With effect from 1st July 2017, Goods and Service Tax (GST) has been introduced in India to combine nine existing indirect taxes into one. In this article, we will be discussing when and who is required to get GST registration in India.
We recommend you to read our article aggregate turnover calculation under GST before getting into this article.
Registration can be obtained through the online portal maintained by the Government of India. The applicant is required to submit an online application through GST common portal along with certain scanned copy of documents. To know more, please read our article on Procedure to get GSTIN – Goods and Service Tax Identification Number.
As per the law, a taxable person should obtain registration in every State from where he makes a taxable supply of goods or services or both. We have two limits to decide whether a business is required to have GST registration in India or not. First criteria are based on aggregate turnover.
GST Registration based on Aggregate turnover
As per the present GST law, every supplier whose aggregate turnover exceeds 20 lakhs rupees in a financial year is liable to get registered under the GST law. The business has to get registered in the state from where he makes taxable supplies.
However, the limit of Rs 20 lakhs is not applicable if you are supplying taxable supplies from special category states. As per article 279A(4)(g) of the constitution, following 11 states are considered as special category of states;
- Arunachal Pradesh,
- Uttarakhand, and
- Jammu and Kashmir
However, as per explanation (iii) to section 22, for the purpose of registration only Tripura, Mizoram, Manipur and Nagaland are to be treated as special category states. To these four special category of states (i.e. Tripura, Mizoram, Manipur and Nagaland) the aggregate turnover limit is Rs 10 lakhs instead of Rs 20 lakhs. To other special category states as per article 279A(4)(g) not specified in explanation (iii) to section 22 of CGST Act, 2017, aggregate turnover threshold limit is Rs 20 lakhs.
With effect from 1st April 2019, CBIC has notified vide notification number 10/2019-Central Tax to enhance the aggregate turnover limit to Rs 40 lakhs. Here is the important part of the notification given below in italicized bold words;
Any person, who is engaged in exclusive supply of goods and whose aggregate turnover in the financial year does not exceed forty lakh rupees, except, –
(a) persons required to take compulsory registration under section 24 of the said Act;
(b) persons engaged in making supplies of the goods, the description of which is specified in column (3) of the Table below and falling under the tariff item, sub-heading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Table;
(c) persons engaged in making intra-State supplies in the States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand; and
(d) persons exercising option under the provisions of sub-section (3) of section 25, or such registered persons who intend to continue with their registration under the said Act.
|SI No||Tariff item, sub-heading, heading or Chapter||Description|
|1||2105 00 00||Ice cream and other edible ice, whether or not containing cocoa.|
|2||2106 90 20||Pan masala|
|3||24||All goods, i.e. Tobacco and manufactured tobacco substitutes|
However, certain categories of persons mentioned in Section 24 of GST Law are liable to be registered irrespective of this threshold.
As the limit of Rs 40 lakhs, 20 lakhs and 10 lakhs depend on the aggregate turnover, you should go through the definition of aggregate turnover. Here is the link for you.
As per section 25(3) of the CGST Act, 2017, a person, though not liable to be registered under Section 22 or Section 24, may get himself registered voluntarily. In such case, all provisions of this Act, as are applicable to a registered taxable person, shall apply to such person.
As per section 25(8) of CGST Act, 2017, where a person who is liable to be registered under the CGST Act fails to obtain registration, the proper officer may, without prejudice to any action which may be taken under the CGST Act, or under any other law for the time being in force, proceed to register such person in the manner as may be prescribed.
Please note, without GST registration, you cannot collect tax from your customers. You are also not allowed to claim any input tax credit of GST paid by you.
On the basis of above analysis the threshold limit criteria for GST registration can be summarized below;
|States or Union Territories||Threshold limit when supplier exclusively supply goods
(Amount in rupees)
|Threshold limit when supplier engaged in supply of service or both goods and services
(Amount in rupees)
|Jammu and Kashmir||40,00,000||20,00,000|
Other cases where GST registration is a must
In addition to the aggregate turnover criteria, we are also required to find out whether a business falls under the below list as specified under GST law or not. Here is the list of cases or categories of persons who shall be required to be registered under GST law irrespective of the above threshold limit.
The following categories of persons shall get registered compulsorily even though these persons do not trigger the provisions of aggregate turnover criteria as prescribed above:
- casual taxable persons making taxable supply;
- persons who are required to pay tax under reverse charge;
- persons who are required to pay tax under sub-section (5) of section 9 (electronic commerce operator)
- non-resident taxable persons making taxable supply;
- persons who are required to deduct tax under section 51 (Tax Deduction at Source);
- persons who supply goods or services or both on behalf of other registered taxable persons whether as an agent or otherwise;
- input service distributor;
- persons who supply goods and/or services, other than supplies specified under subsection (5) of section 9, through such electronic commerce operator who is required to collect tax at source under section 52,
- every electronic commerce operator;
- every person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered taxable person; and
- Such other person or class of persons as may be notified by the Central Government or a State Government on the recommendations of the Council.
If your case is falling under any of the above lists then it’s mandatory to obtain registration irrespective of your aggregate turnover.
In addition to the above list, every person who, on the day immediately preceding the appointed day, is registered or holds a licence under an existing law, shall be liable to be registered under GST law with effect from the appointed day.
When a person is not liable for GST registration
Here is the list of person who is not liable to register under section 23 of CGST Act. As per this section, certain persons will not be the taxable person. Government has also notified certain category of persons as being exempted from obtaining registration under GST law. Here is the list of those who are not required to obtain registration under GST law;
- Person exclusively engaged in the business of supplying goods or services or both not liable to tax under GST law or wholly exempt from tax
- An agriculturist to the extent of supply of produce out of cultivation of land
- A person exclusively making supplies of taxable goods and/or services, the total tax on which is liable to be paid on reverse charge basis. [notification number 5/2017 CT dated 19.06.2017]
- A person making inter-state supplies of taxable services and have an aggregate turnover to be computed on all India basis not exceeding an amount of Rs 20 lakhs in a financial year have been exempted from obtaining compulsory registration. In case of special category states of Mizoram, Tripura, Manipur and Nagaland, this limit of Rs 10 lakhs. [notification number 10/2017 IT dated 13.10.2017]
- Person making inter-state taxable supplies of notified handcraft goods up to Rs 20, 00,000.
- A casual taxable person making inter-state supplies of notified handicraft goods up to Rs 20 lakhs in a financial year.
- Services provided by the commission agent for sale or purchase of agricultural produce. However, a commission agent will be liable to register if the principal is a taxable person and the supplies made by him/her are taxable.