GST registration limit: goods, services and state thresholds

Classify the business before choosing a threshold

This guide concerns the GST framework relevant to FY 2025-26. Start with what your business actually supplies, where it makes supplies from and whether a compulsory-registration category applies. A social-media post saying registration starts at ₹40 lakh is incomplete. That figure comes from a conditional exemption for eligible persons engaged exclusively in supplying goods, not a universal increase for every business.

A consultant, software service provider or repair business should not automatically use the goods threshold merely because it occasionally sells equipment. Equally, a goods dealer should examine the conditions of the exemption rather than assuming its shop size determines eligibility. Classify supplies by substance and maintain a clear list of business activities.

The relevant sources include sections 22 to 25 of the CGST Act and Notification 10/2019-Central Tax, read with applicable amendments and exemptions. GST is not changed merely because an income-tax Budget headline discusses small businesses. Finance Act 2025 income-tax slab changes do not replace the GST registration thresholds. Use GST-specific legislation and state notifications for the actual decision.

Use the correct state-wise goods threshold

The ₹40 lakh exemption is available to eligible exclusive goods suppliers in participating jurisdictions, subject to its conditions. The notification excludes persons making intra-state supplies in Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura and Uttarakhand. For those places, examine the underlying section 22 threshold rather than applying ₹40 lakh.

For goods, the general threshold in those excluded jurisdictions is ₹20 lakh, except that Manipur, Mizoram, Nagaland and Tripura retain the ₹10 lakh threshold. This distinction is important: not every state excluded from ₹40 lakh has a ₹10 lakh limit. A retailer in Telangana and a retailer in Tripura cannot safely use the same threshold simply because both appear in the notification’s exclusion list.

The enhanced exemption also excludes specified goods and compulsory-registration cases. Ice cream, pan masala and tobacco products are important examples; notified brick and tile categories also require checking. Product classification matters. Before relying on ₹40 lakh, confirm the current notification text and amendments against the goods you actually supply, especially where the business manufactures or trades multiple product categories.

Need help with this? Read our guide to GST Registration Online – Get Your GSTIN.

Apply service and mixed-supply limits carefully

For services, the general registration threshold is ₹20 lakh aggregate turnover. The lower ₹10 lakh threshold applies in Manipur, Mizoram, Nagaland and Tripura. A person supplying both goods and services generally cannot assume the exclusive-goods ₹40 lakh exemption applies. Review the actual supply pattern and any specific statutory treatment rather than treating the main revenue source as the only activity.

For example, a Delhi consultant with ₹23 lakh of taxable service turnover has crossed the ordinary ₹20 lakh threshold, absent an applicable special exemption. A Tripura consultant reaches the lower threshold sooner. By contrast, an eligible exclusive-goods trader in Maharashtra with ₹23 lakh turnover may remain below the enhanced goods exemption limit, assuming no compulsory trigger or excluded goods.

Small add-on activities can therefore matter. If a shop charges separately for installations, maintenance or advisory work, get the contracts classified before claiming exclusive-goods treatment. The answer can depend on whether there are separate services or a legally characterised composite supply. Do not redesign invoice descriptions merely to conceal a service component. Consistent contracts, pricing and accounting are more defensible than labels chosen after turnover rises.

Calculate aggregate turnover across the same PAN

Aggregate turnover is broadly calculated across India for persons with the same PAN. It includes taxable supplies, exempt supplies, exports and inter-state supplies, while excluding GST and compensation cess and inward supplies on which tax is payable under reverse charge. It is not merely the taxable turnover of one shop or the amount credited into a single bank account.

Suppose a proprietor operates two Maharashtra outlets under the same PAN with annual supplies of ₹24 lakh and ₹19 lakh. The combined ₹43 lakh cannot be treated as two separate businesses each below ₹40 lakh. If the conditions for the enhanced goods threshold otherwise apply, the aggregate figure still crosses it. Different trade names or separate ledgers do not create different PAN-based thresholds.

Turnover analysis and the place where registration is required are related but distinct. Multiple establishments in different states may create state-specific registration obligations once liability arises. Keep a PAN-level turnover dashboard and a state-level supply map. Reconcile sales returns, exempt supplies and export invoices rather than using bank deposits, which may contain loans, capital contributions or other receipts that are not supplies.

Check compulsory registration and important exemptions

Section 24 identifies categories that can require registration regardless of the ordinary threshold, including specified inter-state taxable supplies, reverse-charge liabilities and certain e-commerce arrangements. However, notifications provide important exceptions. The statement that every inter-state transaction requires GST registration is too broad, especially for service suppliers benefiting from notified threshold relief.

Small suppliers of services through qualifying e-commerce operators can also have specific relief, while supplies covered by section 9(5) require separate treatment. Since October 2023, qualifying unregistered goods suppliers through e-commerce operators have a conditional route for intra-state supplies. Conditions include turnover limits, PAN, enrolment and restrictions on inter-state supplies. Selling online is therefore not answered by a single yes-or-no slogan.

A person exclusively making exempt or non-taxable supplies may fall within section 23, and agriculturists have specified protection for produce from cultivation. These are different from being below a turnover threshold. Review the exact category and notification. A general exemption for one activity does not necessarily cover a separate taxable business carried on by the same person.

Worked examples for growing small businesses

Assume an eligible exclusive-goods shop in Karnataka sells ₹38 lakh during FY 2025-26, with no excluded products and no compulsory-registration trigger. It remains within the ₹40 lakh exemption on those facts. If further supplies take aggregate turnover to ₹41 lakh, the business must review liability from the point the applicable limit is exceeded. It should not wait until the next financial year to begin planning.

Now assume a Telangana trader reaches ₹22 lakh. The ₹40 lakh exemption does not apply there, so the ordinary ₹20 lakh threshold is relevant, subject to the full facts. A Tripura trader with ₹12 lakh similarly needs to assess liability against ₹10 lakh. These examples show why copying another state’s accountant checklist can lead to an incorrect conclusion.

Finally, consider a proprietor with ₹16 lakh taxable services and ₹6 lakh exempt supplies. The aggregate figure is generally ₹22 lakh, not ₹16 lakh merely because only that portion is taxable. Whether registration is required also depends on the nature and place of supplies and applicable exemptions. Track exempt revenue explicitly so that it is not lost in a ledger reserved only for taxable invoices.

Register on time and prepare for continuing compliance

A person becoming liable ordinarily applies within 30 days from the date liability arises under section 25. Determine that date from the applicable rule and facts, not from the date a customer first asks for a GSTIN. Casual taxable persons and non-resident taxable persons have separate timing rules. Keep evidence of the threshold crossing and the application submission.

Prepare PAN, identity and constitution documents, place-of-business evidence, authorisation and other details required by the portal. Authentication and verification requirements can depend on the applicant’s circumstances. Ensure that the address and business constitution are accurate. Using a borrowed address or a consultant’s mobile number without control over communications can create practical problems later.

Registration brings invoicing, return and payment obligations even during quiet periods. Confirm the effective registration date and how supplies around that date should be invoiced. Input-tax-credit eligibility for stock and other items requires its own conditions and deadlines. Do not assume registration retrospectively grants credit on every purchase ever made. Set up records before the first return becomes due.

Decide whether voluntary registration makes business sense

Below-threshold businesses may choose voluntary registration, but that is not simply obtaining a number for display. Once registered, the person is generally subject to the obligations applicable to registered persons. Compare customer requirements, input credits, pricing, accounting costs and working capital before opting in. Cancellation later requires the prescribed process rather than simply stopping returns.

The composition scheme is a separate question from the registration threshold. A business can need registration yet still have to assess whether composition is available and commercially suitable. Restrictions on supplies, tax collection and credit must be examined independently. Udyam registration, incorporation and a shop licence likewise do not substitute for GST registration or establish that the turnover exemption applies.

LawLine connects businesses with independent CAs, CSs and advocates who can review classification and registration liability. Share PAN-level turnover, state locations, product lists, service contracts and online-platform arrangements. Ask for a written threshold conclusion stating assumptions and the trigger date. Reassess whenever you open a new establishment, add services, begin inter-state sales or change your product mix.

Frequently asked questions