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.
Which activities are exempted from GST registration?
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. | ||
Who are Compulsorily Required to Register for 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?
- 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
FAQs
What is the GST registration turnover threshold for businesses dealing with both goods and services?
The Goods and Services Tax (GST) registration threshold for businesses dealing with both goods and services is Rs. 20 lakhs and above. However, the threshold for businesses dealing only with goods is Rs. 40 lakhs. For those exclusively providing services, the threshold is Rs. 20 lakhs. The threshold limit is crucial as it determines whether a business needs to register for GST. Registering for GST is essential to complying with GST rules and regulations and avoiding penalties.
What is the minimum GST turnover limit?
Companies with a yearly turnover of more than Rs. 40 Lakhs (for goods) and Rs.20 lakhs (for services) are required to register for GST and pay taxes on their taxable goods and services. Businesses with a yearly turnover of less than Rs. 40 Lakhs are not required to register for GST, but can choose to register for GST voluntarily. This is beneficial for businesses as it enables them to avail of input tax credit and other benefits. It should be noted that the minimum GST registration turnover limit in India is different for some special category states. The special category states have a minimum threshold limit for GST registration of Rs. 20 Lakhs (for the supply of goods) and Rs. 10 lakhs (for the supply of services). These special category states include Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, and Sikkim. The GST Council has also recommended that all businesses with a turnover of more than Rs. 40 Lakhs should register for GST, irrespective of their state of registration. This threshold is known as ‘turnover for GST registration’. The minimum GST registration limit in India in 2023 is likely to remain the same, i.e. Rs. 40 Lakhs. This is expected to provide some relief to small businesses and enable them to avail of the benefits of GST. It is also likely to enable the government to collect taxes from all businesses, irrespective of their size.
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