GST Registration Eligibility Criteria: Who Must Register?

Under the Central Goods and Services Tax Act, 2017, any person whose aggregate turnover in a financial year exceeds the threshold limit must register for GST. The threshold is ₹40 lakhs for suppliers of goods in most states, and ₹20 lakhs for suppliers of services. For special category states (such as Jammu & Kashmir, Himachal Pradesh, Uttarakhand, and the North-Eastern states), the threshold is ₹20 lakhs for goods and ₹10 lakhs for services. These limits apply to the aggregate turnover of all supplies made from all places of business within a state.

Aggregate turnover includes the value of all taxable supplies, exempt supplies, exports of goods or services, and inter-state supplies. It excludes inward supplies on which tax is payable under reverse charge, and supplies made by a composition dealer. The turnover is calculated on a PAN-India basis for each state separately. If your turnover crosses the threshold at any point during the financial year, you must apply for registration within 30 days.

Yes, certain categories of persons must register for GST irrespective of their turnover. These include persons making inter-state taxable supplies, casual taxable persons, non-resident taxable persons, agents of a supplier, and persons who supply goods or services through an e-commerce operator. Additionally, every e-commerce operator is required to register, as is any person who supplies online information and database access or retrieval services (OIDAR) from outside India to a person in India.

Other mandatory registrants include input service distributors, persons who deduct tax at source under GST, and persons who collect tax at source. If you are a supplier of goods or services through an e-commerce platform, the threshold limits do not apply—you must register regardless of turnover. Similarly, if you are a casual taxable person (someone who occasionally supplies goods or services in a state where they have no fixed place of business), you must obtain registration before making any supply.

The composition scheme is an optional, simplified tax scheme for small taxpayers. To be eligible, your aggregate turnover in the preceding financial year must not exceed ₹1.5 crore (₹75 lakhs for special category states). For suppliers of services, the limit is ₹50 lakhs. Under the composition scheme, you pay tax at a lower rate (1% for manufacturers, 5% for restaurant services, and 6% for other service providers) but cannot claim input tax credit.

However, certain persons cannot opt for the composition scheme. These include suppliers of non-taxable goods, inter-state suppliers, casual taxable persons, non-resident taxable persons, and persons supplying goods through an e-commerce operator. If you opt for the composition scheme, you must still register for GST, but you file returns quarterly instead of monthly. The registration process is the same, but you must indicate your choice of the composition scheme in the application.

Aggregate turnover is calculated on a PAN-India basis for each state separately. It includes the value of all taxable supplies (including zero-rated supplies), exempt supplies, exports of goods or services, and inter-state supplies. It excludes inward supplies on which tax is payable under reverse charge, and supplies made by a composition dealer. The turnover is calculated for the financial year, and you must consider the turnover of all your business verticals under the same PAN.

For example, if you run a retail shop in Delhi and a wholesale business in Mumbai, both under the same PAN, you must add the turnover from both businesses to determine if you cross the threshold in each state. If the combined turnover exceeds ₹40 lakhs (for goods) in Delhi, you must register in Delhi. Similarly, if the combined turnover exceeds the threshold in Maharashtra, you must register there. The turnover is calculated from the first day of the financial year, and if you cross the threshold mid-year, you must register within 30 days.

If you are required to register for GST but fail to do so, you may face penalties. Under Section 122 of the CGST Act, a person who fails to register despite being liable can be penalised with an amount equal to 100% of the tax due, subject to a minimum of ₹10,000. Additionally, you may be liable to pay interest on the tax due from the date it became payable until the date of payment. The interest rate is 18% per annum for tax collected but not deposited, and 24% per annum for tax not paid.

Beyond financial penalties, non-registration can lead to other consequences. You cannot issue valid tax invoices, claim input tax credit, or file returns. Your customers may not be able to claim input tax credit on purchases from you. In cases of deliberate evasion, prosecution under the GST law is possible, which can lead to imprisonment. To avoid these risks, it is advisable to monitor your turnover regularly and apply for registration as soon as you cross the threshold or fall into a mandatory registration category.

If you are unsure whether your business requires GST registration, review your aggregate turnover and check if you fall into any mandatory registration category. For specific guidance on your situation, consult a qualified chartered accountant or tax professional who can help you determine your obligations and assist with the registration process.

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This page provides preliminary information. It is not legal advice. For your matter, consult a qualified professional.