GST registration threshold limits, and the cases where they do not matter

GST registration becomes mandatory when your aggregate turnover crosses the threshold for your state and your type of supply. That is the rule most people have heard. What catches businesses out is the list of situations where the threshold is irrelevant and registration applies from the very first invoice.

The turnover thresholds

Aggregate turnover is computed across all your registrations on the same PAN, all over India, and it includes exempt supplies and exports, not only taxable sales. A business with two branches in two states adds both together to test the limit.

When the threshold does not apply at all

• You supply goods or services across a state line
• You sell through an e-commerce marketplace that collects tax at source
• You are liable to pay tax under reverse charge as the recipient
• You are a casual taxable person, for example running a stall at an exhibition in another state
• You are a non resident taxable person
• You are required to deduct tax at source under GST

The interstate rule is the one that surprises founders. A consultant in Ongole invoicing a client in Bengaluru is making an interstate supply of services.

Voluntary registration

You can register before you cross the limit, and for a business with real purchase costs it is often worth it. Registration is what lets you claim input tax credit on what you buy. It also removes friction with corporate customers, many of whom will not onboard an unregistered vendor.

The trade off is compliance. Once registered you file returns every month or quarter whether or not you had sales, and the late fees run per day.