Last Updated on 9 months by Anoob P T
In this post, we are going to look at GST Registration Limit or Goods & Service GST Limits You Should Know.
Table of Contents
What is GST Registration limit?
Considering the demands put up by Ministry of Micro, Small and Medium Enterprises (MSME), the GST council on 2019 decided to increase the threshold limit for GST registration.
According to the new limits GST registration is exempted for people, both goods and service suppliers, as it got increased to a higher amount.
The registration limit was categorised mainly for two types of taxpayers, which are normal taxpayers and special category states. Within this division, the exemption limit is also based on the type of supply, like goods and services.
Goods Registration Limit
For normal taxpayers, the GST turnover limit for supplier of goods only was Rs. 20 lakhs under the original GST structure.
However, this was restructured with the exemption increased to Rs.40 lakhs as turnover limit.
With the former GST structure, the supplier of goods with an annual turn over above Rs.20 lakhs in the preceding financial year should register under GST.
This limit has been increased to Rs.40 lakhs or doubled helping to ease compliance under GST.
However, this rule is not applicable for people or goods belonging to certain categories. Certain good supplies are required to take compulsory registration under Section 24 of the CGST Act.
The modified limit also does not include people involved in making ice cream and other edible ice, whether containing cocoa, pan masala, and tobacco and tobacco manufactured substitutes.
Apart from the normal taxpayers, there are certain states which belong to the special category. These states are Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.
Initially, the GST turn over limit for special category states was 10 lakhs as these were the north eastern and hilly states. This limit was also increased to 20 lakhs in the latest GST Council Meeting.
In addition, the mentioned states were given a choice to either choose Rs.20 lakhs or Rs.40 lakhs as the turnover limit for GST exemption in case of supplier of goods.
Services Registration Limit
For service supplies, the GST registration limit remains unchanged. The normal taxpayers have GST turnover limit as Rs. 20 lakhs except the special category states, which was the same in original GST structure.
In the case of certain special states as mentioned earlier, the GST registration limit continues to be Rs.10 lakhs, the same as the former GST structure.
Composition Scheme Registration Limit
Composition Scheme under section 10 of CGST Act 2017 has advantages for small businesses.
It offers a composition scheme in which a registered taxable person having an aggregate annual turnover of up to Rs. 1.5 crores in case of goods and restaurant services and Rs. 50 lakhs in case of services other than restaurant services in the previous financial year can opt for this scheme.
This helps in ease and compliance of small taxpayers.
A composition dealer pays a fixed percentage of his aggregate turnover as tax to the government. This is quite less as compared to the tax paid by a normal taxpayer registered under GST. Such a tax needs to be paid on a quarterly basis by a composition dealer via form GST CMP – 08.
This is unlike the tax paid by a normal taxpayer on a monthly basis. The composition dealer need not maintain elaborate accounts and records.
A composition dealer needs to file simple annual return in form GSTR – 4. This is unlike a normal taxpayer who has to file two monthly statements including GSTR – 1 and GSTR – 3B along with annual return in GSTR – 9.
For Traders and Manufacturers
The former GST law applied a rate of 1% as GST for traders and manufactures with an aggregate annual turnover of up to Rs. 1 crore in the previous financial year.
In the latest GST Council meeting, it was decided to increase the annual aggregate for this category from Rs.1 crore to Rs.1.5 crores. Even though the limit has changed, the rate of GST remains the same, that is, 1%.
For Restaurant Services
In the case of providers with restaurants services, GST was applied at a rate of 5% if they had an aggregate annual turnover of up to Rs. 1 crore under the original GST structure.
This was also modified and amended to increase the annual aggregate to Rs. 1.5 crores even though the rate of GST applicable remains the same, that is, 5%.
For Other Service Providers
Under the original GST framework, there was no provision for Composition Scheme in the case of other service providers.
However, a new Composition Scheme shall now be available for Suppliers of Services or Mixed Suppliers with a Tax Rate of 6% (3% CGST +3% SGST) as per latest GST Council Meeting.
The threshold annual turnover for these service providers in the preceding financial year must be up to Rs 50 lakhs.
Compulsory Registration
Apart from those categories mentioned above, there are certain sections for whom it is mandatory to register under the GST. According to Section 24 of the CGST Act, 2017 those categories are:
- Casual Taxable Persons: A person who supplies taxable goods or services occasionally in a taxable territory where he does not have a fixed place of business. The person can be a source or agent or can supply goods or services in any way possible for the furtherance of business.
- People making inter-state supply of taxable goods or services.
- Persons who are required to pay Tax Deducted at Source (TDS) under section 51. This is immaterial of the fact that whether they are separately registered under the Act or not.
- People are required to pay under reverse mechanism. This is a situation where the recipient pays the tax rather than the supplier of goods or services. Mostly, such transactions take place during imports in which the recipient is liable to pay the GST. Further, the recipient must be a registered person as per section 2(94) of the CGST Act, 2017.
- Non-Resident Taxable Person: If you supply goods or services to India occasionally, however, does not have a fixed business place or permanent residence in India, you fall under this category.
Furthermore, a Non – Resident Taxable Person must get himself registered necessarily in order to make a taxable supply in India.
Thus, he needs to apply for registration at least five days prior to commencing his business in India in Form GST REG 09.
This application needs to be filed electronically along with a self-attested copy of his valid passport.
- Electronic commence operator
- Persons who are required to pay Tax Deducted at Source (TDS) under section 51. This is immaterial of the fact that whether they are separately registered under the Act or not.
- Input Service Distributor: This is the office of the supplier of goods or services or both and receives tax invoices under section 31 towards the receipt of input services used by its branches. It issues a prescribed document for the purposes of distributing tax credit on such services. This credit is against central tax, state tax, integrated tax or union territory tax paid on the said services.
- Persons supplying goods or services other than supplies specified under sub-section (5) of section 9. Such supplies are made through an electronic commerce operator who is required to collect tax at source under section 52.
- Persons making taxable supply of goods or services on behalf of other taxable persons as an agent or otherwise.
- Any other person notified by the government on the recommendations of the Council.
- Persons supplying online information and database access or retrieval services from a place outside India. Such services are supplied to a person other than a registered person in India.
States Accepting New Limits
The new GST structure is different for many states due to the special state categorisation. The states Manipur, Mizoram, Nagaland and Tripura accepted Rs.10 lakhs as aggregate annual threshold limit for the supply of goods.
Other states like Arunachal Pradesh, Puducherry, Sikkim, Meghalaya, Telangana and Uttarakhand accepted Rs.20 lakhs as the GST threshold limit. Delhi and Puducherry are considered as normal states for the purpose of GST.
The turnover limit of Rs.40 lakhs is accepted by the remaining 21 states and 5 union territories.
The registration of a taxpayer is mandatory as per section 24 of the CGST Act, 2017. However, a person is exempted from registration if he/she makes inter-state supplies of handicraft goods up to an aggregate turnover of Rs 20 Lakhs.
For states like Manipur, Mizoram, Nagaland and Tripura, the limit is Rs.10 lakhs. But the taxpayer supplying goods from any of the above-mentioned states need to have PAN.
Moreover, the goods supplied by such a taxpayer must move under the cover of e-way bill, irrespective of the value of the supply.
Frequently Asked Questions about GST Limit
What is turnover limit for GST?
Any business that has aggregate turnover in a financial year exceeding Rs 20 lakhs has to mandatorily register under Goods and Services Tax.
What is the limit for GST?
Businesses whose aggregate turnover in a financial year exceeds Rs 20 lakhs has to mandatorily register under Goods and Services Tax.
What is the limit for GST registration in India?
Rs. 40 Lakhs
Is GST applicable if turnover is less than 40 lakhs?
GST Council has doubled the limit for exemption from payment of goods and services tax (GST) to Rs 40 lakh
How is GST Calculated?
For the calculation of GST, the taxpayer should know the GST rate applicable to various categories and then calculate accordingly.
