Summary: GST registration under the CGST Act, 2017, is not determined solely by the ₹20 lakh or ₹40 lakh turnover thresholds. Section 22 establishes the general registration requirement, while Notification No. 10/2019–Central Tax provides conditional relief for eligible suppliers exclusively dealing in goods. Aggregate turnover must be calculated on an all-India PAN basis, including exempt supplies, exports and inter-State supplies. Consequently, even businesses with relatively modest taxable sales may cross the applicable registration threshold. Section 24 prescribes compulsory registration for specified categories regardless of turnover, subject to statutory exemptions and applicable notifications. These include certain inter-State suppliers, casual and non-resident taxable persons, persons liable under reverse charge, tax deductors, Input Service Distributors, agents and specified e-commerce participants. However, exemptions are available for eligible inter-State service providers, small suppliers operating through e-commerce platforms, specified handicraft suppliers and persons covered by Section 23. GST officers must therefore examine the nature, location, recipient and mode of supply rather than relying exclusively on turnover. Failure to obtain mandatory registration may result in best judgment assessment under Section 63 and penalties under Section 122.
- GST Registration: Look Beyond the Threshold
- GST Registration Threshold Under Section 22
- Aggregate Turnover and PAN-Based Registration
- Compulsory GST Registration Under Section 24
- Practical Examples of Mandatory GST Registration
- GST Registration Exemptions and Relaxations
- GST Registration Verification, Assessment and Penalties
GST Registration: Look Beyond the Threshold
Ask a trader when he needs a GST number and the answer is almost always a figure: twenty lakh or forty lakh. Ask many of us in the department and the answer is often the same. Yet the threshold is only one of several routes by which the law brings a person into the tax net. An officer who looks only at turnover may let go a person who was never entitled to stay out, or pursue one whom the law has deliberately kept out.
GST Registration Threshold Under Section 22
The general rule lies in Section 22 of the CGST Act, 2017. A supplier must register in the State or Union Territory from which he makes taxable supplies once his aggregate turnover in a financial year exceeds ₹20 lakh, or ₹10 lakh in the notified special category States. Notification No. 10/2019–Central Tax raises this to ₹40 lakh for persons engaged exclusively in supplying goods, except in certain excluded States and for goods such as ice cream, pan masala and tobacco. Jammu and Kashmir enjoys both limits. The application is due within thirty days of becoming liable.
Aggregate Turnover and PAN-Based Registration
Even this test is often misapplied. Aggregate turnover is computed on an all-India basis for all registrations under one PAN. It includes exempt supplies, exports and inter-State supplies, but excludes taxes and inward supplies taxed under reverse charge. A dealer selling ₹15 lakh of taxable goods alongside ₹30 lakh of exempt fresh vegetables has crossed ₹40 lakh, though his taxable sales look small. A trader who also renders a taxable service, however minor, falls back to the ₹20 lakh limit. Section 22 also requires a transferee on succession, amalgamation or demerger to register from the date of transfer.
Compulsory GST Registration Under Section 24
More important is Section 24, which opens with the words “notwithstanding anything contained in sub-section (1) of section 22”. For the persons it lists, turnover is irrelevant and registration is needed from the first supply. They include persons making inter-State taxable supplies; casual and non-resident taxable persons; persons liable to pay tax under reverse charge; persons required to deduct tax under Section 51; Input Service Distributors; agents supplying on behalf of other taxable persons; e-commerce operators collecting tax under Section 52 or paying tax under Section 9(5); persons supplying through such operators; and suppliers of online database services from abroad to unregistered persons in India.
Practical Examples of Mandatory GST Registration
A hardware dealer in Budgam with a turnover of ₹8 lakh who sends one consignment to a buyer in Punjab must register, because the threshold does not protect inter-State supplies of goods. A trader from outside the Union Territory who takes a stall at an exhibition in Srinagar is a casual taxable person and must apply at least five days before he begins. A government department deducting TDS must register as a deductor though it sells nothing.
GST Registration Exemptions and Relaxations
Officers must equally know the relaxations, so that the net is not cast wider than the law intends. Inter-State suppliers of services within the threshold are exempt under Notification No. 10/2017–Integrated Tax, as are service providers selling through e-commerce operators. Small sellers of goods supplying within their own State through such platforms enjoy conditional exemption under Notification No. 34/2023–Central Tax, and specified handicraft goods, so important to Kashmir, carry their own relief. Section 23 keeps out persons dealing exclusively in non-taxable or wholly exempt supplies, and agriculturists selling their own produce.
GST Registration Verification, Assessment and Penalties
The right question during a survey, verification or audit is therefore not merely how much a person sells, but what he supplies, to whom, from where, through whom and in what capacity. Where registration was due and not taken, Section 63 permits best judgment assessment and Section 122 attracts penalty. A properly framed inquiry protects both revenue and the honest small trader.
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Aijaz Hussain Malik, JKAS, is State Taxes Officer Circle-Budgam Kashmir and writes about GST compliance. Email: [email protected]
