GST Threshold Limit For Registration.

GST Registration can be done either on a voluntary basis or on Mandatory basis. for Mandatory Registration of GST, There are certain criteria has been notified by GSTIN. Once a Provider of service or Seller of Goods crosses such threshold criteria. They need to be mandatorily registered with GST Department and take GST Registration No. by filing online Registration for GST. Let’s understand these criteria and threshold which make online GST registration mandatory.

GST threshold limit

The indirect tax imposed in India on Goods and Services is known as “Goods and Services Tax”. Generally, it is called by its abbreviation i.e GST. This tax is a comprehensive type and multistage destination-based tax. This tax scheme is accepted across all over India and has been proven better until today. This tax has replaced many of the previous indirect taxes levied before.

As the GST Council held the 32nd council meeting on 10th January 2019, few changes in GST Threshold Limit for Online GST Registration were introduced in it. These changes are crucial and one must know them. However, these changes are optional and it’s upon the states to opt for them or just continue with old threshold Limit for GST Registration.

The GST Council has increased the threshold limits for GST registration on considering the demands raised by MSME. This has helped to ease out the compliance under GST. The states have the right to choose between opting for a higher limit or continue with the current existing limits. In this article we are going to explain the earlier threshold limits, new limits, their effective date of applicability and to whom does it apply with what criteria.

Overview of the earlier GST turnover limit and new GST limit and the applicability date:

Aggregate Turnover Registration Required Applicability
Previous Limits – For the sale of Goods/Providing Services
More than Rs.20 lakh Yes For the Normal Category States Up to 31st March 2019
More than Rs.10 lakh Yes For the Special Category States Up to 31st March 2019
New Limits For Sale of Goods
Above Rs.40 lakh Yes For the Normal Category States From 1st April 2019
Above Rs.20 lakh Yes For the Special Category States From 1st April 2019
New updated Limits For Providing Services
Threshold limits for Service Providers hadn’t been changed.

States who had opted for the new GST limit for Registration:

The above-mentioned changes were proposed in the 32nd GST Council Meeting held on 10th January 2019 with an option provided to the states to opt-out or choose between the new limits or continue the earlier ones (status quo).

The normal Category States which had opted for a new limit of Rs.40 lakh The normal Category States who had to choose the status quo The Special Category States who chose for the new limit of Rs.20 lakh
Chhattisgarh, Jharkhand, Delhi, Bihar, Maharashtra, Andhra Pradesh, Gujarat, Haryana, Goa, Punjab, Uttar Pradesh, J&K, Assam, Himachal Pradesh, Karnataka, Madhya Pradesh, Odisha, Rajasthan, Tamil Nadu, West Bengal Kerala and Telangana Puducherry, Meghalaya, Mizoram, Tripura, Manipur, Sikkim, Nagaland, Arunachal Pradesh, Uttarakhand

Important things to notice:

  1. There are two states who have opted to remain under the lower threshold GST limits as they are categorized under the Special Category Status. These two hilly states are J&K and Assam. These states have also opted to raise the limit to Rs.40 lakh. Even before when these two states had the choice to charge GST on the aggregate turnover exceeding Rs.10 lacs, they had chosen for a higher threshold GST limit of Rs.20 lakh.
  2.  To cope up with natural calamities faced by the state last year the state of Kerala can charge ‘calamity cess’ up to 1% on all intra-state supply of goods and services. This would help the state to get stability in the economy.

Financial Year to reckon the aggregate turnover:

For the financial year 2019-2020, the aggregate turnover is considered for applicability of new threshold limits. Every supplier whose aggregate turnover in the financial year 2019-2020 has exceeded the new threshold limits are supposed to get registered under GST schemes.

However, the below-given category of persons is by default, required to compulsorily get registered under GST. i.e. They should register as the threshold for GST Registration doesn’t apply to them:

  • Interstate suppliers
  • Casual Taxable persons
  • Persons who are taxable under the reverse charge basis
  • Non-resident taxable persons
  • Persons required to deduct TDS under GST
  • Persons required to deduct TCS under GST
  • Input Service Distributors
  • Persons as agents or principal who are making a sale on behalf of someone else.
  • All of the E-commerce Operators who sells or provides a platform for suppliers to make supply through their platform.
  • Suppliers are liable to collect tax at source if supplies the goods through E-COMMERCE operators and their portals.
  • If Online Service Providers provides service from outside India to a non-registered person in India, then he has to get registered under GST.

Threshold Limit for Composition Scheme Under GST:

Under the Composition Scheme( Other amendments in the threshold GST limits) the threshold limit is as follows:-

  1. The composition scheme changes: The threshold was increased to Rs.1.5 crores from 1st April 2019 of annual turnover for composition scheme. The taxpayers who are registered under this scheme have to pay the tax quarterly and file returns annually from 1st April 2019. For North-Eastern states & Uttarakhand, the limit remains unchanged at Rs.75 lacs.
  2.  Composition scheme was made available to service providers: A fixed tax rate of 6% with 3% CGST and 3% SGST was introduced in the new scheme for those taxpayers who are mere service provider, Earlier Composition scheme was not available to the service provider. The person’s who can opt for this scheme are the independent service providers, as well as mixed suppliers of goods and services with an annual turnover of up to Rs.50 lacs in the previous financial year.

Why should we know this?

Once a service provider or seller registers under GST there are certain compliance which mandatorily needs to be done, Such as Maintenance of Books of Accounts, Filing of Online GST Return such as in form No GSTR 3B and GSTR 1, Yearly GSTR returns such as GSTR 9, GST Annual Audit if eligible. This compliance requires time and there is compliance cost is also attached to it. Hence If you are a small service provider or seller of Goods, Than you can avoid online GST registration and obtain of GST certificate by taking advantage of these increased thresholds or Limit for Mandatory registration under GST. 

GST Threshold Limit for Registration

Should you surrender your GST Registration if your Turnover is below Threshold?

The answer to this question is not straight forward, We need to analyze several factors before deciding in favor of GST Certificate surrender. For Example 

  • the kind of Industry you are?
  • Whether you want to take Input Credit?
  • Will your customer ready to purchase Goods from an Unregistered GST Suppliers?
  • What will impact on Cost of Goods and services rendered once GST No surrendered?
  • What will impact on non-taking of GST input tax credit (ITC)

Only after analyzing all of these factors it can be decided whether it is profitable to surrender GST or continue to charge and pay GST even the Threshold limit for GST Registration has not been crossed.

Conclusion:

Well, that said, and considering you have read this article you might have a clear idea about the limit for GST Registration and whether you want to Register under GST or Want to Surrender GST Certificate now. 

But if you have any questions or doubts and queries regarding this then you can contact us @ cs@mgrnco.com or 9699042660 and our GST Experts can help you to decide this. 

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