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Increased GST registration limit

There is an exemption limit for registration under Goods and Services Tax (GST) in India. If the annual turnover of any person exceeds the exemption limit then he will have to enroll himself under the Goods and Services Tax regime. This is also known as a GST registration limit or GST threshold.

A lot of queries have been revolving around the GST threshold due to frequent changes in the law. This article has been republished with the latest amendments to the GST threshold.

Registration limit in case of goods

GST registration is mandatory for every person who is engaged in the exclusive supply of goods and his aggregate turnover exceeds Rs 40 lakh in a financial year.  Earlier, the limit was 20 lakhs for a supplier of goods. However, the same was increased to 40 lakhs vide notification No. 10/2019-Central Tax, dated 07.03.2019.

The enhanced exemption figure of 40 lakhs shall not apply to the following category of persons:

  • Service providers
  • Persons engaged in making supplies of ice cream and other edible ice, whether or not containing cocoa [2105 00 00], Pan masala [2106 90 20] and all goods of Chapter 24, i.e. Tobacco and manufactured tobacco substitutes.
  • Persons required to obtain compulsory GST registration
  • Persons obtained voluntary registration under GST
  • Persons engaged in making intra-State supplies in the States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand and the Special Category States as per section 22.

Illustration:

1. Vijay of Assam is exclusively engaged in an intra-State supply of cloths. His aggregate turnover in the current financial year is 22 lakh. In view of the above discussion, the applicable GST limit for registration for Vijay in the given case is 40 lakh. Thus, he is not liable to enroll under GST.

2. If in the above example, all other things remaining the same, Vijay is exclusively engaged in the supply of pan masala instead of cloths, he will not be eligible for a higher threshold of 40 lakh and the applicable limit for GST registration in the given case will be 20 lakh. Consequently, Vijay will be liable to enrolled under GST.

3. Further, if Vijay is engaged in supply of both taxable goods and services, the applicable threshold for registration will be 20 lakh only.

Registration limit for services

The registration limit for service providers in GST in India is Rs. 20 lakhs. There has been no modification in the threshold for service providers. They will have to get registered under GST if the aggregate value of services in a financial year exceeds 20 lakhs.

Registration limit for Special Category States

The registration limit will be Rs 10 lakhs if the person is carrying out business in the Special Category States

As per Article 279A(4)(g) of the Constitution, there are 11 Special Category States, namely, States of Arunachal Pradesh, Assam, Jammu and Kashmir1, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand. However, as per the explanation (iii) to section 22, for the purposes of registration under GST, only Mizoram, Tripura, Manipur and Nagaland are the Special Category States.

Therefore, the GST exemption threshold of Rs 10 lakh will be applicable for Mizoram, Tripura, Manipur and Nagaland.

GST registration limit State-wise

 

States

For Goods

For Services

Mizoram, Tripura, Manipur and Nagaland

10 lakhs

10 lakhs

Arunachal Pradesh, Meghalaya, Puducherry, Sikkim, Telangana, Uttarakhand

20 lakhs

20 lakhs

Jammu and Kashmir, Assam, Himachal Pradesh and all other States

40 lakhs

20 lakhs

 

GST Registration limit State-wise 

 

How is aggregate turnover calculated for the GST threshold?

Now one thing is clear that aggregate turnover is the main parameter to determine whether the person is eligible for GST exemption or not. “Aggregate turnover” is defined under section 2(6) of the CGST Act.

Aggregate turnover” means the aggregate value of all taxable and non taxable supplies, exempt supplies and exports of goods and/or services of a person having the same PAN, to be computed on all India basis and excludes taxes, if any, charged under the CGST Act, SGST Act and the IGST Act, as the case may be; Explanation – Aggregate turnover does not include the value of supplies on which tax is levied on reverse charge basis and the value of inward supplies”.

In simple language, to compute GST limit, Turnover includes

  • Taxable supplies
  • Exempted supplies
  • Non-GST supplies
  • Interstate supplies
  • Zero-rated supplies
  • Goods sent for job work

Turnover excludes

  • Goods or services received on which tax payable under reverse charge mechanism
  • GST paid
  • Goods received for job work

Take note that aggregate turnover shall be taken on a PAN India basis, not a state basis. To learn more about the computation of the threshold, please check out the examples given in the next section.

Computation of GST threshold in various situations

The below tables manifest the calculation of aggregate turnover in various situations and the requirement of registration in each situation.

Situation 1: Turnover for FY 2020-21 less than the threshold.

Particulars

(Rs in lakhs)

Registration requirement

Taxable supplies (a)

20

Registration will not be required in the given case as aggregate turnover is not crossing the exemption threshold.

Note- GST payment and inward reverse charge supplies will not be included in aggregate turnover.

Exempted supplies (b)

5

Non-GST supplies ©

7

GST paid (d)

3.6

Inward supplies attracting reverse charge(e)

8

Total

43.6

Aggregate turnover (a + b + c)

32

 

 

Situation 2: Inter-state supply of goods and turnover less than the threshold.

Particulars

(Rs in lakhs)

Registration requirement

Taxable supplies (a)

20

Registration is mandatory in the given case as the entity is engaged in inter-state supplies irrespective of that aggregate turnover is less than the exemption threshold.

Exempted supplies (b)

5

Inter-state supplies ©

5

Total

30

Aggregate turnover (a + b + c)

30

 

Situation 3: Turnover of entire entity (all states) exceeds the threshold.

Particulars

(Rs
in lakhs)

Registration requirement

Mumbai branch sale (a)

20

Registration will be required in all three states as the turnover of the entire entity exceeds the exemption threshold.

Haryana branch sale (b)

15

Rajasthan branch sale ©

10

Total

45

Aggregate turnover (a + b + c)

45

 

When will the GST exemption limit not be applicable?

As per section 24 of the CGST Act, it is compulsory for certain persons to take registration under GST even their aggregate turnover is less than the registration limit. Here is the list of persons who are compulsorily required to register under GST-

  1. Inter-State supplier
  2. Taxpayer under reverse charge mechanism
  3. Casual taxable person
  4. Non-Resident taxable person
  5. E-commerce operator
  6. Any person who requires to deduct tax at source under section 51 of CGST act, 2017
  7. Input service distributor
  8. Any person who engaged in supplies on behalf of another taxable person whether as an agent or otherwise
  9. Every person supplying online information and database access or retrieval services from a place outside India to an unregistered person in India
  10. Other persons may be notified by the Government.

What is the GST composition scheme turnover limit?

Composition scheme is an optional scheme of levy of tax designed for small taxpayers under the Goods and Services Tax (GST) regime. Under the composition scheme, tax is levied at a reduced rate with less compliances subject to certain restrictions.

The composition scheme turnover limit in GST is Rs 1.50 crores, and Rs 75 lakhs with respect to the 8 Special Category States as follows:

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

Recent updates related to GST registration

 

24th September 2021

An applicant shall undergo Aadhaar authentication for filing an application for revocation of cancellation of registration in FORM GST REG-21 under Rule 23. (Notification No. 35/2021–Central Tax)

Under Aadhar authentication, an authentication link is sent on the registered mobile number and email id. On clicking the verification link, a window for Aadhaar Authentication will open where an applicant needs to enter Aadhaar number and the OTP received on the mobile number linked with Aadhaar.

29th July 2021

The taxpayers who have been newly registered on the GST portal but have not yet furnished their Bank Account details, may login and update the same through the Non-core amendment. 

28th May 2021

The last date for filing application for revocation of canceled GSTIN falling between 15th April 2021 to 29th June 2021 extended to 30th June 2021.

5th March 2021

The search ARN functionality for registration on the common portal has been enhanced for taxpayers.

31st January 2021

(i) SEZs while applying for GST registration will have to provide the validity period as per the letter of authorisation (LOA).

(ii) Aadhaar authentication has been implemented on the Common portal for existing taxpayers.

31st December 2020

(i) For new registrants who opted for Aadhaar authentication, the authentication would be required only for one Primary Authorized Signatory and one Promoter instead of all.

(ii) Now, GST practitioners can apply cancellation of GST registration in Form GST PMT-06. 

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Frequently asked questions (FAQs)

As per the 2nd explanation to section 22, the value of taxable supply made by the registered job-worker on behalf of his principal shall not be added to the aggregate turnover of the registered job worker.

Yes. The ISD registration is for one office of the taxpayer which will be different from the normal registration irrespective of the threshold limit.

Yes, a registered person shall be liable to collect tax from customers and deposit it to the Government.

  • Every person who is liable to be registered under Section 22 or Section 24 shall apply within 30 days from the date on which he becomes liable to registration.
  • A casual taxable person or a non-resident taxable person shall apply for registration at least 5 days prior to the commencement of business.
  • Every person who makes a supply from the territorial waters of India shall obtain registration in the coastal State or Union territory where the nearest point of the appropriate baseline is located.

(i) PAN card

(ii) Aadhaar card

(iii) Business address proof

(iv) Cancelled cheque copy

(V) Photograph

Checklist of documents for registration under GST

Where a tax officer finds that a person liable to registration under the Goods & Service Tax has failed to apply for such registration, the officer may register the said person on a temporary basis by allotment of temporary ID.

Tax officials in the role of Registration Enforcement can initiate the suo moto registration to deposit the amount collected from unregistered persons especially during enforcement proceedings.

Read more: Suo Moto Registration under GST


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TaxGyata Team

TaxGyata Team