Tripura.

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