The headline numbers are Rs 40 lakh of annual turnover for a business supplying goods and Rs 20 lakh for services, with lower limits in special category states. But the threshold is only half the story, because some activities make GST mandatory no matter how small you are. Here is the full picture.
The standard thresholds
For a business supplying goods, GST registration is generally mandatory once aggregate annual turnover crosses Rs 40 lakh. For services, the limit is Rs 20 lakh. These are the limits most states use.
- Goods: Rs 40 lakh in most states.
- Services: Rs 20 lakh in most states.
- Special category states: lower limits, often Rs 20 lakh for goods and Rs 10 lakh for services.
What counts as turnover
Aggregate turnover is calculated on the same PAN across all your business verticals and branches, for the whole financial year. It includes taxable, exempt and export supplies. Because it is measured on a rolling basis, the obligation to register begins the day you cross the threshold, not at the start of the next year.
When turnover does not matter
Several situations require GST registration from the first rupee, no matter how low your turnover:
- Selling taxable goods through an e-commerce marketplace.
- Making inter-state taxable supplies of goods.
- Importing goods for business.
- Being required to pay tax under reverse charge.
Should you register before you hit the limit?
Many businesses register voluntarily below the threshold. If your customers are businesses that claim input credit, a GSTIN makes you easier to sell to, and you can claim credit on your own inputs. If you sell mainly to consumers, voluntary registration mostly adds filing work. Match the decision to your customer base.
What happens if you cross and do not register
You become liable to register from the date you crossed the threshold. Operating unregistered after that point can mean tax on past supplies plus interest and penalty. Registering on time is almost always cheaper than fixing it later.
Common mistakes to avoid
- Treating the goods limit (Rs 40 lakh) as applying to a services business, which uses Rs 20 lakh.
- Forgetting special category states use lower limits.
- Ignoring the activity-based triggers that override the threshold entirely.
- Waiting until the next financial year to register after crossing mid-year.
Get your full compliance checklist
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