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GST threshold limits for registration

GST threshold limit

Jun 10, 2022

Businesses which cross the GST threshold limit, that is, Rs. 40 Lakhs for a general situation whereas for North-eastern states threshold is Rs. 10 Lakhs. For some businesses registration under GST is mandatory. With digitalization, the GST registration process is possible to carry out in 2-6 working days. 

 Every business is mandatorily required to register under GST when the business crosses the threshold limits. If the business carries out activities without registering under GST, it is counted as an offence as per the GST law and attracts heavy penalties that will be levied. No change has been specified in the threshold limits for service providers. Service providers need to register if their aggregate turnover exceeds Rs. 20 lakhs (normal category states) & Rs. 10 lakhs (special category states).

The GST Council has effectively doubled the GST threshold limit from paying goods and services tax (GST) to Rs 40 lakhs from Rs. 20 lakhs. Also, for the northeastern states & hill states, the exemption limit has been increased to Rs 20 lakhs from earlier Rs 10 lakhs.

The increase in the threshold turnover limits helps in easing compliance under the GST regime. The states have an option to continue with the existing limits or opt for a higher limit. Like any other business, service providers should obtain GST registration, if the entity’s aggregated annual turnover exceeds Rs. 20 lakhs per annum in most states and Rs. 10 lakhs in the Special Category States. Registration is mandatory for any other person or class of individuals that the Government may notify based on the GST Council’s recommendations. GST is not applicable for those assessees whose turnover is less than 40 Lakhs / 20 Lakhs (as applicable).

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New GST threshold limit for Goods & Services

TYPE OF STATE

TYPE OF OPERATIONS

EXEMPTION LIMIT UP TO MARCH 31, 2019

EXEMPTION LIMIT FROM APRIL 1, 2019

Normal states

Sale of goods only

Annual threshold turnover of Rs. 20 lakhs

Annual threshold turnover increased to Rs. 40 lakhs

Special category states

Sale of goods only

Annual threshold turnover of Rs. 10 lakhs

Annual threshold turnover increased to Rs. 20 lakhs

Normal States

Provision of services only

Annual threshold turnover of Rs. 20 lakhs

Annual threshold turnover of Rs. 20 lakhs (remains the same)

Special category states

Provision of services only

Annual threshold turnover of Rs. 10 lakhs

Annual threshold turnover of up to Rs. 10 lakhs (remains the same)

 

GST threshold limit for Goods

For Normal Taxpayer

Rs 20 lakhs of the threshold limit for the supplier of goods under the original GST regime declared by the government in July 2017. To be clear, suppliers or dealers of goods whose annual turnover of up to Rs 20 Lakhs are not required to register under the GST regime. So, suppliers or dealers of goods with a 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 Rs 40 lakhs.

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

1) Mandatorily required to register under Section 24 of the CGST Act

2) 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 the Special Category States

The threshold limit under GST registration for northeastern and hilly states is revised to Rs 20 lakhs under the current 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 these States has been raised from Rs 10 lakhs to Rs 20 lakhs for the supply of goods according to the 32nd GST Council meeting. But the north eastern and hilly states were given an option to either choose GST Limit Rs. 40 lakhs or Rs. 20 lakhs as the annual turnover limit for GST exemption in the case of a provider of goods.

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GST threshold limit for Services

For the Normal States

As per the original GST structure, declared in July 2017 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 remains unchanged i.e. Rs 20 lakhs as declared in the 32nd GST Council Meeting.

For the Special Category States

During the initial GST regime, the exemption limit for service providers in hilly and Northeastern states was Rs. 10 lakhs. However, this exemption limit stays unchanged, hence the limit 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 law, all the traders and manufacturers that hold an annual turnover of up to Rs 1 Crore in the preceding financial year could register under GST as composition dealers. A special rate of 1% of sales is applicable to 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. As of right now, manufacturers and traders had 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% rate of GST applicable to such manufacturers and traders remains unchanged.

For Restaurant Service Only

Under the 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. The rate applicable to these kinds of service providers was 5%. However, the GST Registration Limit for Restaurant service providers registered as composition dealers have also been increased 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 as applicable on such restaurant service providers remains 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.

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