GST Registration Limit: Minimum Turnover Limit for GST
GST, or Goods and Services Tax, was implemented in India in 2017 as a unified indirect tax system to bring about transparency, simplicity, and uniformity in the Indian taxation system. GST replaced various indirect taxes like service tax, VAT, excise, octroi, etc. The GST rates on different products are set by the GST council, which consists of the Finance ministers of each state.
Entities crossing the minimum turnover threshold have to register themselves under GST and file a GST return. The turnover threshold limit varies for different types of businesses and different states. This article will help you understand the GST registration limit for all businesses, the new and the old threshold limits, how to calculate turnover, etc.
What is the Minimum Turnover Limit for GST Registration?
Businesses are required to register for GST and pay tax on their annual turnover if their annual revenue exceeds Rs.40 lakhs in the case of goods supplied and Rs.20 lakhs for the supply of services. Although it is not mandatory for businesses with a turnover less than the specified threshold to register for GST, they can still choose to register themselves voluntarily, as it can help them claim their input tax credits and other benefits.
However, there are some exceptions to this threshold. Here is a table that provides a clear overview of the GST registration threshold and registration status.
| Turnover | Category of States | Registration Requirements |
|---|---|---|
| Previous Turnover Limits for Sale of goods/services | ||
| More than Rs.20 lakhs - | Normal Category States | Registration Mandatory |
| More than Rs.10 lakhs | Special Category States | Registration Mandatory |
| New Turnover Limits for Sale of Goods | ||
| More than Rs.40 lakhs | Normal Category States | Registration Mandatory |
| More than 20 lakhs | Special Category States | Registration Mandatory |
| Threshold Limit for Provision of Services | ||
| There has been no change in the GST threshold limits for service providers. They need to register under GST of their aggregate turnover exceeds Rs.20 lakhs for normal category states and Rs.10 lakhs for special category states. | ||
Classification of States for the Applicability of New GST Turnover Limits
Given below is the classification of states for the applicability of new GST turnover limits -
| Normal Category States with a GST Threshold of Rs.40 lakhs | Normal Category States that Chose Status Quo | Special Category States with new GST threshold of Rs.40 lakhs | Special Category States with new GST threshold of Rs.20 lakhs |
|---|---|---|---|
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Who are Compulsorily Required to Register for GST?
Given below is a list of category of taxpayers who are compulsorily required to register under GST -
- Casual taxable persons
- Non-resident taxable persons
- Interstate suppliers
- Persons required to deduct TDS/TCS
- Persons taxable under the reverse charge basis
- Input service distributors
- E-commerce companies offering suppliers a platform to produce supplies.
- Providers delivering items via online retailers are responsible for withholding taxes at the source
- Individuals acting as Agents or Principals in a transaction on behalf of another person.
- Internet service providers offering services to unregistered individuals in India from overseas.
How to Calculate GST Threshold Limit?
GST threshold refers to the minimum annual turnover that your business must have during a year for GST -
Some factors that need to be considered to calculate the annual threshold are -
- Annual Turnover - Determine the total value of goods or services offered by you in a financial year, including both taxable and non-taxable supplies.
- Aggregate Turnover - This should include the sum of turnover of all business entities with the same PAN. If the overall turnover exceeds the minimum threshold for GST registration, considering the type of supply and the state category, then the entity has to register itself under GST.
- Export Earnings - It refers to the revenue generated from international sales. These earnings need to be converted into local currencies for accounts and tax purposes.
- Interstate Supplies - This refers to the sale of goods and services to another state in India and the IGST rates applicable to it.
If your annual business turnover exceeds the minimum threshold, make sure you get yourself registered under GST to avoid legal consequences. Even if you are not mandatorily required to register for GST, you can still register for GST voluntarily to claim your input tax credit and avoid penalty and late fees.
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