What Is the Latest GST Registration Limit? | An Informative Guide

India levies an indirect tax on the supply of certain goods and services known as the Goods and Services Tax (GST). The Goods and Services Tax Act replaced the Value Added Tax (VAT), service tax, purchase tax, excise duty, and prior indirect taxes in 2017. 

Registration is necessary for identifying taxpayers and guaranteeing tax compliance in the economy under any tax system. Any business organisation that registers under the GST Law must get a unique identification number from the relevant tax authorities to collect taxes on behalf of the government and claim input tax credits for the taxes paid on its inward supply. 

You must file a separate GST application if your yearly turnover exceeds Rs. 40 lakhs. A GST number is also required if you run an online company. This blog describes the GST registration threshold limit since it has been raised to Rs. 40 lakhs for the standard category and Rs. 20 lakhs for the special category.

Overview of the Latest GST Registration Limit

The old GST registration limit and the new GST registration limit are shown below in tabulated format.

Earlier Limits: For the sale of Goods/Providing Services

New Limits: For Sale of Goods

States That Opted for the New GST Registration Limit

The states had the choice of choosing the new GST registration limits or keeping the old ones (status quo).

Note:

• J&K and Assam, two hilly states, have also increased the cap to Rs. 40 lakhs. Due to their inclusion in the Special Category States, these two states can continue operating under reduced threshold restrictions. These two states chose to impose a higher threshold limit of Rs. 20 lakhs even though they previously had the choice to impose GST solely on aggregate turnover exceeding Rs. 10 lakhs.
• To compensate for the natural disasters the state experienced last year, Kerala may now impose a “calamity cess” of up to 1% on all intra-state sales of goods and services.

Who Needs To Compulsory Register Under GST?

To determine if new threshold restrictions are applicable, the total turnover for the most recent fiscal year is considered (in the example above, this would be FY 2019�2020). Any seller whose total turnover for the current fiscal year exceeds the threshold requirements must register for GST.

According to Section 24 of the CGST Act, some individuals must register for GST even if their total annual turnover exceeds the registration limit. The following is a list of those who must register for GST under this section:

• All the electronic commerce operators.
• Individuals who, either as agents or otherwise, make a taxable supply of goods or services on behalf of other taxable individuals. 
• Individuals whom the government notifies on the recommendations of the Council. 
• Individuals or businesses that are involved in the interstate taxable supply
• Individuals providing goods or services other than supplies, as specified under Section 9 Subsection (5). Such supplies are made via an electronic commerce operator, who is required under Section 52 to collect tax at the source.
• Individuals who should pay TDS (Tax Deducted at Source) by Section 51
• Individuals who are required to pay tax under Casual taxable. 
• Individuals who are required to pay tax under reverse charge. 
• Individuals who are required to pay tax under sub-section (5) of section 9. 
• Individuals who provide database access or retrieval services from one location to another outside India. Such services are given to a person who is not registered in India. 
• Input Service Distributor who is separately registered under the Act or not
• Non-resident taxable Individuals. 

Changes in the Threshold Limits for the Composition Scheme

Some of the changes in the threshold limits for the composition scheme are:

• Amendments to the composition scheme: As of 1st April 2019, the composition scheme’s yearly turnover criteria were raised to Rs. 1.5 crore. Beginning on 1st April 2019, those enrolled in the scheme must pay their taxes quarterly and submit yearly returns. The cap for the North Eastern states and Uttarakhand is Rs. 75 lakhs. Restaurants are included in the restriction (not serving alcoholic beverages).
• Service providers were added under the composition scheme: A 6% fixed tax rate with 3% CGST and 3% SGST is now available under the new plan. This scheme is open to independent service providers and mixed suppliers of goods and services with a prior fiscal year’s yearly turnover of up to Rs. 50 lakhs.

FAQs on GST Registration Limit

Still confused about the GST registration limit? Below are some frequently asked questions about GST registration.

What is the GST registration limit? Is it 20 lakhs or 40 lakhs?
Previously, the GST registration limit was INR 20 lakh. Now it has changed to 40 lakh. This means all businesses with a turnover of more than INR 40 lakhs are required to get the GST registration. This change has proved to be helpful for small businesses, as it will reduce their burden to register for GST.

Is GST required below INR 40 lakh?
Usually, it is not required to obtain GST registration for businesses below the turnover of INR 40 lakhs. But in some special cases, it is required. It mainly depends on the state in which you are running your business.

What is the GST exemption limit?
The GST exemption limit is the annual turnover limit above which you will need to obtain GST registration for your business. Previously, the limit was 20 lakhs, but now it has changed to 40 lakhs.

What is called the turnover of GST?
Turnover is the total income of your business. It is not the profit your business is making, but the total income of your business.

What is the GST limit for sole proprietorships?
The GST limit for sole proprietorships is also 40 lakhs.

What is the timeline for applying for GST registration?
1. Each individual who is required to register under Sections 22 or 24 must apply within 30 days of the date they become required to register.
2. A casual or non-resident taxpayer must submit an application for registration at least five days before the start of business.
3. Anyone who makes a supply from Indian territorial waters must register in the coastal State or Union territory where the closest point of the relevant baseline lies.

What is the procedure for calculating a GST tax amount?
To calculate GST, multiply the income tax amount by the GST rate. The CGST amounts are equivalent to half of the total GST cost if you use CGST and SGST.�

Does a salaried person qualify to apply under the GST turnover threshold?
You cannot claim ITC as a paid professional until you are a dealer. The GST credit will be applied to the production tax owed if the salaried person also owns a company.

What is the new GST registration limit?
According to the most recent revisions to the GST registration restriction in India, the registration threshold limit for GST has been raised to Rs. 40 lakhs. If a company’s annual revenue exceeds Rs. 40 lakhs, it must register for GST. The prior cap was set at Rs. 20 lakh. The government’s decision to raise the registration cap is positive since it will make compliance easier for small firms. Additionally, it is anticipated to increase tax receipts and economic activity.

Is the taxable supply made by the employee on behalf of his principal taken into account when calculating the GST registration threshold?
According to the second explanation of Section 22, the value of any taxable supplies made by a registered job worker on behalf of his principal is not included in the registered job worker’s overall turnover.

Future Impacts Prediction of GST registration limit

The most recent registration limit is often advantageous to both companies and consumers. Businesses will be encouraged to participate in the formal economy since it will lessen their compliance burden. Additionally, it motivates more companies to join the official economy and begin paying taxes. As a result, the government will earn more money and the economy will grow.

The registration limit is probably going to affect inflation as well. There will be better compliance and less tax evasion as more enterprises register under the GST. Because firms can pass the savings from reduced taxes on to customers, prices will be kept down.

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