Introduction

The Goods and Services Tax (GST), a significant reform in India's taxation system, consolidates the nation's tax framework. Replacing state and central taxes simplifies indirect taxation. Businesses and professionals must know GST turnover criteria to comply. This blog explains GST registration limitations, turnover thresholds, and their applicability in simple terms.

What is GST?

GST is India's comprehensive indirect tax on goods and services. Destination-based taxation is collected upon consumption. On July 1, 2017, GST replaced VAT, excise, and service tax.

GST registration is required for firms with high turnover. Registration lets firms charge GST and obtain ITC on purchases from other businesses. The GST Council routinely evaluates and revises GST turnover thresholds and other laws based on economic situations.

• Uniform Taxation: GST aims to provide a consistent tax rate nationwide.
• Input Tax Credit: Businesses can claim tax credits during procurement.
• Digital Compliance: Online GST returns and registrations increase transparency.

Also Read : Why is roc filing needed

What is the Minimum Turnover for GST?

The kind of business and location determine the lowest turnover required for GST registration. Different criteria on goods and services have been established by the GST Council. Generally, companies with a yearly turnover more than Rs. 40 lakhs are required to register under GST. However, this limit varies for service providers and certain states.

For Goods:

• General Threshold: Rs. 40 lakhs for most states.
• Special Category States: Rs. 20 lakhs.

For Services:

• Rs. 20 lakhs for most states.
• Rs. 10 lakhs for special category states.

Special Considerations:

• Businesses involved in inter-state supply of goods or services must register irrespective of turnover.
• E-commerce operators facilitating supply are also required to register.
• Entities under the reverse charge mechanism have to register regardless of turnover.

Also Read : Gstr 9 annual return

GST Registration Threshold

1. Threshold for Goods:

Limitation: Most states are required by the GST to register firms with a yearly revenue of more than 40 lakhs. Arunachal Pradesh, Meghalaya, Manipur, Mizoram, Nagaland, Sikkim, Tripura, and Uttarakhand are examples of special category states where the maximum is set at ₹20 lakhs.

2. Threshold for Services:

General Limit: Service providers with a turnover above ₹20 lakhs must register. Special Category States: For the states mentioned above, the limit is ₹10 lakhs.

3. Exemptions:

• Businesses engaged in interstate supply of goods or services must register irrespective of turnover.
• E-commerce operators facilitating supplies are also required to register, regardless of their turnover.

4. Composition Scheme:

Small companies with up to ₹1.5 crore can select the composition plan for reduced tax rates. Service providers with income up to ₹50 lakhs are eligible for this scheme.

5. Aggregate Turnover:

It includes all taxable supplies, exempt supplies, exports, and interstate supplies under a single PAN. GST collected is excluded when calculating the aggregate turnover.

6. Updated Limits:

The ₹40 lakhs threshold for goods was introduced in 2019 to simplify compliance for small businesses. However, service providers and special category states continue to follow the lower thresholds.

Also Read : Section 194q of the income tax act applicability tds rate turnover limit and examples

FAQs

• Is the GST registration limit 20 or 40 lakhs?
  Most states limit goods suppliers to ₹40 lakhs, whereas service providers follow a ₹20 lakh cap.
  
  
• Who is compulsory for GST registration?
  Businesses involved in inter-state supplies, e-commerce, or those under the reverse charge mechanism must register regardless of turnover.
  
  
• What is the 1.5 crore limit in GST?
  This refers to the turnover limit for enterprises dealing in commodities to subscribe into the Composition Scheme.
  
  
• What is the GST registration minimum turnover?
  Most states allow ₹20 lakhs for services and ₹40 lakhs for items, excluding special category states with ₹10 lakhs.
  
  
• Do I need GST if my turnover is below 20 lakhs?
  No, unless involved in inter-state supplies or e-commerce.

Also Read : Types of gst in india igst sgst cgst and utgst

States That Opted for the New Limit

When the GST Council introduced the higher threshold limit of Rs. 40 lakhs for GST registration, not all states adopted it uniformly. While most states embraced the new limit for businesses dealing in goods, special category states continued to maintain a lower threshold of Rs. 20 lakhs.

States Following the Rs. 20 Lakhs Limit:

• Arunachal Pradesh
• Manipur
• Mizoram
• Nagaland
• Tripura
• Meghalaya
• Sikkim
• Uttarakhand

These states opted to continue with the lower limit due to their unique economic structures and smaller markets. Businesses operating in these regions need to adhere to the lower threshold to ensure compliance.

States with Rs. 40 Lakhs Limit:

Most other states in India have adopted the Rs. 40 lakhs threshold for goods, easing compliance requirements for small businesses. This change was aimed at reducing the tax burden and encouraging growth for micro and small enterprises.

What is the Limit of GST for Professional Services?

The Goods and Services Tax (GST) threshold limit is decided by the scale and nature of operations for professional services in India. Lawyers, chartered accountants, consultants, architects, and IT service providers must evaluate their annual turnover to ascertain their GST registration requirements.

• Threshold Limit: ₹20 lakhs for most states and ₹10 lakhs for special category states.
• Aggregate Turnover: Includes taxable and exempt supplies, inter-state supplies, and exports but excludes reverse charge inward supplies.
• Inter-State Transactions: Professionals providing services across state borders must register irrespective of turnover.

Example:

A consultant in Delhi earns ₹22 lakhs annually from taxable services. If turnover crosses ₹20 lakhs, GST registration becomes mandatory.

Also Read : Gst tax invoice format for your busines

GST Limit for Business

The GST registration limit for businesses depends on their product or service. GST threshold limit for most enterprises supplying products is ₹40 lakhs. This higher limit is applicable for intra-state transactions in specific states. However, for businesses providing services, the threshold remains at ₹20 lakhs across most states.

Key Details for GST Limit for Businesses:

• Goods Suppliers: ₹40 lakhs threshold for intra-state supply of goods, mandatory registration for inter-state supply.
  
  
• Service Providers: ₹20 lakhs for most states and ₹10 lakhs for special category states.
  
  
• Special Exemptions: Export businesses must register for GST irrespective of turnover to claim refunds.

Examples:

A shopkeeper in Gujarat selling goods worth ₹35 lakhs annually is not required to register for GST as the turnover is below ₹40 lakhs.

A business in Assam providing IT services worth ₹12 lakhs must register for GST since it exceeds the ₹10 lakh limit for special category states.

Also Read : How to file nil gst return

Conclusion

Understanding GST turnover thresholds is crucial for businesses to ensure compliance and avoid penalties. The specific criteria depend on the nature of the business and the state of operation. Regular monitoring of turnover and adherence to the applicable limits helps businesses stay compliant and take advantage of GST benefits.

GST Registration Limit 40 Lakhs for Service Provider

The ₹40 lakh GST registration limit applies to the supply of goods and not to those of the services. In special category states, the threshold limit is ₹10 lakhs; however, service providers across India follow a ₹20 lakhs threshold limit. For service-based businesses, this distinction is very important to decide GST liabilities.

Details About GST Registration Limit for Service Providers:

• Service Providers Threshold: In most states, GST limit for service providers is ₹20 lakhs, while it is ₹10 lakhs in special category states like Mizoram and Tripura.
  
  
• Applicability: Service providers involved in inter-state deliveries must register for GST independent of their turnover.
  
  
• Reverse Charge Mechanism: A firm liable to pay tax via reverse charge mechanism must register for GST even if its turnover is below the threshold.

Example:

A Delhi firm generating Rs. 18 lakhs per year does not need to register for GST since its turnover is less than Rs. 20 lakhs.

Also Read : TNREGINET portal online land records in tamil nadu

FAQs

• Is the GST registration limit 20 or 40 lakhs?
  Most states limit goods suppliers to ₹40 lakhs, whereas service providers follow a ₹20 lakh cap.
  
  
• Who is compulsory for GST registration?
  Businesses involved in inter-state supplies, e-commerce, or those under the reverse charge mechanism must register regardless of turnover.
  
  
• What is the 1.5 crore limit in GST?
  This refers to the turnover limit for enterprises dealing in commodities to subscribe to the Composition Scheme.
  
  
• What is the GST registration minimum turnover?
  Most states allow ₹20 lakhs for services and ₹40 lakhs for items, excluding special category states with ₹10 lakhs.
  
  
• Do I need GST if my turnover is below 20 lakhs?
  No, unless involved in inter-state supplies or e-commerce.
  
  
• Is GST required for small businesses?
  Only if the turnover exceeds the threshold or if they opt for voluntary registration.
  
  
• Are service providers required to register for GST?
  Yes, if turnover exceeds ₹20 lakhs in most states or ₹10 lakhs in special category states.
  
  
• What is the GST audit limit for service providers?
  ₹2 crores in total revenue.
  
  
• What is the turnover limit for GST composition scheme for service providers?
  ₹50 lakhs annually.