What is the Minimum Limit for GST Registration?

  • Setindiabiz Team
  • July 10, 2024
What is the Minimum Limit for GST Registration?
What is the Minimum Limit for GST Registration?

The minimum GST registration limit decides the eligibility of businesses for obtaining GST registration and meeting GST compliances. They are calculated on the basis of aggregate annual turnover values. We have discussed their method of calculation further in this blog. Prior to 1st April, 2019, these limits were quite low and hence increased the burden of GST compliances on small businesses. So, to overcome this challenge, the government raised the minimum GST registration limits, so that smaller businesses can be freed from the burden of GST compliances.

BRIEF SUMMARY
The limits differ on several parameters, including the type of scheme, the business activity, and the state in which the business operates. However, regardless of these factors, once a business crosses the turnover limit, it is bound to get GST registration, pay GST, and file GST returns timely for the particular financial year.
What is the Minimum Limit for GST Registration?

How to Calculate Minimum GST Registration limit?

The minimum GST registration limit is calculated on the basis of annual aggregate turnover of a business. Annual Aggregate turnover is the total value of inward and outward supplies made by a business in the previous financial year, including taxable supplies, tax exempt supplies, inter-state supplies, and exports. The cumulative value of these indicators is termed as the aggregate annual turnover of the business and is used to determine its eligibility for GST compliance as per the minimum GST registration limit. However, while calculating AATO, the values of inward supplies taxable under the reverse charge mechanism, and non-taxable supplies need to be eliminated.

Minimum GST registration limit for Normal Taxpayers Prior to FY 2019

Prior to April 1st 2019, the minimum GST registration limits for regular taxpayers and composition dealers were below the current limits. Moreover, there was no distinction between the turnover limits of goods-based and service-based businesses. The table below shows the exact GST registration limits applicable to businesses up to 31st March, 2019.
GST registration limits Prior to 2019
Regular Taxpayers
(Special Category States)
Rs.10 Lakhs
Regular Taxpayers
(Other States)
Rs.20 Lakhs

New Minimum GST registration limit for Normal Taxpayers From 1st April 2019

Effective from April 1st, 2019, the Indian Government has revised the minimum GST registration limits to raise the same for goods-based enterprises. The limits for service-based enterprises remain the same, thereby creating a distinction between the two. Moreover, the minimum GST registration limits for composition dealers have also been raised for both regular as well as special category states. The table below gives an overview of the revised GST registration limits after 31st March, 2019.
Revised GST registration limits from 1st April, 2019
Regular Taxpayers for Goods-based Businesses
(Special Category States)
Rs.20 Lakhs
Regular Taxpayers for Goods-based Businesses
(Other States)
Rs.40 Lakhs
Regular Taxpayers for Service-based Businesses
(Special Category States)
Rs.10 Lakhs
Regular Taxpayers for Service-based Businesses
(Other States)
Rs.20 Lakhs

Minimum GST registration limit for Composition Taxpayer

The Indian Government has introduced the GST composition scheme as an alternative to the GST regular scheme. It targets the enrolment of low income businesses into the GST framework, providing eased compliance burden and reduced tax rates. As a result, the minimum turnover limits under this scheme have drastically been lowered in comparison to the regular scheme. The table below shows the current and the previous turnover limits for the GST composition scheme.
GST Composition Turnover Limits (Prior to FY 2019) GST Composition Turnover Limits (After FY 2019)
GST Composition Scheme
(Special Category States)
Rs.75 Lakhs
GST Composition Scheme
(Special Category States)
Rs.50 Lakhs
GST Composition Scheme
(Other States)
1.5 Crores
GST Composition Scheme
(Other States)
1 Crore

Minimum GST registration limit for QRMP Taxpayers

The QRMP Scheme is another alternative to the GST Regular Scheme. It stands for Quarterly Return Monthly Payment. The QRMP scheme has basically been introduced to reduce the compliance burden of filing monthly GST returns on small taxpayers. While the obligation to pay GST under the QRMP scheme lies monthly, the consolidated returns for the same are filed quarterly. The minimum GST turnover to enroll under this scheme is Rs.5 crores in the current or preceding financial year, as the case may be. Also, the scheme can only be opted by businesses which have filed their last due GSTR 1 and GSTR 3B returns.

List of Special Category States for GST Registration limits

The minimum GST registration limit determines the eligibility of a business for GST payment and return filing. Once a business exceeds the turnover limits in a financial year, GST payment and return filing for that year becomes mandatory. However, to meet these compliances, the business must obtain GST registration.
GST Composition Turnover Limits (Prior to FY 2019) GST Composition Turnover Limits (After FY 2019)
  • Meghalaya
  • Mizoram
  • Sikkim
  • Nagaland
  • Tripura
  • Arunachal Pradesh
  • Manipur
  • Assam
  • Jammu & Kashmir
  • Uttarakhand
  • Himachal Pradesh
  • Ladakh

What Happens When Businesses Exceed Minimum GST Registration limit?

The minimum GST registration limit determines the eligibility of a business for GST payment and return filing. Once a business exceeds the turnover limits in a financial year, GST payment and return filing for that year becomes mandatory. However, to meet these compliances, the business must obtain GST registration.
Obtaining GST registration is an online process completed on the GST portal. Broadly, there are two steps to it. Firstly, the taxpayer must register on the GST portal and create an account. This will provide the taxpayer with login credentials for the GST website. Using the credentials, the taxpayer can sign into the portal, and access the online form GST REG-01.
This detailed form is the application for GST registration and is submitted online to the GST department. The form contains 5 detailed sections, and each section must be filled thoroughly to ensure an unhindered GST registration process. Documentation is a major aspect of GST Registration too. The taxpayer must file GST registration documents in their accurate and updated formats. Any misfiling or inadequacy may lead to a delay in the processing of GST application.

Here are the brief steps for GST registration process:

Step 1: Visit the GST Website.
Step 2: Go to the “Services” tab on the main menu, and then to “Registration” followed by “New Registration”.
Step 3: Fill in the details and verify through OTP on the new registration page.
Step 4: Once registered a TRN will be generated.
Step 5: Repeat Step One and Two. Then on the New Registration page, go to TRN.
Step 6: Enter the TRN and captcha.
Step 7: Access the GST REG-01 form and enter the details. Also, upload the requisite documents.
Step 8: Verify using DSC.
Step 9: Submit the form online.
Step 10: Receive GSTIN within a week.
Once the GST registration process is complete, the taxpayer needs to pay GST and file GST returns regularly as per the applicable due dates. Our experts are available for consultation, in case any update or assistance is required.

The new GST registration limits have a reasonable structure and method of calculation. Separate limits have been assigned for goods and services based businesses as opposed to the same limits prior to 2019. Further, the limits have been raised for businesses operating in special category and non-special category states. However, businesses from special category states have an option to opt for either. Besides, regular GST scheme, limits have been raised for composition dealers as well.

Conclusion

FAQs

Q1: What is annual aggregate turnover?

The annual aggregate turnover is the total value of taxable, tax-exempt, export and inter-state supplies This includes both inward and outward supplies of a business in a year.

Q2: What is the minimum GST registration limit for goods-based businesses?

The minimum GST registration limits for goods-based businesses is Rs.40 lakhs.

Q3: Is there a different GST registration limit for service providers?

Yes, the GST registration limits for service providers is Rs.20 lakhs.

Q4: Is there any relaxation for businesses from hilly and north-eastern states?

Yes, businesses from hilly and north eastern states have lower limits compared to regular states. For goods-based businesses, the limit is Rs.20 lakhs whereas for service-based the same is Rs.10 lakhs. However, these businesses have the option to choose the regular limits as well.

Q5: Is GST registration mandatory for businesses exceeding GST limits?

Yes, as soon as the GST registration limits exceed, businesses must obtain the GST registration mandatorily.

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