The GST Council, on considering the demands raised by MSME, increased the threshold limits for GST registration. This helps to ease compliance under GST. The states have an option to opt for a higher limit or continue with the existing limits. This article explains the earlier threshold limits, new limits, their effective date of applicability and the persons to whom it applies.
The article covers the following:
Update as on 1st May 2021
The time limit to take actions, reply or pass orders as given under Rule 9 of the CGST Rules, 2017 that falls in between 1st May 2021 and 31st May 2021 has been extended up to 15th June 2021.
Update as on 27th June 2020
The time limit for completion or compliance has been further extended to 31st August 2020, where the time limit falls between the period from 20th March 2020 to 30th August 2020. But it does not include cases where a person needs to obtain GST registration under section 25 (Normal registration) and 27 (Registration as a casual taxable person/ non-resident taxable person) of the CGST Act.
Update as on 3rd April 2020
The time limit for completion or compliance has been extended to 30th June 2020, where the time limit falls between the period from 20th March 2020 to 29th June 2020. It does not include cases where a person needs to obtain GST registration under section 25 (Normal registration) and 27 (Registration as a casual taxable person/ non-resident taxable person) of the CGST Act.
1. Overview of earlier limits, new limits and the date of applicability
| Aggregate Turnover | Registration Required | Applicability |
| Earlier Limits – For the sale of Goods/Providing Services | ||
| Exceeds Rs.20 lakh | Yes – For Normal Category States | Up to 31st March 2019 |
| Exceeds Rs.10 lakh | Yes – For Special Category States | Up to 31st March 2019 |
| New Limits – For Sale of Goods | ||
| Exceeds Rs.40 lakh | Yes – For Normal Category States | From 1st April 2019 |
| Exceeds Rs.20 lakh | Yes – For Special Category States | From 1st April 2019 |
| New Limits – For Providing Services | ||
| There has been no change in the threshold limits for service providers. Persons providing services need to register if their aggregate turnover exceeds Rs.20 lakh (for normal category states) and Rs.10 lakh (for special category states). | ||
2. States who opted for the new limit
The above changes were proposed in the 32nd GST Council Meeting held on 10th January 2019. An option was provided to the states to opt for the new limits or continue the earlier ones (status quo).
| Normal Category States/UT who opted for a new limit of Rs.40 lakh | Normal Category States who choose status quo | Special Category States/UT who opted for new limit of Rs.40 lakh | Special Category States/UT who opted for new limit of Rs.20 lakh |
| Kerala, Chhattisgarh, Jharkhand, Delhi, Bihar, Maharashtra, Andhra Pradesh, Gujarat, Haryana, Goa, Punjab, Uttar Pradesh, Himachal Pradesh, Karnataka, Madhya Pradesh, Odisha, Rajasthan, Tamil Nadu, West Bengal, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu, Andaman and Nicobar Islands and Chandigarh | Telangana | Jammu and Kashmir, Ladakh and Assam | Puducherry, Meghalaya, Mizoram, Tripura, Manipur, Sikkim, Nagaland, Arunachal Pradesh and Uttarakhand |
Note 1: Two hilly states J&K and Assam have also opted to raise the limit to Rs.40 lakh. These two states had the option to remain under lower threshold limits as they fall under the Special Category States. Even previously when these two states had the option to charge GST only on aggregate turnover exceeding Rs.10 lacs, they had opted for a higher threshold limit of Rs.20 lakh. Note 2: Kerala can now charge ‘calamity cess’ up to 1% on all intra-state supply of goods and services to cope up with natural calamities faced by the state last year.
3. Financial Year to reckon the aggregate turnover
Aggregate turnover for FY 2019-2020 is considered for applicability of new threshold limits. Every supplier whose aggregate turnover in the FY 2019-2020 exceeds the new threshold limits will have to get registered under GST. However, certain category of persons are required to compulsorily get registered under GST:
- Inter state suppliers
- Casual Taxable persons
- Persons 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 making a sale on behalf of someone else whether as an Agent or Principal.
- Every E-commerce Operator who provides a platform to suppliers to make supply through it.
- Suppliers who supply goods through E-commerce operator who is liable to collect tax at source.
- Online Service Providers providing service from outside India to a non-registered person in India.
4. Other amendments in the threshold limits under the Composition Scheme
1. Changes in the composition scheme: The threshold of annual turnover for composition scheme was increased to Rs.1.5 crores from 1st April 2019. The taxpayers registered under the scheme have to pay tax quarterly and file returns annually from 1st April 2019. The limit remains unchanged at Rs.75 lacs for North Eastern states & Uttarakhand. 2. Composition scheme was made available to service providers: New scheme introduces a fixed tax rate of 6% with 3% CGST and 3% SGST. Independent service providers, as well as mixed suppliers of goods and services with an annual turnover of up to Rs.50 lacs in the preceding financial year can opt for this scheme.
