GST registration thresholds — ₹20L / ₹40L / specified-state map
GST registration thresholds look simple — ₹40 L for goods, ₹20 L for services — but the 11 specified states, the inter-state supply trap, and the mandatory categories (e-commerce, casual taxable, RCM-receiver) make this the most-misunderstood part of GST setup. Here's the complete map.
The default thresholds
| Supply type | Threshold (most states) | Threshold (specified states) |
|---|---|---|
| Goods only | ₹40 lakh aggregate turnover | ₹20 lakh |
| Services only | ₹20 lakh aggregate turnover | ₹10 lakh |
| Goods + services (mixed) | ₹20 lakh (the lower applies) | ₹10 lakh |
"Aggregate turnover" includes: taxable supplies + exempt supplies + exports + inter-state supplies (by the same PAN, all India) — but excludes inward supplies on RCM.
The 11 specified states (lower thresholds)
Notification 10/2019-CT introduced a "specified states" category where the threshold is half. These states are:
- Arunachal Pradesh
- Manipur
- Meghalaya
- Mizoram
- Nagaland
- Sikkim
- Tripura
- Uttarakhand
- Puducherry
- Telangana
- (plus J&K and Ladakh — special category as UTs)
If your business operates from any of these — register from rupee 1 of turnover above ₹20 L (goods) or ₹10 L (services). Most of the north-east, plus a couple of southern states.
Mandatory registration — threshold doesn't matter
Section 24 lists categories where GST registration is mandatory regardless of turnover:
- Inter-state taxable supply of goods (for services, FA 2017 onwards, this is no longer mandatory if under ₹20 L)
- Casual taxable person (exhibitors at trade fairs, event organisers)
- Non-resident taxable person
- RCM-only receivers (if all your outward supply is exempt but you receive RCM-eligible services)
- E-commerce operators (Amazon, Flipkart, Swiggy) — for the platform business itself, not the sellers
- Persons supplying through e-commerce operators (with some exemptions added in 2023 for restaurant services etc.)
- Input Service Distributor (ISD)
- TDS deductors under Sec 51 (government departments, certain PSUs)
- TCS collectors under Sec 52 (e-commerce operators, again)
- Foreign OIDAR service providers (online services to Indian consumers — Netflix, Spotify equivalents)
The inter-state goods trap
A small trader in Tamil Nadu doing ₹15 L of goods turnover thinks they're below the ₹40 L threshold — but if they make even one inter-state sale (to Karnataka), GST registration becomes mandatory immediately. The ₹40 L threshold only applies if all sales are intra-state.
For services, FA 2017 carved out an exception: inter-state services are no longer mandatory below ₹20 L. So a Chennai-based freelance consultant doing ₹8 L of services to Bangalore clients is still under threshold.
The casual taxable person registration
"Casual" = supply in a state where you don't have a fixed place of business. Example: a Mumbai-based exhibitor sets up a stall in a Chennai trade fair for 4 days. Mandatory casual GST registration with 90-day validity:
- Apply in advance (5 days minimum) via Form REG-01
- Pay estimated tax in advance — refunded if actual is lower
- Standard returns + GSTR-1 / 3B during the casual period
- Auto-cancellation at end of validity
Voluntary registration — why someone under threshold would register
- To pass on input tax credit to B2B customers (otherwise the customer can't claim ITC on your invoice)
- To do inter-state supply legally
- To list on e-commerce platforms (most require GSTIN)
- To claim refund on exports (only registered persons can)
- To bid for government tenders (most mandate GSTIN)
Voluntary registration has the same obligations as mandatory — monthly returns, e-invoice if > ₹5 Cr, audit etc. Don't register voluntarily unless the business case clearly justifies the compliance overhead.
The composition scheme alternative
For traders with turnover under ₹1.5 Cr (₹75 L for specified states), Sec 10 composition scheme is available — 1% on goods (manufacturers/traders), 5% on restaurants, 6% on services up to ₹50 L. Lower rate, no ITC, simpler quarterly returns.
Useful for retail traders / restaurants / small service firms that don't have GST-registered B2B customers. See our separate brief on composition.
State-of-supply, place-of-supply — GSTIN per state
GST is destination-based — registration is required in each state where you have a fixed place of business OR cross the threshold by yourself. A Bengaluru-based company with a warehouse in Chennai needs two GSTINs — one Karnataka, one Tamil Nadu. Each GSTIN has its own returns, ITC pool, and audit.
📌 Threshold once breached, always registered: If your turnover crossed ₹40 L mid-year and you registered, you can't deregister even if next year falls below threshold. Cancellation requires a clean exit — typically wound-up business, sold premises, or shifted to composition.
The Finclar take
For early-stage businesses, the registration call is rarely about turnover hitting ₹40 L — it's almost always about either (a) inter-state goods sales triggering mandatory registration, or (b) the customer's ITC ask forcing voluntary registration. Map the customer mix before deciding. If 80% of your customers are B2C / unregistered, stay unregistered as long as possible. If 80% are B2B, register on day 1.
Ishaq Aqeel · Team Member · GST · Audit · Tally Expert
Leads Finclar's GST and indirect-tax practice. Drafts 200+ notice responses a year for TN textiles, IT services and manufacturing clients. View full bio & archive →