Getting GST registration right is the first compliance decision a startup makes — and one of the most misunderstood. Sometimes you must register only after crossing a turnover threshold; other times you must register from your very first sale, no matter how small. This guide covers the turnover limits (they differ for goods vs services, and by state), the situations where registration is compulsory regardless of turnover under Section 24, the new 3-working-day auto-approval scheme introduced from November 2025, how to calculate your “aggregate turnover”, when voluntary registration is worth it, and the penalty for getting it wrong.
At a glance
- Turnover threshold: ₹40 lakh for goods, ₹20 lakh for services in most states; ₹20 lakh (goods) / ₹10 lakh (services) in specified special-category states.
- Compulsory regardless of turnover (Section 24): e-commerce sellers, inter-state supply of goods, casual/non-resident persons, and anyone liable for RCM, TDS or TCS — among others.
- New from 1 November 2025: an optional simplified registration track (CGST Rule 14A) grants auto-approval within 3 working days for small, low-risk applicants.
- Aggregate turnover is measured all-India and per PAN — all your businesses are added together to test the limit.
- Penalty for not registering when liable: ₹10,000 or the tax due, whichever is higher (Section 122).
- Position for FY 2026-27. Thresholds and rules can change by state notification — confirm your state before deciding.
The turnover thresholds
The basic rule is that you must register once your aggregate turnover in a financial year crosses the threshold for your state and supply type:
| Supply type | Most states | Special-category / NE states |
|---|---|---|
| Goods only | ₹40 lakh | ₹20 lakh |
| Services (or goods + services) | ₹20 lakh | ₹10 lakh |
Two things trip startups up here. First, the higher ₹40 lakh limit applies to goods only — the moment you also supply services (or supply services alone), the lower ₹20 lakh limit applies. Second, the state matters: specified special-category and north-eastern states use lower limits. States on the lower goods limit include Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura and Uttarakhand (a few of these — Manipur, Mizoram, Nagaland and Tripura — sit at ₹10 lakh even for goods), while Jammu & Kashmir, Ladakh and Assam use the ₹40 lakh limit. Always confirm the current notification for your state.
When you must register regardless of turnover (Section 24)
Section 24 of the CGST Act lists cases where registration is compulsory even if your turnover is well below the threshold — effectively from your first taxable supply. You must register if you:
- Make any inter-state taxable supply of goods (see the important service exception below);
- Sell through an e-commerce operator that collects TCS (Amazon, Flipkart, Meesho, etc.), or you are an e-commerce operator;
- Are a casual taxable person (for example, a stall at an exhibition in another state);
- Are a non-resident taxable person;
- Are liable to pay tax under reverse charge;
- Must deduct TDS (Section 51) or collect TCS (Section 52);
- Are an Input Service Distributor;
- Supply as an agent on behalf of another taxable person; or
- Supply OIDAR services from outside India to unregistered persons in India.
The two exceptions startups get wrong
The mandatory list above has two important reliefs that are widely misunderstood:
- Inter-state services: a service provider making inter-state supplies is not forced to register until crossing ₹20 lakh (Notification 10/2017-Integrated Tax). Only inter-state supply of goods triggers registration from the first rupee. So a Bengaluru freelancer billing a Mumbai client can stay unregistered until ₹20 lakh.
- Services through an e-commerce operator: small suppliers of services through an ECO are similarly relieved up to ₹20 lakh (Notification 65/2017). But if you sell goods through a marketplace, you must register from the first sale.
New: the 3-day simplified registration scheme (Rule 14A)
Approved at the 56th GST Council meeting in September 2025 and notified as CGST Rule 14A, an optional simplified registration track took effect from 1 November 2025:
- If you self-assess that your monthly output tax on B2B supplies will stay within ₹2.5 lakh (CGST + SGST/UTGST + IGST combined), you can opt into the scheme.
- Registration is then granted automatically within 3 working days, down from the usual 7.
- It is voluntary and reversible — you can withdraw if your business outgrows the ₹2.5 lakh limit. The government estimates roughly 96% of new applicants qualify.
For most early-stage startups, this makes getting a GSTIN materially faster and less painful.
How to calculate your aggregate turnover
“Aggregate turnover” is the number the thresholds are tested against, and it is broader than most founders assume. It is the all-India total of:
- all taxable supplies, plus
- exempt supplies, plus
- exports, plus
- inter-state supplies
… of all persons having the same PAN, computed on an all-India basis. It excludes the GST itself and the value of inward supplies on which you pay tax under reverse charge. The critical point: it is measured per PAN, not per business. If you run two proprietary firms under the same PAN, their turnovers are added together to decide whether you have crossed the limit.
Should a startup register voluntarily?
You can register even before you cross a threshold. Whether you should depends on who you sell to:
- Register early if you want to claim input tax credit on your purchases, you sell to GST-registered B2B customers who need a tax invoice, or you plan to sell inter-state or on marketplaces.
- Consider waiting if you sell mainly to price-sensitive B2C customers — once registered you must charge GST (which raises your price) and file returns every period, even when there are no sales.
Penalty for not registering when required
Failing to register when you are liable is an offence under Section 122 of the CGST Act, carrying a penalty of ₹10,000 or the amount of tax evaded, whichever is higher. On top of that, during any unregistered period you cannot legally collect GST from customers or claim input tax credit on your purchases, and the department can demand the tax with interest. For a growing startup, the cost of registering late almost always exceeds the cost of registering on time.
Common mistakes to avoid
- Applying the ₹40 lakh limit to services — for services (or goods + services) the limit is ₹20 lakh.
- Assuming inter-state services force registration — only inter-state goods do; inter-state services are relieved up to ₹20 lakh.
- Selling goods on a marketplace without registering — goods sellers on Amazon/Flipkart must register from the first sale.
- Ignoring turnover from a second business on the same PAN — aggregate turnover is per PAN.
- Charging GST before your certificate is issued — you can only collect GST once registered.
Frequently asked questions
Q: What is the GST registration limit for a service startup? A: ₹20 lakh aggregate turnover in most states (₹10 lakh in specified special-category states).
Q: I only sell online on Amazon/Flipkart — do I need GST? A: Yes. Selling goods through an e-commerce operator requires registration from your first sale, regardless of turnover.
Q: Do I need GST to bill a client in another state? A: For services, only after you cross ₹20 lakh. For goods, an inter-state supply requires registration from the first rupee.
Q: How fast is registration now? A: Under the simplified CGST Rule 14A scheme (from 1 November 2025), low-risk small applicants can get auto-approval within 3 working days.
Q: I run two small businesses — do I add their turnover? A: Yes. Aggregate turnover is computed per PAN across all your businesses.
Q: If I register voluntarily but make no sales, do I still file? A: Yes — once registered you must file returns (even nil returns) for every period.
Start billing the moment you register
Once you have your GSTIN, our free GST Invoice Generator produces compliant tax invoices with the CGST/SGST/IGST split calculated for you — add your GSTIN once and it auto-fills on every bill. Not yet registered, or supplying exempt goods? You can issue a Bill of Supply instead. Everything is free, with no sign-up required to start.