GST Registration Turnover Limit: Everything You Need to Know

Recently, a Panipuri seller from Tamil Nadu got a notice from the state GST department stating that his business turnover was more than ₹40 Lakh per annum, which exceeded the threshold limit for GST registration. This incident left many small vendors in shock and confused. In order to guide the micro and small business owners/vendors, we have come up with this blog. In this blog, we are going to discuss the GST registration limit for services as well as goods business, and how to proceed with GST registration online.

Why the GST Threshold Matters in 2025

The GST threshold allows you to concentrate on growth without having to file monthly or quarterly GST returns. The downside, however, is that when you are close to the threshold, you may find yourself waiting too long to record, and you risk penalties or lost opportunities, such as claiming input tax credit (ITC). ITC allows you to offset the GST paid on buying products or services with the taxes collected on selling goods/services and save money.  

What is the Threshold Limit for GST Registration?

In simple terms, the threshold limit of registration of GST is the lowest turnover that a business has to pass before registration of GST becomes compulsory. GST is optional when your sales are less than this line. Registration is mandatory in case you cross it.

Here are the key limits you need to know:

• ₹40 lakhs annual turnover for goods (for most states).

• ₹20 lakhs annual turnover for services.

• ₹10 lakhs for special category states (like the Northeast and hill states).

Why Does the GST Registration Turnover Limit Matter?

The GST turnover threshold is not just a number; actually, it determines whether the GST is applicable to you or not. Here’s why it matters:

• Compliance: Crossing the turnover limit without GST registration can lead to penalties.

• Input Tax Credit (ITC): GST-registered businesses can claim ITC on purchases, reducing their overall tax burden.

• Market Credibility: Many larger businesses prefer dealing with GST-registered vendors.

GST Turnover Limit: Examples to Understand Better

Let’s make this simple with a few examples:

1. Ravi Bakery: Ravi owns the bakery located in Delhi and has a yearly turnover of ₹28 lakh; therefore, there is no need for GST registration. However, when his sales increase to ₹42 lakh, then GST registration is mandatory.

2. Meena Consulting Firm: Meena provides a digital marketing service and makes ₹18 lakhs annually. She does not require GST registration yet. As soon as her turnover reaches ₹20 lakhs, she has to register.

3. North East Business Owner: Amit of Sikkim owns a handicraft store. His turnover is ₹12 lakhs. As ₹10 lakhs is the GST registration limit for a special category state, he must register.

The Composition Scheme: A Simpler Option for Small Businesses

Provided your turnover is less than ₹1.5 crore (or ₹75 lakh in special category states), you may wish to consider the composition scheme. This is a shortcut to small businesses, allowing you to pay a flat tax rate, which varies from business to business: 

• 1% on traders,
• 2% on manufacturers, 
• 5% on restaurants not serving liquor

Under the GST composition scheme, you are supposed to file returns quarterly instead of monthly. However, there is a limitation of the scheme that you cannot claim ITC under the composition scheme and cannot charge GST to customers. 

The scheme is suitable for businesses that cater directly to the end consumers. 

Voluntary Registration

There is a provision in GST that you can register your business even if your turnover is less than the stipulated threshold limit. But why would you do that? Here are the advantages: 

• Claim ITC: Offset GST paid on purchases, reducing your overall costs.  

• Expand your market: Registered businesses can sell interstate or on e-commerce platforms without restrictions.  

• Build credibility: A GSTIN (your unique GST identification number) signals to customers and suppliers that you are a legit business. 

Penalties for Non-Compliance

You might be wondering what the consequences would be if you don’t comply with GST registration requirements, which are as follows: 

• A penalty equal to the tax amount due.

• Interest on unpaid tax.

• Trouble getting loans or working with corporates who require GST compliance.

How to Register for GST

After reading this blog, if you have realised that you need to register your business under GST and you don’t know the process, don’t worry. We are here to help you. 

Step 1: Visit the GST portal.

Step 2: Fill out Part A of the application with PAN, mobile number, and email.

Step 3: Upload documents like PAN, Aadhaar, business proof, and bank details.

Step 4: Submit Part B with OTP verification.

Step 5: Wait for approval and receive your GSTIN (Goods and Services Tax Identification Number).

Mandatory GST Registration (Irrespective of turnover)

The following are the special categories of business for which GST registration is compulsory, irrespective of their turnover: 

• Inter-state suppliers of goods
• Casual taxable persons
• Non-resident taxable persons
• E-commerce sellers and operators
• Businesses liable to deduct TDS/TCS under GST
• Input Service Distributors (ISD)
• Reverse charge liable businesses

Key Takeaways

1. The GST registration turnover limit is ₹40 lakhs for goods, ₹20 lakhs for services, and ₹10 lakhs for special category states.

2. Crossing the turnover limit for GST registration without registering can invite penalties.

3. Voluntary registration can sometimes be smart for credibility and ITC.

Summing Up 

Understanding the GST turnover limit for your organisation is important to know whether your organisation needs to get registered under GST or not. After reading this blog, we hope you understood the same thoroughly. In case you are struggling to maintain your turnover data so that you can determine whether you should register or not, we have a solution for you. Sign up with Munim Accounting and Billing software, and track your company’s financials at your fingertips. 

Frequently Asked Questions

Is GST registration mandatory for private limited companies​?

Irrespective of the company registration type, GST registration is mandatory if your turnover exceeds the GST threshold limit. 

How much is the limitation for GST registration in West Bengal?​

West Bengal does not come under the special category states, so the GST registration limit is as follows: 

• ₹40 lakhs for businesses dealing in goods.
• ₹20 lakhs for service providers.

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