Meera designs websites for clients across India and billed ₹17 lakh last year. Her friend Arjun runs a small stationery shop and sold ₹38 lakh of goods. Both keep asking the same thing: do we need a GST number? The GST registration threshold decides it, but the answer changes with what you sell, where you sell it and which state you work from.
This guide explains the limits in plain terms, who must register even with tiny sales, what turnover counts, and what to do the day you cross the line. The figures come from the CBIC registration flyer, the notification on goods suppliers and the GST Council’s composition flyer. Rules get amended, so confirm the latest position on the GST portal before you act.
The GST registration threshold in one table
GST is a tax on the supply of goods and services, and in principle every supplier must register. Small businesses get relief: if your all-India aggregate turnover stays below a limit, you need not register. The CBIC flyer on registration puts the limits like this.
| What you supply | Usual limit | Lower limit in some states |
|---|---|---|
| Only goods | ₹40 lakh | ₹20 lakh in Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura and Uttarakhand |
| Services, or a mix of goods and services | ₹20 lakh | ₹10 lakh in Manipur, Mizoram, Nagaland and Tripura |
So Arjun, selling only goods from a state with the ₹40 lakh limit, is below it at ₹38 lakh. Meera, a service provider, is below ₹20 lakh at ₹17 lakh. Neither is forced to register on turnover alone, though other rules covered below can still pull them in.
Note the phrase “exclusive supply of goods”. The ₹40 lakh limit is for businesses that supply only goods. A shop that also earns service income, such as installation charges billed separately, falls under the ₹20 lakh limit that the flyer gives for services and mixed supplies.
What counts as aggregate turnover
Turnover for this purpose is not just the invoices from one shop or one client. The flyer describes it as an all-India figure, tied to the same PAN. That means if you run two small ventures under one PAN, say a design practice and a catalogue-printing sideline, the sales are added together before you compare them with the limit.
The flyer also says aggregate turnover includes supplies you make on behalf of your principals, and it leaves out the value of job-worked goods if you are a job worker. If everything you sell is either not taxable or wholly exempt, you are not liable to register at all, and the same holds for an agriculturist selling produce from cultivated land.
One more point from the flyer: if every supply you make is taxable under reverse charge, where the buyer pays the tax, you need not register either, under a 2017 notification it names.
Which financial year do you count?
The GST registration threshold is tested on a financial year, April to March. The notification for goods suppliers speaks of aggregate turnover “in the financial year” not exceeding ₹40 lakh. Track your running total month by month, not only at year end, because the liability arises on the day you cross the limit and not on 31 March.
Who must register whatever the turnover
The GST registration threshold is not a free pass for everyone. The CBIC flyer lists suppliers who need registration irrespective of the size of their turnover. The ones small traders meet most often are these.
- Inter-state suppliers of goods. If you sell goods outside your own state, you must register even with a small turnover. The flyer gives handicraft suppliers a relief until they cross the threshold.
- Sellers of goods through e-commerce platforms that must collect tax at source, since the operator is liable under section 52 of the CGST Act.
- Casual taxable persons who set up a temporary stall in a state where they have no fixed place of business.
- People who receive notified supplies under reverse charge, such as goods transport agency services or legal services from an advocate.
- Agents who supply on behalf of a principal, which covers consignment and C&F agents but not commission agents, the flyer says.
- Persons required to take compulsory registration under section 24 of the CGST Act, which the goods notification itself carves out.
Certain goods also lose the exemption. The 2019 notification excludes suppliers of ice cream and similar edible ice, pan masala and tobacco products from the ₹40 lakh relief.
Freelancers and service providers have a special relief
For goods, selling across state lines forces registration. For services, the rule is kinder. The flyer says that persons making inter-state supplies of taxable services with an all-India aggregate turnover not above ₹20 lakh (₹10 lakh in Manipur, Mizoram, Nagaland and Tripura) are exempt from registration under Notification 10/2017-Integrated Tax dated 13 October 2017, as amended in January 2019.
In practice, a freelance writer in Pune billing a client in Bengaluru, or a consultant in Jaipur working for a firm in Chennai, can stay unregistered while the all-India total stays within the services limit. Meera’s website clients in several states do not by themselves force her to register.
The flyer also says people who supply services through e-commerce operators can claim the same ₹20 lakh or ₹10 lakh exemption. A tutor on a learning platform or a designer on a freelance marketplace is not pushed into registration by the platform alone, going by that description. Some platforms may still ask for a GSTIN as a business policy, which is a contract matter and not a legal requirement.
The relief is described for services. A person who sells physical goods across states does not get it, and a freelancer who also resells goods should check which limit applies to each part of the work.
When you cross the GST registration threshold: the 30-day clock
If your turnover goes past the limit, you must apply for registration. The flyer says the application must be submitted online on the GST portal within thirty days from the date the liability to register arose. Casual and non-resident taxable persons apply at least five days before they begin business.
Take an illustration. Say Meera bills ₹19.5 lakh by 28 February and then raises a ₹1.5 lakh invoice on 5 March. Her turnover crosses ₹20 lakh on 5 March, so the thirty days run from that date. She should plan the filing early and not wait for the last day.
The flyer describes the process once you apply. The proper officer must raise a query or approve the registration within three working days, failing which the registration is considered deemed approved. If a query is raised, you get seven working days from the fourth day of filing to respond, and the officer then has seven working days to grant or reject. You receive a 15-digit GSTIN, whose first two digits are the state code and next ten are your PAN.
Voluntary registration: is it worth it
A business below the GST registration threshold may still choose to register, the flyer notes. Some do so because they want to claim input tax credit on purchases, because business customers prefer a GST invoice, or because they supply through a platform that asks for one.
The trade-off is simple. Once registered, you can collect GST from customers and claim credit on tax paid on inputs, but you must also file returns and pay tax on every taxable supply, however small your sales are. The flyer adds that a voluntary registration can now be cancelled at any time, after a rule change from January 2018, so you are not locked in for a year as before.
| Situation | Registering tends to help | Staying out tends to help |
|---|---|---|
| Customers are mostly consumers | Rarely | Yes, you charge no GST and keep prices lower |
| Customers are GST-registered businesses | Often, as they want credit on your bill | Only if your clients do not mind |
| Large input costs with GST on them | Yes, credit reduces your cost | No credit available |
Composition scheme for small traders
Once you are required to register, a simpler route may exist. The GST Council’s flyer on the composition levy describes a scheme where a service provider pays 6% of the supplies made, instead of the 12% or 18% bracket many services fall in, and files a quarterly payment statement in Form GST CMP-08 and a yearly return in Form GSTR-4 by 30 April after the financial year.
The cost of this simplicity is clear in the same flyer. A composition taxpayer cannot take input tax credit, and cannot deal in inter-state supplies or exports. Its customers also cannot claim credit on the tax. The same flyer, updated as on November 2022, puts the turnover cap in the previous financial year at ₹1.5 crore for goods (₹75 lakh in Uttarakhand and seven North Eastern states) and ₹50 lakh for services. Limits can be amended, so check the GST portal before you opt in.
For Arjun, whose shop sells within one state, composition could be worth a look if he were to cross ₹40 lakh. For Meera, who bills clients in other states, it would not work, because inter-state supply is barred.
Practical steps for a freelancer or small trader
- Add up your sales for the financial year so far, across every business under your PAN.
- Decide whether you supply only goods, only services or both, and pick the correct limit and state.
- Check whether any compulsory case applies: inter-state goods, e-commerce selling, reverse charge, or agency work.
- Set a reminder when you reach about 80% of the limit, so crossing it does not surprise you.
- If you cross, apply on the GST portal within thirty days and start issuing tax invoices from the date you are liable.
- Keep invoices and bank records organised, because they are the proof of your turnover.
The income-tax side is separate. GST registration does not change how your earnings are taxed, and the presumptive tax rules for freelancers and small businesses have their own limits. Use our income tax calculator to see that side of your numbers.
Key takeaways
- The GST registration threshold is ₹40 lakh for goods only and ₹20 lakh for services or a mix, with lower limits in listed states.
- Selling goods across state lines needs registration whatever the turnover.
- Small inter-state service providers, including freelancers, can stay unregistered within the ₹20 lakh limit (₹10 lakh in four states).
- Apply within thirty days of crossing the limit, and track turnover through the year.
- Voluntary registration and the composition scheme each have costs, so choose them deliberately.
This is general information and not tax advice. For a specific business, check with a qualified tax professional or the GST portal.
