The Goods and Services Tax (GST) system in India has integrated various indirect taxes into a unified structure, impacting businesses across sectors. One essential element for compliance is meeting the prescribed turnover for GST registration.
Understanding the factors influencing this minimum turnover limit for GST registration is essential for businesses to deal clearly with aspects of taxation effectively. In this article, we shall understand the activities subject to GST taxation, exemptions from registration and the factors affecting minimum turnover for GST registration.
Which Activities are Subject to Taxation Under GST?
The GST covers a major part of the economy which includes the taxing of all goods and services and generally leads to better tax coverage. All the business activity relating to the exchange of the commodities or services for the price comes under the tax head of GST rules.
Additionally, the import of goods and services from outside India is subject to GST taxation, enabling a unified taxation framework. Other activities brought under the GST umbrella include e-commerce operations involving the supply of goods and services, dealing in intellectual property rights, leasing and renting of goods and facilitating betting, gambling or lottery transactions.
By including this extensive range of transactions, GST aims to promote a common national market and enhance indirect taxation revenues.
Which Activities are Exempted from GST Registration?
Certain activities are exempted from mandatory GST registration requirements. Key exemptions include:
- Transactions involving the supply of non-taxable goods or services, not subject to GST.
- Instances where unregistered businesses provide goods or services to registered persons. This enables smaller players to operate without excessive compliance burdens.
- Businesses transacting through unregistered e-commerce platforms or operators, removing registration obligations.
- Supplies to and by SEZ units and developers, specified Government authorities and diplomatic personnel.
These exemptions balance public revenue interests and economic growth objectives, easing compliance for identified sectors. At the same time, the exemptions further GST’s goal of establishing a unified taxation framework by keeping small businesses outside the registration ambit. Overall, the exemptions aim to promote business growth without compromising on larger taxation objectives.
What is the Minimum Turnover Required for GST Registration?
The minimum turnover for GST registration plays an important role in determining the compliance requirements for businesses. As of recent amendments, the minimum turnover limit for GST registration are as follows:
- For the supply of goods: Rs. 40 lakhs annually.
- For the supply of services: Rs. 20 lakhs annually.
However, businesses falling below these thresholds can opt for voluntary registration, enabling them to access benefits like input tax credit.
Overview of Earlier and New limits & Date of Applicability
The evolution of turnover thresholds reflects the dynamic nature of GST regulations. Below is an overview of earlier and new limits along with their applicability dates:
| Aggregate Turnover | Registration Needed | Applicability |
| Earlier Limits – For sale of Goods or for Providing of Services | ||
| Exceeds Rs. 20 lakh | Mandatory for Normal Category States | Effective until March 31, 2019 |
| Exceeds Rs. 10 lakh | Mandatory for Special Category States | Effective until March 31, 2019 |
| New Limits – For Sale of Goods | ||
| Exceeds Rs. 40 lakh | Compulsory for Normal Category States | Effective from April 1, 2019 |
| Exceeds Rs. 20 lakh | Compulsory for Special Category States | Effective from April 1, 2019 |
| New Limits – For Providing Services | ||
| No alteration in the threshold limits for service providers. Providers offering services must register if their aggregate turnover surpasses Rs. 20 lakh (for normal category states) and Rs. 10 lakh (for special category states). |
States Who Opted for the New Limit
Different states have varying thresholds based on their categorisation. Here’s a list of states opting for the new turnover limits:
| Normal Category States/UT (New Limit Rs. 40 lakh) | Normal Category States/UT (Status Quo) | Special Category States/UT (New Limit Rs. 40 lakh) | Special Category States/UT (New Limit Rs. 20 lakh) |
| Kerala, Chhattisgarh, Jharkhand, Delhi, Bihar andhra Pradesh, Gujarat, Punjab, Haryana, Goa, Uttar Pradesh, Himachal Pradesh, Karnataka, Dadra and Nagar Haveli and Daman and Diu, Madhya Pradesh, Odisha, Rajasthan, Tamil Nadu, West Bengal, Lakshadweep andaman and Nicobar Islands & Chandigarh, Maharashtra | Telangana | Jammu and Kashmir, Ladakh and Assam | Puducherry, Meghalaya, Nagaland, Mizoram, Arunachal Pradesh, Tripura, Manipur, Sikkim and Uttarakhand |
Financial Year to Calculate the Aggregate Turnover for GST Registration
The financial year is key for evaluating turnover thresholds for GST registration. New businesses must consider projected annual turnover, while existing enterprises reckon turnover of the preceding financial year.
For seasonal businesses, only turnover for the months of operation is aggregated to assess thresholds. Irrespective of turnover, certain business types like interstate suppliers mandatorily require registration.
Changes in the Threshold Limits to Opt into the Composition Scheme
The key changes in threshold limits for opting into the Composition Scheme include –
- increase in minimum annual turnover for GST registration to Rs. 1.5 crores;
- introduction of 6% fixed tax rate for service providers with turnover up to Rs.50 lakhs;
- Composition taxpayers now allowed to undertake interstate outward supplies up to Rs.50 lakhs; and
- limit of supply of goods via e-commerce operators raised from Rs.5 lakhs to Rs.25 lakhs.
These enhanced limits offer greater ease of compliance for small businesses under the Scheme.
Factors Affecting Threshold Limit for GST Registration
Several factors influence the threshold limit for GST registration, including:
1. Type of Supply: The threshold varies for goods and services. While the turnover threshold for goods is higher, services have a lower threshold for mandatory registration.
2. Geographical Considerations: Special category states often have different turnover thresholds compared to other states. Factors such as economic development and state policies influence these variations.
3. GST Council Decisions: The GST council periodically reviews and revises the minimum turnover for GST registration. These revisions are based on factors such as economic conditions, revenue considerations and administrative ease.
Final Thoughts
Understanding the regulations around minimum turnover required for GST registration is key for businesses to effectively comply with GST rules. Being clear about what constitutes aggregate turnover and the applicable financial year allows proper self-assessment of registration requirements based on turnover limits prescribed for goods and services.
With clear insights on activities attracting GST, exemptions in certain cases and simplified registration processes, businesses can easily meet their GST obligations. Staying up-to-date on evolving caps and exemptions also aids financial planning and projecting tax outflows. Overall, clarity on turnover considerations can help businesses efficiently fulfill GST compliance, avoid penalties and reap available benefits while supporting the unified national taxation goal.
FAQs
1. How can I determine if my business meets the minimum turnover required for GST registration?
You can determine if your business meets the minimum turnover required for GST registration by firstly calculating your annual turnover and thereafter comparing it with the prescribed limits.
2. Are there exemptions or waivers available for businesses falling below the minimum turnover for GST registration?
Yes, exemptions are available for businesses falling below the minimum turnover for GST registration. This is depending on specific criteria such as the nature of transactions and business activities.
3. Can I voluntarily register for GST even if my turnover is below the minimum requirement?
Yes, you can voluntarily register for GST even if your turnover is below the minimum requirement. This is mainly done to access benefits like input tax credit.
4. Can StartupFino help businesses navigate the complexities of GST registration criteria?
StartupFino can help businesses to deal easily with the complexities of GST registration criteria with expert guidance and support.
5. Is there a dedicated support team at StartupFino for GST registration inquiries?
Yes, StartupFino provides a dedicated support team for GST registration inquiries to assist businesses in addressing their concerns and queries.
6. What are the advantages of using StartupFino for GST registration and compliance?
The advantages of using StartupFino for GST registration and compliance includes not only expert assistance and simplified processes but it also gives you compliance assurance and access to a dedicated support team for inquiries and assistance.
