GST Registration Turnover Limit Explained

The GST registration limit is ₹40 lakh of aggregate turnover for a business supplying goods exclusively, and ₹20 lakh for a business supplying services or a mix of goods and services — halved to ₹20 lakh and ₹10 lakh respectively in certain states. But the threshold is only half the answer. Section 24 of the CGST Act forces a long list of businesses to register from their very first rupee of turnover, and the turnover figure you compare against the limit is not the one sitting in your books.

The GST registration limit at a glance

Section 22 of the CGST Act is the basic rule: every supplier whose aggregate turnover in a financial year exceeds the prescribed threshold is liable to be registered in the state or union territory from which the taxable supply is made. The Act itself sets ₹20 lakh, with a lower figure for special-category states. The ₹40 lakh figure for goods came later, through a notification issued in March 2019 and effective from 1 April 2019, which exempted exclusive suppliers of goods below that turnover from the obligation to register.

Two things trip people up in that table. First, the limit is on aggregate turnover, a defined term that is broader than sales — see the section below on how it is computed. Second, the ₹10 lakh services threshold and the ₹20 lakh goods threshold apply to different lists of states. They are not the same carve-out under two names.

Why goods and services have different limits

The ₹40 lakh threshold was a deliberate relief for small traders and manufacturers, and the notification granting it is drafted narrowly. It applies to a person engaged exclusively in the supply of goods. If you sell goods and also bill for installation, annual maintenance, consultancy, freight recovered as a separate service, or commission, you are no longer exclusive and the applicable limit for you is ₹20 lakh.

The notification also carries its own exclusions. It does not help a person who is required to register compulsorily under Section 24, a person who has opted for voluntary registration, or a person supplying certain specified goods such as ice cream and other edible ice, pan masala and tobacco products. And it does not apply in the states that did not adopt it. If any of those apply, fall back to ₹20 lakh — or, under Section 24, to no threshold at all.

Special-category states and the lower thresholds

The Constitution defines a set of special-category states for GST purposes — the North-Eastern states along with Himachal Pradesh, Uttarakhand and Jammu & Kashmir. For the registration threshold specifically, however, that list was narrowed by amendment. For the ₹10 lakh services threshold, the states that remain are Manipur, Mizoram, Nagaland and Tripura. The other special-category states, including Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand, use the ordinary ₹20 lakh services threshold.

The practical consequence is that a freelance developer or consultant based in Aizawl or Kohima hits the registration threshold at half the turnover of the same consultant in Bengaluru. If you have branches across states, the threshold you test against is the one for the state you are supplying from — but the turnover you test is the all-India PAN figure, which is where this gets counter-intuitive.

States that stayed on the lower goods threshold

The ₹40 lakh goods threshold was not imposed uniformly. States were given the option to stay at ₹20 lakh, and several took it. The states and union territories that were excluded from the higher goods threshold in the 2019 notification are Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura and Uttarakhand. In those places, a trader dealing exclusively in goods must register once aggregate turnover crosses ₹20 lakh, not ₹40 lakh.

This is a state-level choice that can be revised, so treat any list — including this one — as a starting point rather than a citation. Before you act on it for a specific state, confirm the current position against the notification text on the CBIC GST portal. Our GST state code list is useful alongside this if you are mapping entities to states in a system.

Section 24: registration regardless of turnover

Section 24 opens with "notwithstanding anything contained in sub-section (1) of section 22", which is legal drafting for: the threshold does not save you. If you fall in one of these categories you are required to register even if your turnover is a few thousand rupees.

The inter-State entry is the one that catches genuinely small businesses. A craftsperson in Jaipur selling ₹6 lakh a year of goods to customers in Delhi and Mumbai is making inter-State supplies of goods and is liable to register, despite being nowhere near ₹40 lakh. The services exemption does not help, because the supply is of goods.

How aggregate turnover is actually computed

Section 2(6) defines aggregate turnover as the aggregate value of all taxable supplies (excluding inward supplies on which tax is payable by you under reverse charge), exempt supplies, exports of goods or services, and inter-State supplies of persons having the same PAN, computed on an all-India basis, and excluding CGST, SGST, UTGST, IGST and cess. Reading that definition carefully changes the number for most businesses:

• Exempt supplies count. Nil-rated and exempt turnover is included even though no tax is charged on it. A business with ₹15 lakh of taxable sales and ₹30 lakh of exempt sales has ₹45 lakh of aggregate turnover.
• Exports count. Zero-rated is not the same as excluded. Export turnover goes into the figure.
• Tax does not count. You take the value of supply, not the invoice total including GST.
• Reverse-charge inward supplies do not count. The value on which you pay tax as recipient is specifically excluded from your aggregate turnover.
• It is all-India, not per state. Turnover of every branch, in every state, on the same PAN is added together.

We have a fuller walkthrough of the definition, including how it differs from the turnover you report in your annual return, in our guide to annual aggregate turnover under GST. The same figure drives other thresholds too — the composition scheme limit and the e-invoicing threshold both key off aggregate turnover rather than a single GSTIN's sales.

One PAN, several GSTINs, one turnover figure

GST registration is state-wise, so a company operating in five states holds five GSTINs. All five share the same PAN, which sits in characters 3 to 12 of each GSTIN — see our breakdown of the GSTIN format if you need to read one apart. Because Section 2(6) says "persons having the same PAN, to be computed on all India basis", those five registrations produce a single aggregate turnover number.

This matters in two directions. If you are already registered in Maharashtra and open a small branch in Karnataka, you cannot argue that the Karnataka branch is below ₹20 lakh — the PAN-level figure has already crossed, and the liability to register in Karnataka arises as soon as you make a taxable supply from there. Conversely, if a group runs several businesses under separate PANs, each PAN has its own threshold, however common the ownership.

The same logic applies to multiple registrations within one state for separate business verticals: still one PAN, still one aggregate turnover.

What to do as you approach the limit

Liability arises when turnover exceeds the threshold, and the application must be filed within thirty days of becoming liable. Casual and non-resident taxable persons are the exception — they apply at least five days before starting business. A few practical points:

1. Track the running PAN-level figure monthly, including exempt and export turnover, rather than checking once at year end. The thirty-day clock starts from the date you become liable, not the date you notice.
2. Decide on the composition scheme before you register, not after. It has its own, higher turnover ceiling and its own restrictions, including no input tax credit and no inter-State outward supplies.
3. Consider registering voluntarily if your customers are businesses. Without a GSTIN you cannot pass on input tax credit, which makes you measurably more expensive than a registered competitor to any B2B buyer.
4. Have your documents ready. The mechanics of the application itself are covered in our online GST registration walkthrough.

The mirror image of this is checking your counterparties. A supplier who has crossed the threshold but has not registered cannot legally charge you GST, and you cannot claim credit on an invoice from an unregistered person — nor on a GSTIN that has been cancelled or suspended since the invoice date. If you are onboarding vendors at any volume, verifying the GSTIN and its status against the GST system at onboarding, and again periodically, is the cheap version of this problem. Our vendor GST verification guide for accounts payable covers how teams wire that into their AP workflow, and the GSTIN validator is a quick way to sanity-check a single number.

Frequently asked questions