The Goods and Services Tax (GST) threshold limit is the minimum annual turnover above which businesses must register for GST in India. It is essential to observe that the GST Threshold Limit for Sole Trade, Company, partnership firm, or LLP is the same. The GST Threshold Limit for Services and Goods is different.
- For businesses engaged in the supply of goods, the GST threshold limit is:
- ₹ 40 lakhs for businesses located in most states and Union Territories of India (except for special category states)
- ₹ 20 lakhs for the state of Telangana
- ₹ 10 lakhs for businesses located in North Eastern and hill states of India (Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, and Himachal Pradesh)
- For businesses engaged in the supply of services or both goods and services, the GST threshold limit is:
- ₹ 20 lakhs for businesses located in most states and Union Territories of India (except for special category states)
- ₹ 10 lakhs for businesses located in North Eastern and hill states of India (Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, and Himachal Pradesh)
How to Calculate Threshold Limit for GST Registration
Knowing the computation method for determining the threshold is essential; else, one may end up not having GST Registration, which could lead to the payment of penalties or obtaining it without requirement, leading to an unnecessary compliance burden.
GST Threshold Limit Calculation should include the following
- Turnover of the person/entity across the country for the particular PAN number
- All taxable supplies
- All exempted supplies
- Exports
And excludes the following
- Central Goods and Service Tax Amount,
- State/Union Territory Goods and Services Tax Amount,
- Integrated Goods and Services Tax Amount,
- GST Compensation Cess
- Transactions on which Tax is payable on Reverse Charge Mechanism
There are different GST calculators online that we can use to calculate the threshold limit and GST charges.
Also Read: Types of GST Registrations
The above computation is called Aggregate Annual Turnover, and the treatment of various
Sl.No | Particulars | Included in Aggregate Annual Turnover |
1 | Partners’ salary from a Partnership Firm | No |
2 | Salary as a Director of a Private Limited Company | No |
3 | Incentives Received by Executive | No |
4 | Interest on Partners Capital in Partnership Firm | Yes |
5 | Interest earned on Post Office Deposits | Yes |
6 | Interest earned on Bank Deposits | Yes |
7 | Rental income on Residential Property | Yes |
8 | Rental Income on Commercial Property | Yes |
9 | Dividend Income | No |
10 | Proceeds from the Maturity of the Insurance Policy | No |
11 | Capital Gains Arising on Sale of Securities | No |
12 | Proceeds from the sale of Land | No |
13 | Proceeds from the sale of Buildings during construction | Yes |
14 | Proceeds from the sale of Buildings after Receipt of Occupancy Certificate or any other equivalent Certificate | No |
It is essential to understand and obtain GST Registration as and when the threshold crosses and the above table will help in understanding the various types of income to be included while determining the Aggregate Annual Turnover.
