You must register for GST once aggregate turnover in a financial year exceeds ₹20 lakh for service providers (₹10 lakh in special category states), or ₹40 lakh for businesses supplying only goods in most states. Some businesses must register regardless of turnover, such as inter-state suppliers of goods, casual taxable persons, e-commerce operators and those liable under reverse charge.
The GST registration threshold limit is the turnover above which a business must register for GST. Below it, you can trade without a GSTIN; above it, you must register within 30 days and start charging tax. The limit depends on two things: whether you supply goods, services or both, and which state you operate from.
There is also a list of businesses that must register from the very first rupee of turnover. This guide covers both, with worked examples.
What is the GST registration threshold limit in 2026?
The basic rule is in section 22 of the CGST Act, and a higher limit for goods-only suppliers was notified in 2019 for states that opted in. In summary:
| Type of business | Normal states | Special category states (with lower limits) |
|---|---|---|
| Supplier of services only | ₹20 lakh | ₹10 lakh |
| Supplier of both goods and services | ₹20 lakh | ₹10 lakh |
| Supplier of goods only (states that adopted the higher limit) | ₹40 lakh | ₹20 lakh or ₹10 lakh depending on the state |
Some states chose not to adopt the ₹40 lakh limit for goods, so suppliers there continue with the ₹20 lakh (or lower) limit. The ₹10 lakh limit applies in certain north-eastern and hill states. Before relying on ₹40 lakh, confirm that your state adopted the higher limit and that you meet the conditions — notably, the higher limit is not available to suppliers of ice cream, pan masala and tobacco products, or to businesses that also supply services.
What counts as "aggregate turnover"?
The threshold is tested against aggregate turnover, which is defined broadly:
Included:
- Taxable supplies (including those at 0% or nil rate)
- Exempt supplies
- Exports of goods and services
- Inter-state supplies between distinct persons with the same PAN
- Turnover of all branches and businesses under the same PAN across India
Excluded:
- CGST, SGST, UTGST, IGST and cess
- Value of inward supplies on which you pay tax under reverse charge
- Non-taxable supplies such as alcoholic liquor for human consumption and petroleum products (these are outside GST, though how they interact with the threshold has nuances — check with your adviser if this applies)
Two consequences surprise people. First, exempt sales count: a dealer in fresh vegetables (exempt) who also sells a small volume of taxable goods adds both together. Second, the test is all-India by PAN: branches in different states are added together, even though registration is taken state by state.
Which businesses must register regardless of turnover?
Section 24 of the CGST Act lists categories that need registration even if turnover is below the threshold. The main ones for small businesses are:
- Persons making inter-state taxable supplies of goods.
- Casual taxable persons — for example, an exhibitor from another state at a trade fair.
- Persons required to pay tax under reverse charge.
- Non-resident taxable persons making taxable supplies.
- Persons required to deduct TDS or collect TCS under GST, including e-commerce operators.
- Persons supplying goods or services through an e-commerce operator that is required to collect TCS (with specific relaxations notified for certain small sellers).
- Input Service Distributors.
- Persons supplying online information and database access or retrieval (OIDAR) services from outside India to unregistered persons in India.
A relief applies for services: suppliers making inter-state supplies of services are exempt from compulsory registration as long as their aggregate turnover stays within the threshold. So a freelance developer in Kochi with ₹12 lakh billing to clients across India does not need to register, while a craft seller in Jaipur shipping goods to Delhi does.
Worked examples: do these businesses need to register?
Example 1 — A Pune hardware shop (goods only, Maharashtra). Turnover for 2025-26 reaches ₹36 lakh, all sales within Maharashtra. Maharashtra applies the ₹40 lakh limit for goods-only suppliers, so no registration is required yet. If it crosses ₹40 lakh on 10 February, it must apply by 11 March.
Example 2 — The same shop starts offering paid installation. Installation is a service, so the business now supplies both goods and services. The ₹40 lakh goods-only limit no longer applies; the ₹20 lakh limit does. With ₹36 lakh turnover, registration is required.
Example 3 — A Chennai consultant. Fees of ₹18 lakh, of which ₹7 lakh is from clients in other states. Turnover is under ₹20 lakh and inter-state services are covered by the exemption, so no registration is required.
Example 4 — A Surat textile trader selling to Mumbai. Turnover ₹6 lakh, but one consignment goes to a Mumbai buyer. An inter-state taxable supply of goods requires registration regardless of turnover. (Note that some textiles may be exempt; the compulsory rule bites on taxable supplies.)
Example 5 — A Delhi boutique with a Gurugram branch. Delhi turnover ₹25 lakh, Gurugram ₹20 lakh, goods only. Aggregate turnover is ₹45 lakh across the PAN, which exceeds ₹40 lakh, so registration is required in both Delhi and Haryana.
What happens when you cross the threshold?
- Note the date on which aggregate turnover first exceeded the limit.
- Apply within 30 days in Form REG-01 — see our GST registration process guide.
- Registration takes effect from the date liability arose if you applied in time, or from the grant date if you were late.
- Charge GST on supplies made from the effective date. Between the effective date and the date you receive your GSTIN, you can later issue revised tax invoices for those supplies within the time the law allows.
- Set up invoicing with your GSTIN, state code and correct HSN/SAC codes.
You do not pay GST on turnover earned before you became liable. The threshold is a trigger for registration, not a deduction — once you are registered, GST applies to every taxable supply, not just the amount above ₹20 or ₹40 lakh.
Should you register voluntarily below the threshold?
Voluntary registration is allowed and often makes sense:
Reasons to register voluntarily
- Business customers want a GSTIN on your invoice so they can claim input tax credit.
- You buy significant taxable inputs and want to claim ITC on them.
- Marketplaces, large corporates and government buyers often require a GSTIN.
- You plan to sell goods inter-state soon.
Reasons to wait
- You sell mainly to consumers, who cannot claim ITC, so charging GST simply raises your price.
- Your inputs are mostly exempt or from unregistered suppliers, so there is little credit to claim.
- You want to avoid monthly or quarterly return filing for now.
If you register but your customers are mostly consumers, look at the composition scheme, which keeps tax and compliance light for eligible small businesses.
How do you calculate aggregate turnover month by month?
The safest habit is a running total that you update every month, rather than a one-off check at year-end. A simple method:
- Start on 1 April with a fresh cumulative total for the financial year.
- Add every outward supply under the PAN: taxable sales, exempt sales, nil-rated sales, exports and inter-state branch transfers.
- Exclude GST (if you were already charging it under another registration) and the value of purchases on which you paid tax under reverse charge.
- Compare with the limit that applies to you — ₹20 lakh, ₹40 lakh or the lower special category limit.
- Set an internal alert at around 80% of the limit so that you have time to prepare documents before you actually cross it.
| Month | Taxable sales (₹) | Exempt sales (₹) | Cumulative aggregate turnover (₹) |
|---|---|---|---|
| April–June | 4,20,000 | 60,000 | 4,80,000 |
| July–September | 5,10,000 | 75,000 | 10,65,000 |
| October–December | 6,40,000 | 90,000 | 17,95,000 |
| January | 2,30,000 | 30,000 | 20,55,000 |
In this illustration a service business crosses ₹20 lakh during January. Note that ₹2,55,000 of the cumulative figure is exempt turnover — without it, the business would have wrongly concluded it was still under the limit.
What are the consequences of not registering on time?
A business that should have registered but did not is treated as liable for tax on its taxable supplies from the date liability arose. In practice this means:
- Tax is payable on those supplies even though no GST was collected from customers, so it usually comes out of your margin.
- Interest runs on the unpaid tax from the date it was due.
- Penalties can be imposed under the CGST Act for failing to register and for not paying tax.
- Customers lose credit, because they could not receive valid tax invoices for that period, which damages B2B relationships.
Because the cost lands on the business, registering slightly early is almost always cheaper than registering late.
Common mistakes with the threshold limit
- Using ₹40 lakh when you also supply services. Even small service income (repairs, delivery charges billed separately, installation) can pull you down to the ₹20 lakh limit.
- Ignoring exempt turnover. It counts towards aggregate turnover.
- Testing each branch separately. The test is on the whole PAN.
- Assuming the threshold applies to inter-state goods. It does not; registration is needed from the first inter-state taxable sale of goods.
- Waiting for year-end. The 30-day clock starts the day you cross the limit, not on 31 March.
- Thinking GST is only due on turnover above the limit. After registration, every taxable supply is taxed.
How to keep track of turnover
A simple monthly check of cumulative sales against the limit prevents late registration. Billing software that totals sales by PAN across locations and separates taxable, exempt and nil-rated turnover makes this easy. Billing Software by Betterwork provides these reports and, once you register, applies tax automatically to every invoice. To estimate tax on a price, use the GST calculator.
Key takeaways
- Services (or goods plus services): ₹20 lakh threshold, ₹10 lakh in certain special category states.
- Goods only: ₹40 lakh in states that adopted the higher limit, with exclusions for ice cream, pan masala and tobacco.
- Aggregate turnover is all-India by PAN and includes exempt supplies and exports.
- Inter-state taxable supply of goods, e-commerce selling, casual trading and reverse charge liability can require registration regardless of turnover.
- Apply within 30 days of crossing the limit so registration is effective from that date.
This guide is general information, not tax advice. Rules last checked on 20 October 2026; confirm with your tax professional for your situation.