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Guide · GST

GST Registration Threshold — ₹40 Lakh or ₹20 Lakh?

The turnover limit that triggers mandatory GST registration for goods and services, the special-category-state limits, and the cases where you must register regardless of turnover.

Written by
TaxClue Editorial Desk
Updated
18 August 2026
Reading time
4 min
Questions
14 answered
  • Updated August 2026
  • GST Expert Reviewed
  • Goods, Services & Freelancers
Quick Answer

GST registration becomes mandatory once your aggregate turnover crosses ₹40 lakh for a supplier of goods or ₹20 lakh for a supplier of services in most states. In special-category states the limits fall to ₹20 lakh (goods) and ₹10 lakh (services). Separately, some businesses — inter-state suppliers, e-commerce sellers, casual and non-resident persons, and those under Reverse Charge — must register from the first rupee, regardless of turnover.

At a glance

GST Registration Threshold by State & Supply Type

The turnover limit depends on whether you supply goods, services or both, and on the state category. See the current registration limits below.

Supplier typeNormal statesSpecial-category states
Goods — manufacturer / trader₹40 lakh₹20 lakh
Services — all service providers₹20 lakh₹10 lakh
Goods + services (mixed supply)₹20 lakh₹10 lakh
Composition — goods / manufacturer₹1.5 crore₹75 lakh
Composition — service provider₹50 lakh₹50 lakh

Special-category states: Manipur, Mizoram, Nagaland, Tripura (₹10L for goods too), plus Arunachal Pradesh, Meghalaya, Sikkim, Uttarakhand, Puducherry & Telangana for the ₹20L goods / ₹10L services limits. Thresholds were not changed by the GST 2.0 rate rationalisation (eff 22 Sep 2025).

Mixed supply falls to the lower limit

If you supply both goods and services, the lower ₹20 lakh (services) threshold applies — you do not get the ₹40 lakh goods limit. A trader who also earns any service income (commission, freight, installation) is therefore assessed against ₹20 lakh, not ₹40 lakh.

Not sure which threshold applies to your business?

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Section 24 CGST Act

When Registration Is Mandatory — Regardless of Turnover

The ₹40L / ₹20L limits are only one route to registration. Under Section 24 of the CGST Act, several categories must register from their very first supply, even with zero turnover:

CategoryWhy mandatoryReference
Inter-state supplier of goodsAny supply crossing a state line needs registrationSection 24(i)
E-commerce sellers & operatorsNo listing / TCS handling without a GSTINSection 24(ix)
Casual taxable personTemporary business in a state you are not resident inSection 24(ii)
Non-resident taxable personForeign entity making taxable supplies in IndiaSection 24(iii)
Reverse-charge (RCM) payersAnyone liable to pay GST under RCMSection 24(iii)
Input Service Distributor (ISD)Distributing ITC to branches needs ISD registrationSection 24(vii)
TDS deductorsGovt / PSU deducting 2% TDS on eligible contractsSection 24(vi)
OIDAR providersOverseas digital services to unregistered persons in IndiaSection 14, IGST Act

Inter-state supply of services is exempt below ₹20L (2019 amendment); the from-rupee-one rule mainly bites inter-state goods.

  • Cross the turnover limit in a financial year
  • Sell on Amazon / Flipkart / Meesho
  • Supply goods to another state
  • Pay GST under Reverse Charge
  • Act as a casual / non-resident supplier
  • Want ITC or B2B credibility (voluntary)

Selling online or across states? Get registered the right way.

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How the limit is measured

What Counts as "Aggregate Turnover"?

The threshold is tested on aggregate turnover — an all-India, PAN-level figure, not a per-state or per-branch number. It is wider than most people expect.

  • Includes — taxable supplies, exempt supplies, exports and inter-state supplies, computed on the same PAN across every state.
  • Excludes — GST itself (CGST/SGST/IGST/cess) and the value of inward supplies taxed under Reverse Charge.
  • Once any registration point under the PAN crosses the limit, GST registration is triggered for that business.
TaxClue Insight — exempt income still counts

Aggregate turnover includes exempt and export income. A freelancer with ₹15L taxable fees plus ₹6L of exempt receipts has crossed ₹20L and must register — a trap that catches many small service providers and exporters.

Use our GST calculator to check tax on invoices, and see GST return filing for what happens after you register.

Small-taxpayer option

Composition Scheme & Voluntary Registration

Above the registration limit but still small? The composition scheme lets you pay a flat rate on turnover up to ₹1.5 crore (goods) or ₹50 lakh (services), with quarterly CMP-08 and annual GSTR-4 instead of monthly returns.

Below

Below the threshold — optional

  • Registration not mandatory
  • Can register voluntarily to claim ITC
  • Useful for B2B / exporter credibility
  • No returns unless you opt in
Above

Above the threshold — mandatory

  • Must register within 30 days
  • File GSTR-1 & GSTR-3B (or QRMP)
  • Charge GST & issue tax invoices
  • Can pick composition if eligible

Voluntary registration below the limit is common for freelancers and exporters who want to claim input tax credit on software, rent and equipment, or to bill GST-registered clients cleanly.

Sources
  1. Thresholds & notifications: gst.gov.in
  2. CBIC: cbic-gst.gov.in
  3. ₹40L goods threshold: Notification 10/2019-CT (eff. 1 Apr 2019)
  4. Mandatory categories: Section 24, CGST Act 2017

Disclaimer: This guide is general information based on the law and notifications in force when it was last updated. It is not professional advice for your case — rates, thresholds and due dates change, so check the current position or speak to our CA team before you act on it.

People also ask

Questions, answered

Short, direct answers to the 14 questions readers ask most on this topic.

GST registration is mandatory once aggregate turnover crosses ₹40 lakh for a supplier of goods or ₹20 lakh for a supplier of services in most states. In special-category states the limits are ₹20 lakh for goods and ₹10 lakh for services. These thresholds were not changed by the GST 2.0 rate rationalisation effective 22 September 2025.

It depends on what you supply. Suppliers of goods get the higher ₹40 lakh limit (in most states); suppliers of services get ₹20 lakh. If you supply both goods and services, the lower ₹20 lakh service threshold applies. In special-category states the limits drop to ₹20 lakh (goods) and ₹10 lakh (services).

₹20 lakh of aggregate turnover a year in most states, and ₹10 lakh in special-category states. This ₹20 lakh limit applies to all service providers — consultants, lawyers, architects, IT professionals, designers, tutors and freelancers. It is measured on aggregate turnover across the same PAN, including exempt and export income.

₹40 lakh of aggregate turnover a year in most states for an exclusive supplier of goods. In Manipur, Mizoram, Nagaland and Tripura the goods threshold is ₹20 lakh. If a goods supplier also earns any service income, the lower ₹20 lakh service limit applies to the whole business.

For GST thresholds the special-category states include Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Uttarakhand, Puducherry and Telangana. Services are subject to a ₹10 lakh limit in these states; goods generally get ₹20 lakh, except Manipur, Mizoram, Nagaland and Tripura where goods are also ₹10 lakh.

Under Section 24 of the CGST Act, registration is compulsory from the first supply for: inter-state suppliers of goods, e-commerce operators and sellers, casual taxable persons, non-resident taxable persons, persons paying GST under Reverse Charge, Input Service Distributors, TDS deductors under Section 51, and OIDAR service providers supplying to unregistered persons in India — irrespective of turnover.

Yes. Sellers on marketplaces like Amazon, Flipkart, Meesho or Myntra must register for GST regardless of turnover under Section 24(ix). The ₹40L / ₹20L threshold does not apply. The platform collects TCS at 1% on your sales, which you can only offset if you hold a GSTIN.

Inter-state suppliers of goods must register regardless of turnover under Section 24(i). Inter-state suppliers of services, however, are exempt below the ₹20 lakh threshold following a 2019 amendment, so a small service provider selling across states does not have to register until it crosses ₹20 lakh.

If your total freelance receipts stay below ₹20 lakh a year and all clients are in India, GST registration is not mandatory. Above ₹20 lakh it becomes compulsory. Many freelancers who export services register voluntarily so they can claim ITC refunds on business expenses, even though exports are zero-rated.

Aggregate turnover is the all-India, PAN-level total of taxable supplies, exempt supplies, exports and inter-state supplies, excluding GST itself and inward supplies taxed under Reverse Charge. Registration is triggered when this figure crosses the applicable threshold — it is not measured per state or per branch.

Voluntary registration can help if you want to claim input tax credit on business purchases, bill GST-registered B2B clients cleanly, or claim ITC refunds on exports. The trade-off is ongoing compliance — once registered you must charge GST and file GSTR-1 and GSTR-3B (or QRMP) even if you are below the threshold.

The composition scheme is available up to ₹1.5 crore aggregate turnover for goods suppliers and manufacturers (₹75 lakh in special-category states) and ₹50 lakh for service providers. Composition taxpayers pay a flat rate — 1% for traders, 2% for manufacturers, 5% for restaurants, 6% for other services — cannot claim ITC or charge GST on the bill, and file quarterly CMP-08 with annual GSTR-4.

You must apply for GST registration within 30 days of becoming liable. After registration you charge GST on your invoices, file GSTR-1 and GSTR-3B (monthly, or quarterly under QRMP), and can claim input tax credit. If eligible, you may instead opt for the composition scheme for simpler quarterly compliance.

No. The GST 2.0 rationalisation effective 22 September 2025 restructured tax rates into a two-slab 5% / 18% system (with a 40% demerit rate) but did not change registration thresholds. The ₹40 lakh goods, ₹20 lakh services and ₹10 lakh special-category limits, and the composition caps, all continue unchanged.