GST Registration Threshold and Aggregate Turnover

Aggregate turnover is a key concept under GST for determining liability for registration and eligibility for schemes such as the composition scheme. As defined under Section 2(6) of the CGST Act, it includes the aggregate value of all taxable supplies, exempt supplies, exports, and inter-State supplies of persons having the same PAN, computed on an all-India basis. However, it excludes GST taxes (CGST, SGST, IGST, UTGST), compensation cess, and inward supplies liable to reverse charge. For registration purposes, aggregate turnover includes supplies made on one’s own account as well as supplies made on behalf of principals when invoiced in the agent’s name. Supplies made from a registered job worker’s premises are treated as supplies of the principal and are excluded from the job worker’s turnover. The threshold for GST registration is generally ₹20 lakh, ₹10 lakh for specified special category states, and may be enhanced up to ₹40 lakh for suppliers exclusively dealing in goods, subject to conditions under Notification No. 10/2019–Central Tax.

Aggregate Turnover

Aggregate turnover is a crucial parameter for determining the eligibility of a supplier to avail the benefit of threshold exemption from registration and eligibility under the composition scheme.

In common parlance, “turnover” refers to the total volume of business in monetary terms. The term “aggregate turnover”, as defined under Section 2(6), is reproduced below:

Section 2(6) – “Aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both, and inter-State supplies of persons having the same Permanent Account Number, computed on an all-India basis, but excluding central tax, State tax, Union territory tax, integrated tax and cess.

Explanation under Section 22 (for Registration Purpose)

For the purpose of determining liability for registration under Section 22, the following clarifications are relevant:

(i) the expression “aggregate turnover” shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals;

(ii) the supply of goods, after completion of job work, by a registered job worker shall be treated as the supply of goods by the principal referred to in section 143, and the value of such goods shall not be included in the aggregate turnover of the registered job worker;

Aggregate Turnover – Inclusions and Exclusions

Aggregate Turnover – Exclusion of Inward Supplies under Reverse Charge

It may be noted that inward supplies on which the recipient is liable to pay tax under reverse charge do not form part of the “aggregate turnover” as defined under Section 2(6) of the CGST Act. In such cases, although the recipient discharges the tax liability, the value of those inward supplies is specifically excluded while computing aggregate turnover.

Accordingly, services such as Goods Transport Agency services, legal services, sponsorship services, etc., where tax is payable by the recipient under reverse charge, shall not be included in the aggregate turnover of the recipient.

Aggregate Turnover – Computed on All-India Basis for Same PAN

Aggregate turnover includes the total turnover of all branches (i.e., all GST registrations) having the same Permanent Account Number (PAN).

It may be noted that, as per Section 2(6) of the CGST Act, aggregate turnover is required to be computed on an all-India basis. Therefore, if a person has obtained multiple GST registrations in different States or Union Territories under the same PAN, the turnover of all such registrations must be clubbed together for the purpose of determining aggregate turnover.

Accordingly, the threshold limit for GST registration is assessed based on the combined turnover of all branches under the same PAN, and not registration-wise or State-wise individually.

Example: Mr. X holds a single PAN and operates business branches in Delhi, Haryana and Rajasthan, each having separate GST registrations. During the financial year, the Delhi branch has taxable supplies of ₹18,00,000, the Haryana branch has taxable supplies of ₹12,00,000, and the Rajasthan branch has exempt supplies of ₹8,00,000.

For the purpose of computing aggregate turnover under Section 2(6) of the CGST Act, the turnover of all branches having the same PAN is required to be clubbed together on an all-India basis. Accordingly, the aggregate turnover of Mr. X will be ₹38,00,000 (₹18,00,000 + ₹12,00,000 + ₹8,00,000).

It may be noted that even though each individual GST registration has turnover below the prescribed threshold limit, the liability for registration is determined based on the combined turnover of all registrations under the same PAN.

Aggregate Turnover – Supplies Made on Own Account and on Behalf of Principal

Aggregate turnover shall include all supplies made by a taxable person, whether such supplies are made on his own account or made on behalf of all his principals.

It may be noted that where a person acts as an agent and makes outward supplies on behalf of his principal, the value of such supplies shall also be included in the computation of his aggregate turnover, provided such supplies are made in his own name. Therefore, aggregate turnover is not confined only to supplies made on one’s own account but also covers supplies made in a representative capacity, in accordance with Section 2(6) of the CGST Act.

Accordingly, the total outward supplies reflected under the GST registration of the taxable person, including supplies made as an agent, shall be considered while determining eligibility for registration and other threshold-based compliances.

Example: Mr. A is a commission agent registered under GST. During the financial year 2024–25, he makes taxable supplies of goods worth ₹15,00,000 on his own account. In addition, he sells goods worth ₹20,00,000 on behalf of his principal, issuing invoices in his own name as an agent. He also earns a commission of ₹2,00,000 on such sales.

For the purpose of computing aggregate turnover under Section 2(6) of the CGST Act, the total value of supplies made by Mr. A shall include both the supplies made on his own account and the supplies made on behalf of his principal. Accordingly, his aggregate turnover will be ₹35,00,000 (₹15,00,000 + ₹20,00,000).

It may be noted that the commission income of ₹2,00,000 is separately taxable as consideration for services; however, for the purpose of determining aggregate turnover, the full value of outward supplies made on behalf of the principal (where invoiced in his own name) is included.

Aggregate Turnover – Supply of Goods after Job Work

The value of goods, after completion of job work, supplied directly from the premises of a registered job worker shall not be included in the aggregate turnover of the job worker.

It may be noted that in terms of Section 143 of the CGST Act, goods sent for job work remain the property of the principal. Where such goods are supplied directly from the premises of the registered job worker, the supply is treated as a supply made by the principal and not by the job worker. Accordingly, the value of such goods shall be included in the aggregate turnover of the principal and not in the aggregate turnover of the job worker.

However, the job worker’s aggregate turnover shall include only the job work charges (processing charges) earned by him for providing the job work services.

Example: M/s ABC Manufacturers (Principal) sends raw materials worth ₹25,00,000 to M/s XYZ Job Works (registered job worker) for processing. After completing the job work, the finished goods are directly supplied from the premises of XYZ Job Works to the customer for ₹40,00,000, as per the instructions of ABC Manufacturers. During the same financial year, XYZ Job Works charges ₹5,00,000 as job work (processing) charges to ABC Manufacturers.

For the purpose of computing aggregate turnover:

• The value of finished goods supplied, i.e., ₹40,00,000, shall be included in the aggregate turnover of ABC Manufacturers (Principal).
• The said amount shall not be included in the aggregate turnover of XYZ Job Works.
• Only the job work charges of ₹5,00,000 earned by XYZ Job Works shall be included in the aggregate turnover of the job worker.

It may be noted that goods sent for job work remain the property of the principal, and therefore, the supply made from the job worker’s premises is treated as a supply made by the principal under GST law.

Aggregate Turnover – Supply from Premises of Unregistered Job Worker

In case the job worker is unregistered, the principal should declare the job worker’s premises as his additional place of business in the GST registration and remove (supply) the goods from such declared premises.

However, if the job worker is registered under GST, the goods can be supplied directly from the premises of the registered job worker without the requirement of declaring the said premises as an additional place of business of the principal.

It may be noted that, in both situations, the goods sent for job work remain the property of the principal. Therefore, the supply of such goods is treated as a supply made by the principal, and the value thereof shall be included in the aggregate turnover of the principal and not of the job worker.

Threshold Limit for Registration

It may be noted that as per Section 22(1) of the CGST Act, every supplier shall be liable to be registered under this Act in the State or Union Territory, other than Special Category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds ₹20 lakh.

Accordingly, once the aggregate turnover of a supplier crosses the prescribed threshold limit during a financial year, registration under GST becomes mandatory in the respective State or Union Territory from where such taxable supplies are made.

Proviso to Section 22(1) – Special Category States

Provided that where a person makes taxable supplies of goods or services or both from any of the Special Category States, he shall be liable to be registered under the CGST Act if his aggregate turnover in a financial year exceeds ₹10 lakh.

Accordingly, in case of specified Special Category States (as applicable for registration purposes), the threshold limit for mandatory registration is ₹10 lakh instead of ₹20 lakh. Once the aggregate turnover crosses ₹10 lakh in a financial year, registration becomes compulsory in the State from where such taxable supplies are made, subject to applicable notifications and conditions.

Second Proviso to Section 22(1) – Power to Enhance Threshold in Special Category States

Provided further that the Government may, at the request of a Special Category State and on the recommendations of the GST Council, enhance the aggregate turnover referred to in the first proviso from ₹10 lakh to such amount, not exceeding ₹20 lakh, and subject to such conditions and limitations, as may be notified.

Accordingly, the law empowers the Government to increase the threshold limit for registration in a Special Category State from ₹10 lakh up to a maximum of ₹20 lakh, provided such enhancement is made on the request of the concerned State and on the recommendations of the GST Council. Such enhancement is effective only upon issuance of a notification specifying the revised limit along with applicable conditions.

Third Proviso to Section 22(1) – Enhancement up to ₹40 Lakh for Suppliers of Goods

Provided also that the Government may, at the request of a State and on the recommendations of the GST Council, enhance the aggregate turnover from ₹20 lakh to such amount not exceeding ₹40 lakh in the case of a supplier who is engaged exclusively in the supply of goods, subject to such conditions and limitations as may be notified.

Accordingly, the threshold limit for registration for suppliers exclusively dealing in goods may be increased up to ₹40 lakh, provided the concerned State makes a request and the GST Council recommends such enhancement. The revised limit becomes effective only upon issuance of a notification specifying the applicable conditions and restrictions.

Notification No. 10/2019–Central Tax dated 07.03.2019

Notification No. 10/2019–Central Tax dated 7th March 2019 was issued under Section 22 of the CGST Act to enhance the threshold limit for registration to ₹40 lakh for certain suppliers.

Key Provisions of the Notification

• The threshold limit for registration is increased from ₹20 lakh to ₹40 lakh.
• Applicable only to suppliers engaged exclusively in the supply of goods.
• Effective from 1st April 2019.

Conditions and Restrictions

The enhanced threshold of ₹40 lakh is not applicable to:

1. Persons required to take compulsory registration under Section 24.

2. Persons engaged in making intra-State supplies in the States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand; and

3. Persons engaged in making supplies of:

• • Ice cream and other edible ice, whether or not containing cocoa
  • Pan masala
  • Tobacco and manufactured tobacco substitutes

4. Persons exercising option under the provisions of sub-section (3) of section 25 (voluntary registration), or such registered persons who intend to continue with their registration under the said Act.

Explanation-

For the purposes of this sub-section, a person shall be considered to be engaged exclusively in the supply of goods even if he is engaged in exempt supply of services by way of extending deposits, loans or advances, where the consideration is represented by way of interest or discount.

Thus, earning interest income from deposits, loans, or advances will not disqualify a person from being treated as exclusively engaged in the supply of goods for the purpose of availing the enhanced threshold limit up to ₹40 lakh.

Special Category States

It may be noted that under the GST law, Special Category States are granted a lower threshold limit for registration as compared to other States. As per Section 22 of the CGST Act, the threshold limit for registration in Special Category States is ₹10 lakh (as against ₹20 lakh or ₹40 lakh applicable in other States, subject to conditions and notifications). However, certain Special Category States have been granted enhanced threshold limits through subsequent notifications.

As per Article 279A(4)(g) of the Constitution of India, there are 11 special category states namely Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, Uttarakhand. However, as per explanation (iii) to section 22, for the purpose of registration, only Mizoram, Tripura, Manipur and Nagaland are Special Certegy States. Therefore, the threshold limit of ₹10 lakh for registration is presently applicable only to Mizoram, Tripura, Manipur and Nagaland, subject to applicable notifications and conditions.