Knowing what is on the table for you can save you money and time. That’s why it is important to know of the latest GST registration limit in India.
Latest GST Registration Limit in India: Overview
As India’s economic landscape evolves, so do the thresholds for GST registration. This blog delves into the anticipated changes in the GST registration limit set to unfold in 2024. Understanding these upcoming adjustments is pivotal for businesses, ensuring compliance with the Goods and Services Tax framework. From small enterprises to growing businesses, this introduction sets the stage for an insightful exploration into the altered GST registration limits, providing a foresight into the regulatory landscape that will govern businesses in the upcoming fiscal year. Stay informed and prepared for the dynamic shifts in GST registration criteria.
The minimum threshold limit for Goods and Services Tax (GST) registration in India varies based on the type of business and its location. Here are the key considerations:
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General Threshold
- For businesses operating in most states, the threshold limit for GST registration is an annual turnover of Rs. 40 lakhs for the supply of goods and Rs. 20 lakhs for the supply of services.
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Special Category States
- Businesses operating in special category states, including Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, and Sikkim, have a lower threshold limit.
- The threshold for GST registration in these states is an annual turnover of Rs. 20 lakhs for the supply of goods and Rs. 10 lakhs for the supply of services.
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Option for Northeastern and Hilly States
Northeastern and hilly states were given flexibility. Businesses in these states can choose between two GST ceiling options for the annual turnover threshold
- Option 1: Rs. 20 lakhs for the supply of goods and Rs. 10 lakhs for the supply of services.
- Option 2: Rs. 40 lakhs for the supply of goods and Rs. 20 lakhs for the supply of services.
This flexibility allows businesses in the northeastern and hilly states to select the threshold that aligns better with their operations, either availing a lower or higher exemption limit based on their preferences.
Why Should Businesses Know About the Newest GST Registration Limit?
Going by the current pace of GST registration, it seems like the government is soon going to raise the GST new registration limit. This would be beneficial for businesses as they would have more clarity on the taxes they need to pay. Also, this will help businesses save on costs as they would be able to avoid paying multiple taxes.
Registration Limit India Update
As per the latest GST registration limit updates in India, the registration threshold limit for GST has been increased to ₹40 lakhs. This means that all businesses with a turnover of more than ₹ 40 lakhs will now be required to obtain a GST registration. The previous limit was ₹ 20 lakhs.
This increase in the registration limit is a welcome move by the government as it will reduce the compliance burden on small businesses. It is also expected to boost economic activity and tax revenues.
Exempted Activities
As per the latest GST registration limit, the following activities have been exempted from GST:
- Supply of goods or services which are not liable to tax
- Supply of goods or services by an unregistered person to a registered person
- Supply of goods or services through an e-commerce operator who is not registered under GST.
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How to Make the Best Use of GST Registration
The GST registration limit in India has been increased to ₹40 lakhs (from ₹ 20 lakhs) for most states, except for the special category states of Jammu and Kashmir, Assam, Arunachal Pradesh, Sikkim, Meghalaya, Nagaland, Tripura, Mizoram and Manipur where the limit is ₹ 10 lakhs. This was done in order to bring more small businesses into the GST net and to improve tax compliance.
To make the best use of this revised GST registration limit, businesses must:
- File their GST returns regularly and on time. This will help them avoid any penalties or interest that may be levied for late filing
- Maintain proper records of their sales and purchases. This will ensure that they are able to correctly calculate their taxes and file accurate GST returns
- Keep updated with changes in GST rates and regulations. This will help them ensure that they are compliant with the latest rules and requirements.
What is the Minimum Turnover Limit for GST Registration?
The Goods and Services Tax (GST) is a crucial part of India’s indirect tax system. But not all businesses need to register for GST. Here’s a breakdown of the minimum turnover limit that determines mandatory GST registration:
In most Indian states, companies with an annual turnover exceeding ₹ 40 lakh for goods and ₹ 20 lakh for services must register for GST. This means they’ll need to collect and pay GST on their taxable sales. Businesses below this limit are exempt from mandatory GST registration.
Even if your turnover falls below the mandatory threshold, you can still choose to register for GST voluntarily. This can be strategic for several reasons. For instance, registering for GST allows you to claim input tax credit (ITC), essentially reducing your overall tax burden. This credit system helps you offset the GST you pay on purchases with the GST you collect on sales.
Keep in mind that some Indian states classified as ‘special category states’ have different minimum GST registration limits. In these states, the threshold for goods drops to ₹ 20 lakh, and for services, it’s ₹ 10 lakh. These special category states include Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, and Sikkim.
While there have been discussions about revising the minimum GST registration limit, it’s currently expected to remain unchanged at ₹ 40 lakh for most businesses in 2024. This offers some relief to small businesses, allowing them to operate without the immediate burden of mandatory GST registration. However, the government is likely aiming to eventually include all businesses, regardless of size, within the GST framework.
Classification of States for the Applicability of New GST Turnover Limits
States and Union Territories in India were given the choice to either adopt the new GST exemption limits or keep the existing ones. Here’s how they decided:
States and UTs Opting for the New ₹ 40 Lakh Limit
The following states and UTs have chosen to raise the GST registration exemption limit to ₹ 40 lakh for the sale of goods:
- Kerala, Chhattisgarh, Jharkhand, Delhi, Bihar
- Maharashtra, Andhra Pradesh, Gujarat, Haryana, Goa
- Punjab, Uttar Pradesh, Himachal Pradesh, Karnataka
- Madhya Pradesh, Odisha, Rajasthan, Tamil Nadu
- West Bengal, Lakshadweep, Dadra and Nagar Haveli, Daman and Diu
- Andaman and Nicobar Islands, Chandigarh
State Opting to Maintain the Existing ₹ 20 Lakh Limit
- Telangana has decided to keep the earlier limit of ₹ 20 lakh.
Special Category States/UTs Opting for the New ₹ 40 Lakh Limit
These special category states and UTs have chosen to increase their GST registration exemption limit to ₹ 40 lakh:
- Jammu and Kashmir, Ladakh, Assam
Special Category States/UTs Opting for the New ₹ 20 Lakh Limit
The following special category states have opted for a new limit of ₹ 20 lakh:
- Puducherry, Meghalaya, Mizoram, Tripura
- Manipur, Sikkim, Nagaland, Arunachal Pradesh, Uttarakhand
Notes
- Jammu & Kashmir and Assam, though hilly states, have chosen to increase their GST registration threshold to ₹ 40 lakh.
- Kerala has been allowed to impose a ‘calamity cess’ of up to 1% on all intra-state supplies of goods and services.
Limit Future Impacts Prediction
As per the latest GST registration limit, any business whose turnover is below ₹ 40 lakhs is exempt from obtaining a registration. This threshold limit is applicable to all states in India, except for the states of Jammu and Kashmir, Himachal Pradesh, and Uttarakhand, where the limit is ₹10 lakhs.
This exemption from registration can have a significant impact on businesses, as it reduces their compliance burden. It also encourages more businesses to enter the formal economy and start paying taxes. This, in turn, will lead to an increase in government revenue and help boost the economy.
The registration limit is also likely to have an impact on inflation. With more businesses registered under GST, there will be greater compliance and fewer instances of tax evasion. This will help keep prices down as businesses will be passing on the benefit of lower taxes to consumers.
Overall, the latest registration limit is positive for both businesses and consumers. It will help reduce the compliance burden for businesses and encourage them to enter the formal economy. For consumers, it will help keep prices down as businesses pass on the benefit of lower taxes.
How Do I Apply for GST Registration?
If you are a business with an annual turnover of more than ₹20 lakhs, you will have to register for GST. You can do this online on the GST website. The registration process is simple and straightforward, and you will need to provide some basic information about your business. Once you have registered, you will be given a GST number which you can use on invoices and other documentation.
Types of Registrations and Basic Requirements
GST registration is mandatory for all businesses with a turnover exceeding ₹20 lakhs.
The type of GST registration you apply for depends on the legal structure of your business. If you are a sole proprietor, you will need to apply for a sole proprietorship GST registration. If your business is registered as a partnership firm, LLP, company or any other legal entity, you will need to apply for a separate GST registration.
In addition to the above, businesses engaged in interstate trade will also need to obtain an interstate GST registration.
The application process for each type of GST registration is different and you will need to submit different supporting documents accordingly.
Once you have obtained your GST registration, you will be issued a GSTIN (Goods and Services Tax Identification Number). This number must be quoted on all invoices issued by your business.
Who Can Register for GST?
Any business entities engaged in the taxable supply of goods and/or services with an aggregate turnover exceeding ₹20 lakhs in a financial year are liable for GST registration
Taxable and non-taxable activities.
Taxable activities under GST include:
- The sale of goods and services
- The supply of goods and services in the course of furtherance of business
- The import of goods into India
Non-taxable activities under GST include:
- The sale or supply of goods that are exempt from tax under the GST Act or any other law for the time being in force
- The sale or supply of services that are exempt from tax under the GST Act or any other law for the time being in force.
What Falls Within the Gst Criterion of Aggregate Turnover?
The GST criterion of aggregate turnover encompasses the total revenue generated by all companies registered under the same PAN. This includes
- Taxable Purchases: The value of purchases that are subject to GST.
- Exemption Sales: The revenue generated from sales that are exempt from GST.
- Exports: The total revenue generated from exporting goods or services.
The aggregate turnover for GST calculation does not include
- Value of Sales Tax: The amount related to traditional sales tax is not considered in the calculation of aggregate turnover.
- Value of Purchases Subject to RCM Taxation (Reverse Charge Mechanism): Purchases subject to RCM, where the liability to pay tax is on the recipient, are excluded from the calculation of aggregate turnover.
Conclusion
Understanding the GST registration limit is crucial for businesses of all sizes. The recent increase to ₹40 lakh (with exceptions for specific states) provides relief to smaller enterprises while maintaining a robust tax net.
As the economic climate continues to evolve, it’s essential to stay updated on potential changes to the GST registration threshold. Businesses should regularly review their turnover to determine if registration is mandatory or beneficial.
By staying informed and compliant, businesses can optimise their tax strategies and contribute to the overall growth of the Indian economy.
FAQs on GST Registration Limit
Is GST registration limit 20 lakhs or 40 lakhs?
The GST registration limit is Rs. 40 lakhs for most states, and Rs. 20 lakhs for special category states, for the supply of goods.
What is the new GST registration limit?
For the supply of goods, the new GST registration limit is Rs. 40 lakhs for most states, and Rs. 20 lakhs for special category states.
What is the maximum limit of GST rate?
The maximum limit of GST rate is 28%.
What is the turnover limit for GST return?
Regardless of turnover, GST return must be filled. To learn more about NIL GST returns, reach out to our experts for a free consultation.
Is GST applicable if turnover is less than 40 lakhs?
GST is not applicable if the turnover is less than Rs. 40 lakhs for most states, and less than Rs. 20 lakhs for special category states, for the supply of goods.
What if turnover is less than 20 lakhs GST?
If the turnover is less than Rs. 20 lakhs for most states, and less than Rs. 10 lakhs for special category states, for the supply of goods, GST is not applicable
