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GST Rules

GST Registration — Who Must Register

GST registration is mandatory above ₹40 lakh turnover. Here is the threshold, the application process, what the GSTIN format means, and what happens if you operate without it.

Introduction

GST registration is the process of getting a unique GSTIN that identifies your business in the GST system. Once registered, you can collect GST from your customers, claim input tax credit on purchases, and file returns. Operating without a mandatory GST registration is a legal offence.

Registration is free and done entirely online at gst.gov.in. Most applicants receive their GSTIN within three working days if their documents are in order. The registration is permanent unless surrendered or cancelled.

Key concepts

Threshold limit

Businesses with aggregate turnover above ₹40 lakh in a financial year must register. Special category states (northeastern, hill states) have a ₹20 lakh threshold. Service businesses use the same thresholds.

Mandatory registrations

E-commerce operators, casual taxable persons, non-resident taxable persons, and TDS deductors must register under GST regardless of turnover. Their registration is mandatory, not optional.

Composition scheme

Small businesses with turnover up to ₹1.5 crore can opt for the Composition Scheme — paying GST at a lower rate (5% for restaurants, 3% for manufacturers, 1% for traders) with simplified compliance.

GSTIN format

A GST Identification Number (GSTIN) is a 15-character alphanumeric code: first 2 characters are state code, next 10 are PAN, then entity code, and last character is checksum. Every invoice must carry the GSTIN.

When GST registration is mandatory vs optional

Business type Registration threshold
General businesses ₹40 lakh turnover
Special category states ₹20 lakh turnover
E-commerce operator / seller Mandatory regardless of turnover
Casual taxable person Mandatory before first supply
Inter-state supplier Mandatory regardless of turnover

Frequently asked questions

Do I need GST registration?
You need GST registration if your annual turnover exceeds ₹40 lakh (₹20 lakh in special category states). You also need it if you sell on e-commerce platforms, operate from multiple states, make inter-state supplies, or are a casual taxable person — regardless of turnover.

How do I apply for GST registration?
Apply on the GST portal at gst.gov.in. You need your PAN, Aadhaar, address proof, bank account details, and photographs. The application is filed online using Form GST REG-01. For most cases, registration is auto-approved within 3 working days if no discrepancy is found.

What is the GSTIN?
GSTIN (GST Identification Number) is your unique 15-character GST registration number. The first two digits are your state code (e.g., 27 for Maharashtra). The next 10 characters are your PAN. The 13th character is a business type code, and the 15th is a check digit. Every tax invoice you issue must display your GSTIN.

What is the Composition Scheme?
The Composition Scheme lets small businesses pay GST at a reduced rate without filing detailed returns. Turnover must be below ₹1.5 crore. You pay 5% on restaurant services, 3% on manufacturing, 1% on trading. You cannot claim ITC and cannot make inter-state sales under the Composition Scheme.

What happens if I operate without GST registration?
Operating without mandatory GST registration attracts a penalty of 10% of the tax due (minimum ₹10,000) for the first offence, and 100% of the tax for subsequent offences. If the person deliberately evades tax, the minimum penalty is 100% of the tax. A registered person cannot claim ITC on purchases from an unregistered supplier above threshold.

Sources

Last reviewed by FinWiz24 Research Desk.