GST Registration Limits: Threshold limit for GST Registration for 2025

The GST registration limits have been significantly changed to simplify compliance for Micro, Small, and Medium-sized Enterprises (MSMEs). The Goods and Services Tax Council proposed these changes during its 32nd meeting on January 10, 2019, and the Central Board of Indirect Taxes and Customs (CBIC) announced them afterward. These modifications aim to reduce the burden of GST compliance on MSMEs, allowing you to focus on your primary business operations.

What is the GST Registration Threshold Limit?

(Updated for 2025)

Previously, you had to register for GST if your overall turnover exceeded ₹20 lakhs in regular category states and ₹10 lakhs in special category states. However, from April 1, 2019, the threshold for regular category states was increased to ₹40 lakhs, while special category states remained at ₹20 lakhs.

Businesses with a turnover below certain limitations are not required to register for GST, but they can do so voluntarily to receive input tax credits and other benefits.

States Adopting the New GST Registration Limit

Notably, although being special category states, Assam and Jammu & Kashmir chose the new maximum of ₹40 lakhs. They did the same by choosing the new maximum when the limit was raised to ₹20 lakhs from ₹10 lakhs. This modification intends to make compliance easier for MSMEs and assist small enterprises.

Kerala, having faced natural disasters, can now levy a ‘calamity cess’ of up to 1% on intra-state goods and services to help recover financially.

What are the Categories Required for Compulsory GST Registration?

• Interstate suppliers.

• Casual taxable persons.

• Persons are taxable on a reverse charge basis.

• Persons are required to deduct TDS under GST.

• Persons are required to deduct TCS under GST.

• Non-resident taxable persons.

• Input Service Distributors (ISDs).

• Persons making sales on behalf of someone else, whether as an agent or principal.

• Persons who must deduct taxes under section 51, regardless of their separate registration status under this Act.

• Every e-commerce operator.

• Suppliers who supply goods through e-commerce operators are liable to collect tax at source.

• Online Service Providers provide service from outside India to non-registered persons in India.

How to Calculate GST Turnover Threshold?

You should consider the following factors while calculating the GST turnover threshold:

• Turnover of a person or organisation for the PAN number nationwide.

• All taxable supplies.

• All supplies that are exempted.

• Export of Goods and Services.

• Interstate Supplies

Impact of Threshold Limit Changes on Different Industries

The new threshold limit of GST registration for services has both positive and negative impacts on numerous industries. The updated threshold limitations have significantly eased GST compliance for SMEs, lowering complexity and expenses. This allows SMEs to concentrate on their primary activities.

On the other hand, some SMEs may still want to be a part of the GST chain, while others might choose to use the composition scheme, even with the increase in the threshold limit. Raising the GST registration threshold barrier will benefit SMEs who have faced challenges like demonetisation, business interruption, credit squeezes, etc.

However, small businesses, particularly those that do not meet the threshold limit for GST registration, may decide not to register for it. This is generally because GST registration necessitates business compliance, and the procedure can be time-consuming (e.g., filing returns, reconciling invoices, etc.).

Furthermore, registered businesses must collect GST from their clients and submit it to the government. All of this frequently makes it difficult for small businesses with limited labour and resources to comply.

You can use the following strategies to reduce risks and capitalise on opportunities resulting from changes in GST registration threshold limits:

• Understand and comply with GST requirements promptly and accurately.

• Streamline supply chain management to reduce compliance costs and complexity.

• Use technology to simplify GST compliance and avoid errors.

• Consult tax experts to ensure proper GST compliance.

What are the Changes in the GST threshold limits who opted for the Composition Scheme?

On April 1st, 2019, the annual turnover revenue criteria for the composition scheme was increased to ₹1.5 crore. Thus, starting from April 1st, 2019, taxpayers who have registered for the scheme must pay taxes every quarter and submit yearly reports. For the Northeast and Uttarakhand states, the limit was not changed and remains at ₹75 lakh.  Additionally, restaurants(not serving alcohol) are subject to this limitation.

The new composition scheme was made accessible to service providers. It offers a fixed tax rate of 6% with 3% CGST and 3% SGST. This initiative is available to independent service providers and diversified suppliers of goods and services with a sales turnover of up to ₹50 lakh in the previous financial year.

Conclusion

To effectively navigate the complexities of the GST framework, you need to understand the registration limitations as a business. Stay informed about recent changes to threshold limits to avoid penalties. Additionally, seek professional assistance when necessary to prevent future disputes.

Frequently Asked Questions (FAQs):

1. Is the GST registration limit 20 lakhs or 40 lakhs?

GST registration limits in regular category states are ₹40 lakhs for goods and ₹20 lakhs for services. Special category states have a limit of ₹20 lakhs.

2. Who is exempt from GST registration?

Service providers and small business owners with annual turnovers under ₹40 lakh, as well as agriculturists and those supplying exempt goods or services, are exempt from GST registration.

3. Are there different turnover thresholds for GST registration based on the type of business or goods/services provided?

Yes, normal category states have threshold limits of ₹40 lakhs for products and ₹20 lakhs for services. In special category states, the limitation for goods and services is ₹20 lakhs.

4. How often are the GST registration turnover limits revised, and what factors influence these changes?

The GST Council regularly examines and revises the GST registration turnover limits, considering various factors. These factors include economic development, the compliance cost to enterprises, and administrative efficiency for taxing authorities. The last changes were made in 2019.

5. What documents are required for GST registration once a business crosses the turnover threshold?

For GST registration, you need documents like a company PAN card, proof of business constitution, identity and address proof of authorised signatory, address proof of the business, bank account details, digital signature (for companies and LLPs), etc.

6. Is there any penalty for not registering under GST if the turnover exceeds the prescribed limit?

Yes, if the turnover exceeds the allowed threshold, there is a penalty for failing to register under GST. 10% of the tax owed, up to a minimum of ₹10,000, is the penalty. In the case when the offender intentionally fails to pay taxes, the penalty is 100% of the tax due.