## [GST Registration](https://www.harunraaj.com/services/gst-registration): The Basics

Goods and Services Tax (GST) registration is governed by **Section 22 and Section 24 of the Central Goods and Services Tax Act, 2017**. The obligation arises when your **aggregate annual turnover** crosses the prescribed threshold — or when you fall into a mandatory registration category.

## Turnover Thresholds for Mandatory Registration

| Business Type | Normal States | Special Category States |
|---|---|---|
| Goods suppliers | ₹40 lakh | ₹20 lakh |
| Service providers | ₹20 lakh | ₹10 lakh |
| Both goods and services | ₹20 lakh | ₹10 lakh |

**Special category states** (for the ₹10L/₹20L threshold): Manipur, Mizoram, Nagaland, Tripura, Meghalaya, Sikkim, Arunachal Pradesh, Uttarakhand, Himachal Pradesh.

**Aggregate annual turnover** includes all taxable supplies, exempt supplies, exports, and inter-state supplies — across all business verticals of the same PAN in India. But it **excludes**: GST itself, inward supplies taxed under reverse charge, value of non-taxable supplies.

## Mandatory Registration Regardless of Turnover (Section 24)

These businesses must register even with ₹1 of turnover:
- **Inter-state suppliers** of goods or services
- **E-commerce operators** and sellers on e-commerce platforms
- **Input Service Distributors**
- Persons liable under **reverse charge mechanism**
- **Casual taxable persons** (temporary supplies in a state where not resident)
- **Non-resident taxable persons**
- Persons required to deduct **TDS under GST** (Section 51)

## When Does the Threshold Clock Start?

The obligation to register arises when the **aggregate turnover exceeds the threshold** during a financial year. You must apply for registration **within 30 days** of becoming liable (Rule 8, CGST Rules). Registration is effective from the date of liability, not the date of application.

**Example**: If your goods business in Maharashtra crosses ₹40 lakh on 15 October, you must apply by 14 November. Your GST registration will be effective from 15 October.

## Voluntary Registration Under Section 25(3)

Any person below the threshold can **voluntarily register**. Advantages:
- Claim Input Tax Credit (ITC) on business purchases
- Supply to GST-registered customers without them facing reverse charge complications
- Build business credibility

Once voluntarily registered, you must comply with all GST obligations — there is no special dispensation.

## Composition Scheme: Low-Compliance Option

Under **Section 10 of the CGST Act**, small businesses (turnover ≤ ₹1.5 crore) can opt for the Composition Scheme:
- Pay GST at 1% (manufacturing), 2.5% (restaurants), or 6% (services) on turnover
- No input tax credit
- Quarterly return (CMP-08) and annual return (GSTR-4)
- Cannot make inter-state supplies or supply to non-GST registered buyers with ITC requirement

## Penalty for Not Registering

**Section 122(1)(xi)** of the CGST Act: A penalty of **10% of tax due or ₹10,000** (whichever is higher) for failure to register. If the non-registration is accompanied by tax evasion, the penalty can go up to **100% of tax evaded**.

**Additionally**: Supplies made without registration are treated as non-compliant, and customers cannot claim ITC on such supplies — which may damage business relationships.

## Cancellation of GST Registration

Voluntary cancellation is possible if:
- Turnover falls below threshold consistently
- Business is discontinued
- Transferred/merged as going concern

Cancellation is done via Form GST REG-16. Pending returns must be filed and pending tax paid before approval.

*Our team handles GST registration end-to-end — from threshold analysis to GSTIN in 7 working days. [Register for GST →](https://app.harunraaj.com)*

## Frequently Asked Questions

### What is the GST registration threshold for service providers?

Service providers must register for GST when aggregate annual turnover exceeds ₹20 lakh in normal states, or ₹10 lakh in special category states (Manipur, Mizoram, Nagaland, Tripura, Meghalaya, Sikkim, Arunachal Pradesh, Uttarakhand, Himachal Pradesh), under Section 22 of the CGST Act, 2017.

### Do I need GST registration for inter-state sales even below the threshold?

Yes. Under Section 24 of the CGST Act, inter-state suppliers of goods or services must register regardless of turnover — even with ₹1 of inter-state supply. This is one of the mandatory registration categories that overrides the threshold exemption.

### What is the penalty for not registering for GST when required?

Operating without GST registration when liable attracts a penalty of 100% of the tax due or ₹10,000, whichever is higher, under Section 122 of the CGST Act. Additionally, all input tax credit on purchases during the unregistered period is lost.

### How many days do I have to apply for GST registration after crossing the threshold?

You must apply for GST registration within 30 days of becoming liable (Rule 8, CGST Rules). The registration is effective from the date your turnover crossed the threshold, not the date of application. Supplies made between the liability date and registration date are still taxable.

### Can I voluntarily register for GST below the threshold limit?

Yes. Section 25(3) of the CGST Act allows voluntary registration even if turnover is below the threshold. This is beneficial for businesses that want to claim input tax credit on purchases or deal with registered clients who need GST invoices for their own credit claims.

I'm CA Harun Raaj, Visakhapatnam. If any of this affects you or your business, reach out — I'd be glad to help.

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## See Also

- [GST Registration in India — Complete Process, Documents & Timeline (2026)](https://www.harunraaj.com/blog/gst-registration-india-complete-guide)
- [RoDTEP Rate Chart 2025-26 for Indian Exporters — Scheme Guide, Eligible Categories & How to Claim](https://www.harunraaj.com/blog/rodtep-rate-chart-exporters-india-2025-26)
- [GSTR-9 Annual Return — Complete Filing Guide for FY 2025-26](https://www.harunraaj.com/blog/gstr-9-annual-return-filing-guide)

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