The GST registration threshold isn't one number

Every accountant's WhatsApp forward says the GST registration limit is ₹40 lakh. It is a real number. It is also the answer to a narrower question than the one most owners are asking, and quoting it back to yourself is how businesses end up registering a year late — or registering a year early and inheriting a filing calendar they did not need.

Here is the whole shape of it.

Four thresholds, not one

Which limit applies to you depends on what you sell and where you are:

• Goods, ordinary states: ₹40 lakh
• Services, ordinary states: ₹20 lakh
• Goods, special category states: ₹20 lakh
• Services, special category states: ₹10 lakh

The special category list covers most of the north-eastern states along with a few others, and some states that were entitled to the lower limit chose the higher one. This is the first place the WhatsApp forward breaks: a service business in a metro crosses its limit at half the number it thinks it has.

If you sell both goods and services, the mixed case does not get you the higher figure by default. Assume the stricter reading until someone has looked at your actual mix.

"Aggregate turnover" is bigger than your sales figure

The threshold is measured against aggregate turnover, and that term is wider than what you would put in a sales report. It is computed all-India, across every GSTIN on the same PAN, and it includes exempt supplies and exports, not just taxable sales.

So two things surprise people:

1. A second business or branch under the same PAN counts toward the same limit.
2. Income you think of as outside GST — exempt supplies, for instance — still counts when testing whether you crossed the line.

When turnover stops mattering entirely

Several situations require registration from the first rupee, whatever your turnover:

• Inter-state supply of goods. Ship a taxable product to the next state and the threshold is behind you.
• Selling through an e-commerce operator, in most cases, and running one always.
• Liability under reverse charge on certain inward supplies.
• Casual taxable person — an exhibition stall or a seasonal counter in a state where you have no fixed place of business.
• Non-resident taxable persons, and anyone required to deduct or collect tax under GST.

This is the part that catches the smallest businesses, because it catches growth: a ₹12 lakh home-manufacturing unit that starts shipping outside its state has a registration obligation that a ₹35 lakh purely local shop does not.

The composition scheme, and its real cost

If you are under ₹1.5 crore of turnover in goods (lower in some states), the composition scheme lets you pay a flat percentage of turnover with a quarterly payment and one annual return, instead of the ordinary monthly cycle. There is a separate, much smaller scheme for service providers.

It is genuinely simpler. It costs you two things, and both matter more than the admin saving for some businesses:

• No input tax credit. Every rupee of GST on your purchases is now a cost.
• You cannot pass on credit to your buyers. For a B2B business, this is close to disqualifying — your customers lose credit by buying from you, so you are quietly more expensive than a registered competitor at the same price.

Composition suits businesses selling to end consumers with low input tax. It rarely suits anyone selling to companies.

When registering early is the right call

Voluntary registration below the threshold is legal, and sometimes correct:

• Your customers are registered businesses who need the credit.
• Your inputs carry meaningful GST that you would otherwise absorb.
• You sell on marketplaces, or intend to within the year.
• You need it for a tender, a distributor agreement, or a lender who wants filed returns.

The cost is real: returns every month or quarter forever after, late fees that accrue on nil returns too, and cancellation that is far more work than registration was.

The question is never "have I crossed ₹40 lakh". It is "which of the four limits applies to me, is any compulsory-registration case switched on, and would credit make me cheaper or dearer to my actual customers".

Thresholds and slabs are the most-amended part of Indian tax law. Confirm anything you are about to act on at gst.gov.in, or have Vyavsay AI check it against your state, sector and turnover.

The figures above were current when this was written. Rates, limits and the composition ceilings have all moved before and will move again — this is background, not advice on your specific filing position.