GST Registration Threshold in 2026: ₹20L vs ₹40L vs ₹10L — Which Limit Applies to Your Business
Three GST thresholds, multiple special-category states, and a PAN-level aggregation rule that trips up everyone who treats their states as separate businesses. Here is which limit applies to you and when Section 24 overrides all thresholds.
Harun Raaj
Chartered Accountant · Harun Raaj & Associates
Three different thresholds. Multiple special category states. One PAN-level aggregation rule that trips up everyone who treats their states as separate businesses. And a set of mandatory registration situations that apply regardless of any threshold. If you are operating a business in India in 2026 and not sure whether you need to register for GST, this is the authoritative guide.
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The Legal Foundation: Section 22 of the CGST Act
Section 22 of the Central Goods and Services Tax Act, 2017 is the starting point. It provides that a person is liable to register for GST when their aggregate turnover in a financial year exceeds the prescribed threshold. The Central Government, on the recommendation of the GST Council, prescribes the threshold through notifications.
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The Three Thresholds: Which Applies to You
₹40 Lakh — Goods Suppliers in Normal States
With effect from 1 April 2019 (via Notification No. 10/2019-CT), the threshold for suppliers of goods was raised to ₹40 lakh in the Normal States.
This ₹40 lakh limit applies to you if:
- You supply goods (manufacturing, trading, e-commerce of physical products)
- You are located in a normal state (Delhi, Maharashtra, Karnataka, Tamil Nadu, Gujarat, Rajasthan, UP, West Bengal, etc.)
- Your aggregate turnover (all supplies across all your businesses under the same PAN) does not exceed ₹40 lakh in the FY
₹20 Lakh — Services Suppliers and Mixed Suppliers in Normal States
If you supply services (or a mix of goods and services where the principal supply is services), the threshold remains ₹20 lakh in Normal States.
This also applies to:
- Suppliers located in Manipur, Mizoram, Nagaland, and Tripura — for all suppliers (goods or services), the limit is ₹20 lakh in these four states
₹10 Lakh — Special Category States for Services
The following states have a threshold of ₹10 lakh for service suppliers:
- Arunachal Pradesh, Meghalaya, Puducherry, Sikkim, Telangana, Uttarakhand
Goods suppliers in these states have the ₹20 lakh threshold.
State-wise threshold table:
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"Aggregate Turnover" — The Definition That Changes Everything
Most businesses get this wrong. Aggregate turnover under Section 2(6) means the total value of:
- All taxable supplies (goods and services)
- All exempt supplies (fresh vegetables, milk, educational services below threshold)
- All exports (zero-rated, not nil-rated)
- All inter-state supplies of the same person across all business verticals
Computed on a PAN-level basis — meaning if you run a textile business in Mumbai and a consulting practice in Bengaluru under the same PAN, both businesses' turnover is counted together for the threshold.
What is NOT included in aggregate turnover:
- Inward supplies on which you pay tax under reverse charge (Section 9(3)/(4))
- Taxes (CGST, SGST, IGST, cess) themselves
The exempt supply trap: A common mistake is to count only taxable turnover. If you also sell agricultural produce (exempt), the exempt turnover must be added. Combined, you may be well above the threshold.
The multi-state PAN trap: If you have outlets in three states and each outlet has ₹15L in goods turnover, your aggregate turnover is ₹45L — above the ₹40L threshold. You are liable to register in each state where you have a fixed place of business.
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GSTIN Per State: Threshold Is PAN-Level, Registration Is State-Level
The aggregate turnover threshold is assessed at the PAN level (all businesses, all states together). But once you cross the threshold, you must obtain a separate GSTIN for each state where you have a place of business.
Each state's GSTIN is a distinct registration. You file separate GSTR-1 and GSTR-3B for each GSTIN.
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Compulsory Registration Under Section 24: No Threshold Applies
Section 24 of the CGST Act lists categories of persons who must register for GST regardless of turnover. If you fall in any of these, there is no ₹40L, ₹20L, or ₹10L protection:
- Inter-state taxable supply: If you supply goods or services across state borders and the supply is taxable, you must register. Even ₹1 of inter-state taxable supply triggers mandatory registration.
- E-commerce operators under Section 52: Platforms like Amazon, Flipkart, Swiggy, Zomato must register in every state of operation.
- Persons supplying through e-commerce platforms: Suppliers who sell on such platforms are required to register regardless of turnover.
- Persons liable to deduct TDS under Section 51: Government entities, government companies, local authorities, PSUs.
- Non-resident taxable persons: A foreign person who makes taxable supplies in India must register.
- Casual taxable persons: If you travel to a state where you have no fixed business place and make taxable supplies there (e.g., an exhibitor at a trade fair), you must register as a casual taxable person in that state.
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Voluntary Registration: Why You Might Want to Register Below Threshold
You can register for GST voluntarily even if your turnover is below the threshold. Benefits:
- Input tax credit from Day 1: You recover the GST you paid on purchases, raw materials, and services
- Supplier qualification: Many B2B buyers only deal with GST-registered vendors
- Export refunds: Zero-rated exports allow you to claim refund of ITC — only possible with registration
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Composition Scheme: Simplified Compliance for Small Businesses
If you are eligible and registered, you can opt for the Composition Scheme under Section 10:
- Goods suppliers: Turnover ≤ ₹1.5 crore (₹75 lakh for special category states)
- Service suppliers (under Notification 2/2019-CT): Turnover ≤ ₹50 lakh, pay 6% (3% CGST + 3% SGST)
- Restaurant services: Flat 5% (2.5% CGST + 2.5% SGST), no ITC
Composition dealers cannot: collect GST from customers, claim ITC, or make inter-state supplies.
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FAQ
Q: I supply both goods and services. Which threshold applies to me?
In practice, the ₹20 lakh threshold for services is the safer number to use if you provide a significant component of services.
Q: I export software services from Bengaluru. My turnover is ₹30L. Do I need to register?
Yes. Export of services is treated as inter-state supply under Section 7(5)(a) of the IGST Act. Inter-state suppliers must register under Section 24 regardless of turnover.
Q: I have a small shop in Telangana and only sell goods. What's my threshold?
Telangana is a special category state. For goods suppliers, the threshold is ₹20 lakh (not ₹40L).
Q: My business has been running for 6 months and my actual turnover is ₹18L. When do I need to register?
The threshold under Section 22 is based on aggregate turnover in a financial year. You must apply for registration within 30 days of crossing the threshold in the actual FY.
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Start Right, Stay Compliant
For a registration eligibility check or to handle your GST registration, composition scheme election, or voluntary registration, reach out at harunraaj.com/contact.
Harun Raaj & Associates | NRI Tax Specialists
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