The GST registration threshold for a small business in India is ₹40 lakh of turnover for a shop selling goods, and ₹20 lakh for a service business, in a normal-category state. Cross it in a financial year and registration becomes compulsory. A few states use lower limits, and some sellers must register from their very first sale regardless of turnover. This guide explains the figures, what “turnover” actually counts, and the cases where the threshold doesn’t help you.
The GST registration threshold at a glance
Under the CGST Act, a small business must register once its aggregate turnover in a financial year crosses the limit for its state and supply type (see the GST portal):
| What you sell | Normal-category states | Special-category states |
|---|---|---|
| Goods | ₹40 lakh | ₹20 lakh |
| Services (or goods + services) | ₹20 lakh | ₹10 lakh |
A few points that trip shopkeepers up:
- The higher ₹40 lakh limit is only for a business dealing wholly in goods, and only where the state has adopted it. It does not apply to certain notified goods (such as pan masala, tobacco and ice cream).
- Special-category states are mainly the north-eastern and hill states. Not all of them chose the lower figure — a few opted for the higher ₹40 lakh limit for goods. The exact list changes, so confirm your own state’s threshold on gst.gov.in or with your CA rather than assuming.
- If you sell both goods and services, the lower ₹20 lakh services limit applies to your combined turnover.
What counts as “turnover”
The threshold is measured on aggregate turnover, not just your taxable sales. On a single PAN, across all your branches in India, add up:
- taxable sales,
- exempt sales (e.g. fresh vegetables, unbranded flour),
- exports, and
- inter-state supplies.
You then exclude the GST and cess you collected, and inward supplies on which you pay tax under reverse charge. The key surprise for many shops is that exempt sales still count — a kirana store selling a lot of nil-rated staples can reach the limit sooner than it expects. Confirm the exact definition on cbic.gov.in if your mix is complex.
When you must register even below the threshold
The turnover limit is not a blanket free pass. You must register from your first sale, regardless of turnover, in cases such as:
- Inter-state supply of goods — sell goods to a buyer in another state and the threshold no longer protects you.
- Selling through an e-commerce operator — listing on an online marketplace generally requires registration.
- Casual or seasonal stalls away from your registered place, and non-resident sellers.
Reverse-charge cases — where the buyer, not the seller, pays the GST — also require registration from day one. These rules have specific conditions, so check your exact situation on gst.gov.in or with your CA.
A worked example: when does an Indore shop cross the line?
Meena runs a kirana and general store in Indore, Madhya Pradesh — a normal-category state, so her goods threshold is ₹40 lakh. Over the financial year her sales add up to:
| Sales in the year | Amount |
|---|---|
| Taxable goods (biscuits, soap, packaged snacks…) | ₹36,00,000 |
| Exempt goods (fresh vegetables, unbranded atta) | ₹6,00,000 |
| Aggregate turnover | ₹42,00,000 |
₹36,00,000 + ₹6,00,000 = ₹42,00,000, which is above ₹40,00,000. Even though a big chunk was exempt, Meena has crossed the threshold and must register. Had she looked at only her taxable ₹36,00,000, she would have wrongly assumed she was still below the line.
Now compare Ravi, a tailor in the same city. Tailoring is a service, so his limit is ₹20 lakh. If his year’s stitching receipts come to ₹22,00,000, he too must register — even though a goods shop with the same ₹22 lakh would still be well under its ₹40 lakh limit. Same city, same rupees, different threshold, because one sells goods and the other sells a service.
Should a small shop register voluntarily?
You can also register before you hit the limit. Shops choose to when they want to:
- claim input tax credit on the GST they pay to suppliers,
- issue a proper tax invoice to B2B buyers who insist on one, or
- look established to larger customers.
The trade-off is real compliance: once registered, you file returns on time every period, whether or not you owe tax. For a tiny counter shop that sells only to walk-in customers, staying below the threshold may be simpler. Weigh it for your own shop, and if you already sell to businesses, read our guide to the GST invoice format for small shops.
After you register: your billing has to be GST-ready
Registration is a portal (or CA) job — Yojika does not register your shop for you. What it does is everything after the certificate arrives: from the day you have a GSTIN, every taxable sale needs a correct tax invoice, with the right CGST/SGST or IGST split, unique invoice numbers that reset each financial year, and HSN codes on your items.
Yojika is offline-first GST billing software built for exactly that. Its tax engine splits CGST/SGST or IGST automatically from the place of supply, numbers your invoices correctly across the financial year, and prints to A4, A5 or a thermal receipt printer — in any of the 22 official Indian languages. Your business data stays on your own PC.
- See what’s included on the features page.
- Check simple, transparent pricing on the pricing page.
- Or download Yojika and try it free for 14 days.
Not yet registered but already billing walk-in customers? See how to bill a B2C customer without a GSTIN.
This article is general information, not tax advice. GST thresholds and state options change — confirm the current position on gst.gov.in, cbic.gov.in or with your CA before you decide.