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Increased GST registration limit

There is a certain exemption threshold for registration under Goods and Services Tax (GST) in India. If the annual turnover of any person exceeds that threshold limit then he will have to enroll in the GST regime. A lot of queries have been revolving around the exemption threshold in GST due to frequent changes in the law. This article has been republished with the latest amendments to the registration limit.

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, this exemption 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 limit of 40 lakhs shall not apply to the following category of persons:

  • Service providers
  • 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 Special Category States as per section 22.

Registration limit in case of services

The registration limit for service providers in GST in India is Rs. 20 lakhs. There has been no modification in the GST 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.

Special Category States

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

How aggregate turnover is 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” 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 registration 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 calculation of 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 GST threshold limit.

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 registration limit.

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 registration limit.

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 registration limit.

Haryana branch sale (b)

15

Rajasthan branch sale ©

10

Total

45

Aggregate turnover (a + b + c)

45

 

When is GST exemption not available?

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 for GST-

  1. Any person making Inter-state supplies
  2. Any person paying tax 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.

Recent updates related to GST registration

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.

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.

  • 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.


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TaxGyata Team

TaxGyata Team