The short answer most business owners want first: if you sell only goods, you generally need GST registration once your all-India turnover crosses Rs. 40 lakh; if you provide services, the line is Rs. 20 lakh. In several north-eastern and hill states those figures halve to Rs. 20 lakh and Rs. 10 lakh respectively. But the threshold is only half the story, because a long list of situations forces you to register from the very first rupee, turnover be damned.
Getting this wrong is expensive in both directions. Register late and you face tax on past supplies plus interest and a late-fee exposure; register when you did not need to and you have signed up for monthly returns and compliance you could have avoided. This guide sets out the exact thresholds for FY 2025-26, how to compute the “aggregate turnover” that is tested against them, the traps that quietly pull you below the higher limit, and the compulsory-registration cases under Section 24 that override the threshold entirely.
The threshold limits for FY 2025-26
There has been no change to the basic thresholds for FY 2025-26. The limits depend on two things: whether you deal in goods or services, and which state you operate from. The Rs. 40 lakh limit for goods was introduced from 1 April 2019 and continues, but each state was allowed to choose whether to adopt it.
| Type of supply | Normal category states | Special category / lower-limit states |
|---|---|---|
| Exclusive supply of goods | Rs. 40 lakh | Rs. 20 lakh |
| Supply of services (or goods + services) | Rs. 20 lakh | Rs. 10 lakh |
For the goods limit, the states that kept the lower Rs. 20 lakh figure are Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Tripura, Uttarakhand and Telangana. Jammu & Kashmir, Ladakh and Assam adopted the higher Rs. 40 lakh limit despite being special-category states. For services, the Rs. 10 lakh limit applies in the north-eastern and hill states (Manipur, Mizoram, Nagaland, Tripura and the others in that group). If you are unsure which bucket your state sits in, check your position before you assume you are safe.
Quick check: use our free GST registration threshold checker to see your state’s exact limit and whether you must register.
The Rs. 40 lakh limit is narrower than it looks
The higher Rs. 40 lakh threshold is available only to a person engaged exclusively in the supply of goods. The moment you also supply a service, you drop to the Rs. 20 lakh limit for your entire turnover. This is the single most common misreading of the rule.
Worked example. Rahul runs a hardware shop in Pune (Maharashtra, a Rs. 40 lakh state). His annual sale of goods is Rs. 38 lakh, comfortably under Rs. 40 lakh, so he believes he is exempt. But he also earns Rs. 2.5 lakh a year renting out a portion of his godown and doing small repair jobs — that is a supply of services. Because he is no longer “exclusively” in goods, his applicable threshold falls to Rs. 20 lakh, and his combined turnover of Rs. 40.5 lakh blows past it. Rahul must register. Had the repair income not existed, he would have stayed out of GST.
Even for a pure-goods seller, the Rs. 40 lakh limit is switched off if you make any inter-state supply, supply through an e-commerce operator that collects TCS, or deal in certain notified goods such as ice cream, pan masala or tobacco. In any of those cases you are back to Rs. 20 lakh — or, as we will see, to compulsory registration.
What “aggregate turnover” actually includes
The threshold is tested against aggregate turnover, computed on an all-India, same-PAN basis. It is the sum of all taxable supplies, exempt supplies, exports, and inter-state supplies of persons operating under the same PAN. Two points trip people up: it is measured across all your GSTINs and branches in every state together, not state by state; and it excludes the GST itself (CGST, SGST, IGST and cess) and the value of inward supplies on which you pay tax under reverse charge. Interest earned on deposits, loans or advances is also excluded when you test the goods threshold.
So a person with a Rs. 15 lakh business in Karnataka and a Rs. 10 lakh business in Kerala under the same PAN has an aggregate turnover of Rs. 25 lakh, not two separate Rs. 15 lakh and Rs. 10 lakh figures — and is over the services limit.
When you must register regardless of turnover — Section 24
Section 24 of the CGST Act lists categories that must register from the first rupee, no matter how small the turnover. The ones that catch small businesses most often are:
| Trigger | What it means in practice |
|---|---|
| Inter-state supply of goods | Sell goods to a buyer in another state, even once, and registration is compulsory — no threshold. |
| Liable to pay under reverse charge | If you receive a supply on which you must pay GST under RCM (e.g. rent of commercial property from an unregistered landlord), you must register. |
| Supply through an e-commerce operator | Selling goods through Amazon, Flipkart, etc. that collect TCS generally requires registration. |
| E-commerce operators; casual and non-resident taxable persons | Platforms collecting TCS, and those with no fixed place of business in a state, must register. |
| Persons deducting TDS, agents, Input Service Distributors, OIDAR suppliers | Registration is mandatory irrespective of turnover. |
There is one important relief. A person making only inter-state supply of services is not forced to register until turnover crosses the ordinary Rs. 20 lakh / Rs. 10 lakh limit (Notification 10/2017-Integrated Tax). This is why a freelance designer in Bengaluru billing clients across India can stay unregistered up to Rs. 20 lakh, while a trader shipping goods across a state border must register immediately.
Contrast example. A Karnataka trader who dispatches Rs. 8 lakh of goods to a customer in Tamil Nadu must register — inter-state supply of goods has no threshold. But a Karnataka consultant earning Rs. 15 lakh from clients spread across five states need not register, because the service-provider relief keeps her under the Rs. 20 lakh limit.
Voluntary registration — sometimes the right call
Even below the threshold, you can register voluntarily. It makes sense when your buyers are themselves registered businesses that want input tax credit, when you want to claim ITC on your own purchases, or when a marketplace or tender requires a GSTIN. The trade-off is monthly/quarterly return filing and the discipline that comes with it. If most of your customers are end consumers who cannot use ITC, voluntary registration usually just adds cost. If you are also setting up a shop or office, our Shop & Establishment registration calculator can help you scope the other registrations you may need alongside GST.
Key takeaways
- For FY 2025-26 the thresholds are Rs. 40 lakh (exclusive supply of goods) and Rs. 20 lakh (services), halving to Rs. 20 lakh and Rs. 10 lakh in the lower-limit states.
- The Rs. 40 lakh goods limit applies only if you supply no services and make no inter-state or e-commerce supplies; mix in a service and you fall to Rs. 20 lakh on your whole turnover.
- Aggregate turnover is all-India and same-PAN, includes exempt supplies and exports, but excludes GST and inward reverse-charge supplies.
- Section 24 forces registration regardless of turnover — most commonly for inter-state supply of goods, reverse-charge liability and selling through TCS e-commerce operators.
- Inter-state supply of services up to Rs. 20 lakh does not trigger compulsory registration; inter-state supply of goods does, from the first rupee.
Frequently Asked Questions
Is the GST registration limit Rs. 20 lakh or Rs. 40 lakh?
Both, depending on what you supply. Rs. 40 lakh is the limit for a business that supplies goods only (in a state that adopted this limit and where no inter-state or e-commerce supply is involved). For service providers, and for anyone supplying both goods and services, the limit is Rs. 20 lakh.
Do I need GST registration if I sell online through Amazon or Flipkart?
Generally yes. Supplying goods through an e-commerce operator that collects tax at source requires registration under Section 24 regardless of turnover. A limited relief exists for very small suppliers selling within their own state under specific conditions, but most online sellers of goods must register.
My turnover is only Rs. 12 lakh but I ship to another state. Must I register?
If you ship goods inter-state, yes — inter-state supply of goods has no threshold. If you only provide services inter-state, no — you remain exempt until you cross Rs. 20 lakh (Rs. 10 lakh in lower-limit states).
Does exempt or nil-rated turnover count towards the limit?
Yes. Aggregate turnover includes taxable, exempt, nil-rated and export supplies under the same PAN across all states. Only the GST component and inward reverse-charge supplies are excluded.
Should I register voluntarily if I am below the threshold?
Register if your customers are businesses wanting input credit, if you want to claim ITC on purchases, or if a platform or client requires a GSTIN. If you sell mainly to consumers who cannot use ITC, staying unregistered avoids return-filing costs. If in doubt, our team at Ask a CA — GST can review your specific position.