GST registration is one of the first big decisions for a growing Indian business. Register too late and you face penalties and back taxes. Register when you don’t need to and you take on filing work and may have to charge customers more. This guide explains when registration is compulsory, when it makes sense anyway, how the composition scheme works, and how to apply. This guide explains GST registration in India: thresholds, documents and how to apply.
GST rules change regularly. The rates changed significantly on 22 September 2025 under GST 2.0, and a faster registration route started on 1 November 2025. Check the GST portal or a chartered accountant for your exact situation.
Key points
Table of Contents
- You must register once your aggregate turnover crosses ₹40 lakh a year if you supply only goods in most states, or ₹20 lakh if you supply services (lower thresholds apply in some states).
- Some businesses must register whatever their turnover, including most sellers of goods to other states and many sellers on e-commerce marketplaces.
- Registration is free on gst.gov.in. Since 1 November 2025, small and low-risk applicants can opt for approval within three working days under the simplified registration scheme.
- The composition scheme lets small businesses pay a low fixed rate with simpler filing, but they can’t collect GST from customers or claim input tax credit.
- Under GST 2.0, most goods and services are taxed at 5% or 18%, with 40% for luxury and sin goods.
When registration is compulsory
The turnover threshold
You must register when your aggregate turnover in a financial year crosses:
- ₹40 lakh if you supply only goods, in most states
- ₹20 lakh if you supply services, or goods and services together
- lower limits in some states: for example ₹20 lakh for goods in several states, and ₹10 lakh for services in Manipur, Mizoram, Nagaland and Tripura
Aggregate turnover is the total value of all your supplies across India under the same PAN, including exempt supplies and exports, but not GST itself. If you run two shops in different states under the same PAN, add them together.
Check the threshold that applies in your state on the GST portal before relying on these figures.
Registration regardless of turnover
You must register even below the threshold if, for example, you:
- sell goods to customers in other states (inter-state supply of goods). Service providers selling to other states can stay below the threshold without registering.
- sell through e-commerce operators that collect tax at source, such as most online marketplaces. Small suppliers of goods selling only within their own state through marketplaces have some relief under conditions, so check the current rules.
- are a casual taxable person, such as a seller at a trade fair in another state
- are liable to pay tax under reverse charge
- are an agent supplying on behalf of other registered businesses
Should you register voluntarily?
Registering before you have to can help if:
- Your customers are businesses. Registered buyers can claim input tax credit on your invoices, so many prefer, or insist on, GST-registered suppliers.
- You buy a lot of goods or equipment. Registration lets you claim credit for the GST you pay on purchases, reducing your costs.
- You want to sell online or to government. Marketplaces and the Government e-Marketplace generally require a GSTIN.
- You want to look established. Many customers trust GST-registered businesses more. On the free India Business Directory, listings with a GST number show "GST registered" and have a higher chance of approval.
Registration may not make sense if your customers are mostly individuals, your purchases are small, and you’re well below the threshold. Charging GST then simply raises your prices without any offsetting credit.
The composition scheme
The composition scheme is designed for small businesses that sell mainly to consumers. Instead of charging GST on each sale and claiming credits, you pay a small percentage of your turnover.
| Business type | Turnover limit | Tax rate |
|---|---|---|
| Traders and manufacturers | Up to ₹1.5 crore (₹75 lakh in some states) | 1% |
| Restaurants not serving alcohol | Up to ₹1.5 crore | 5% |
| Service providers (and mixed suppliers) | Up to ₹50 lakh | 6% |
The rates above are the total of central and state tax.
Advantages: low tax, quarterly payments with a simple statement, and an annual return instead of monthly returns.
Limits: you can’t collect GST from customers, can’t claim input tax credit, can’t make inter-state supplies of goods, and can’t sell goods through most e-commerce operators. You issue a bill of supply instead of a tax invoice, stating that you’re a composition taxable person not eligible to collect tax. Certain businesses, such as manufacturers of ice cream, pan masala and tobacco, can’t opt in.
Composition suits a kirana store, small eatery or local manufacturer selling to consumers. It doesn’t suit a business whose customers are mostly other businesses, because they can’t claim credit on your purchases.
GST rates after GST 2.0
On 22 September 2025, the GST Council’s reforms replaced the old four-slab structure of 5%, 12%, 18% and 28% with:
- 0% for exempt essentials
- 5%, the merit rate for many essentials and mass-consumption goods
- 18%, the standard rate for most goods and services
- 40% for select luxury and sin goods
- special rates of 0.25% and 3% for items such as rough diamonds and gold
Most items that were at 12% moved to 5%, and most at 28% moved to 18%. Check the rate for your specific goods and services, by HSN or SAC code, on the CBIC website.
How input tax credit works: a simple example
Input tax credit is the main reason registration can save money. Suppose you run a registered furniture workshop in Jaipur:
- You buy wood and fittings for ₹1,00,000 plus 18% GST of ₹18,000.
- You sell finished furniture to a registered interior design firm for ₹1,60,000 plus 18% GST of ₹28,800.
- You pay the government only the difference: ₹28,800 minus ₹18,000, or ₹10,800.
Your customer, in turn, claims the ₹28,800 as credit against the GST they charge their own clients. That’s why business customers prefer registered suppliers: buying from an unregistered workshop, they’d pay the same price with no credit to claim.
If you weren’t registered, you couldn’t claim the ₹18,000 you paid on materials, so it would simply be a cost. For businesses with large purchases, that can make registration worthwhile even below the threshold.
Documents by type of business
- Proprietorship: proprietor’s PAN and Aadhaar, photograph, address proof of the business premises, and a cancelled cheque or bank statement.
- Partnership firm: the firm’s PAN, partnership deed, PAN, Aadhaar and photographs of partners, authorisation for the signatory, and address and bank proof.
- LLP or company: PAN, certificate of incorporation, details of directors or designated partners, a board resolution or authorisation for the signatory, and address and bank proof.
Unsure which structure to use? See our guide to choosing a business structure in India, or try Advanton’s business structure chooser.
How to register, step by step
- Get your documents ready: PAN of the business (or proprietor), Aadhaar, a photograph, proof of business address (electricity bill, rent agreement or property document, plus a no-objection certificate if the premises aren’t yours), bank account details, and, for firms and companies, the partnership deed or incorporation certificate.
- Go to gst.gov.in and choose Services, then Registration, then New Registration. Enter PAN, mobile number and email, and verify with OTPs to get a Temporary Reference Number (TRN).
- Complete the application (Form GST REG-01) using the TRN: business details, promoters, place of business, goods and services with HSN or SAC codes, and bank details. Upload the documents.
- Choose Aadhaar authentication. You may be asked for biometric verification at a GST Suvidha Kendra, depending on your state.
- Opt for the simplified scheme if eligible. Under Rule 14A, if your output tax on supplies to registered persons won’t exceed ₹2.5 lakh a month, you can opt for automated approval within three working days. Applicants the system identifies as low risk can also be approved quickly.
- Track your application with the Application Reference Number (ARN). If the officer asks for clarification, respond quickly.
- Download your registration certificate (Form GST REG-06) once approved, and display it at your place of business.
After you register
- Display your GSTIN at your premises and on your signboard and invoices.
- Issue proper tax invoices with your GSTIN, HSN or SAC codes and the correct tax split. Our GST invoice guide explains every required detail, and Advanton’s free GST invoice generator does the calculations.
- File returns on time. Most businesses file GSTR-1 (sales) and GSTR-3B (summary and payment). Businesses with turnover up to ₹5 crore can file quarterly under the QRMP scheme while paying tax monthly. Composition dealers file quarterly statements and an annual return.
- Add your GSTIN to your listings. It’s a trust signal on the India Business Directory.
Penalties for not registering
If you should have registered but didn’t, you owe the tax you should have collected, plus interest, plus a penalty of 10% of the tax due or ₹10,000, whichever is higher, rising to 100% of the tax in cases of deliberate evasion. Watch your turnover month by month as you approach the threshold.
Frequently asked questions about GST registration in India
Is GST registration free?
Yes. Registration on gst.gov.in is free. You can apply yourself or use a chartered accountant or GST practitioner for help.
I’m a freelancer with clients abroad. Do I need GST?
Exports of services count towards aggregate turnover. Once you cross the ₹20 lakh threshold, you must register, even though exports are zero-rated. Many freelancers export under a Letter of Undertaking (LUT) without paying GST.
Can I register with a home address?
Yes, with proof of the address and, if you don’t own it, consent from the owner.
Can I cancel GST registration later?
Yes, if your turnover falls below the threshold and you’re not otherwise required to be registered, you can apply to cancel.
Does GST registration replace Udyam registration?
No. They’re separate. See our Udyam registration guide.
Sources
- GST portal (Goods and Services Tax Network)
- Central Board of Indirect Taxes and Customs, GST
- MoSPI, Press note on the ASUSE 2025 detailed report (6 May 2026)
Last reviewed November 7, 2026. Startup costs are estimates; check local prices, licensing and tax rules before you commit money.
