GST Registration in India: A Complete Guide to Sections 22 & 24
GST Registration in India: A Complete Guide to Sections 22 & 24
Understanding when GST registration becomes mandatory is crucial for every business owner in India. While many believe registration is only required after crossing the ₹40 lakh turnover threshold, the reality is more nuanced. Let's break down the registration requirements under the GST Act.
Section 22: Turnover-Based Registration
Section 22 of the GST Act outlines the basic threshold limits for mandatory registration based on your business turnover.
The Legal Provision
Section 22(1) states:
"Every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees:
Provided that where such person makes taxable supplies of goods or services or both from any of the special category States, he shall be liable to be registered if his aggregate turnover in a financial year exceeds ten lakh rupees:
Provided further that the Government may, at the request of a special category State and on the recommendations of the Council, enhance the aggregate turnover referred to in the first proviso from ten lakh rupees to such amount, not exceeding twenty lakh rupees and subject to such conditions and limitations, as may be so notified:
Provided also that the Government may, at the request of a State and on the recommendations of the Council, enhance the aggregate turnover from twenty lakh rupees to such amount not exceeding forty lakh rupees in case of supplier who is engaged exclusively in the supply of goods, subject to such conditions and limitations, as may be notified."
What This Means in Simple Terms
Standard Threshold Limits
For most states and union territories in India, you must register for GST if your aggregate turnover exceeds ₹20 lakh in a financial year. This applies to businesses supplying goods, services, or both.
Special Category States
For special category states (Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim, and Uttarakhand), the threshold is lower at ₹10 lakh aggregate turnover.
Enhanced Limit for Goods Suppliers
An important provision allows states to increase the threshold to ₹40 lakh for businesses engaged exclusively in the supply of goods. Many states have adopted this higher limit, providing relief to small traders and retailers.
Key Point: Even if you supply exempt services like extending loans or deposits (where consideration is interest), you're still considered exclusively in goods supply for this exemption.
Understanding Aggregate Turnover
As per the explanation in Section 22, aggregate turnover includes:
- All taxable supplies made by you
- Exempt supplies
- Exports
- Inter-state supplies
- Supplies made on behalf of all principals (if you're an agent)
Important Exception: The supply of goods after completion of job work by a registered job worker is treated as supply by the principal, and the value is not included in the job worker's aggregate turnover.
Transfer and Succession
Section 22(3) states that when a business is transferred as a going concern (whether through succession or otherwise), the transferee must obtain GST registration from the date of transfer.
Section 22(4) covers corporate restructuring - in cases of amalgamation or demerger approved by High Courts or Tribunals, registration is required from the date the Registrar of Companies issues the incorporation certificate.
Section 24: Mandatory Registration (Regardless of Turnover)
Here's where many businesses get caught off-guard. Section 24 lists categories that must register for GST regardless of their turnover. Even if your annual revenue is just ₹1 lakh, you need GST registration if you fall under any of these categories.
The Legal Provision
Section 24 states:
"Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act,—
(i) persons making any inter-State taxable supply;
(ii) casual taxable persons making taxable supply;
(iii) persons who are required to pay tax under reverse charge;
(iv) persons who are required to pay tax under sub-section (5) of section 9;
(v) non-resident taxable persons making taxable supply;
(vi) persons who are required to deduct tax under section 51, whether or not separately registered under this Act;
(vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise;
(viii) Input Service Distributor, whether or not separately registered under this Act;
(ix) persons who supply goods or services or both, other than supplies specified under sub-section (5) of section 9, through such electronic commerce operator who is required to collect tax at source under section 52;
(x) every electronic commerce operator who is required to collect tax at source under section 52;
(xi) every person supplying online information and data base access or retrieval services from a place outside India to a person in India, other than a registered person;
(xia) every person supplying online money gaming from a place outside India to a person in India; and
(xii) such other person or class of persons as may be notified by the Government on the recommendations of the Council."
Breaking Down Each Category
1. Inter-State Suppliers [Clause (i)]
Making even a single supply from one state to another? Registration is mandatory. This catches many small online sellers who ship across state lines.
2. Casual Taxable Persons [Clause (ii)]
Planning to set up a temporary stall at an exhibition in another state? You're a casual taxable person and need registration, even if it's just for a few days.
3. Reverse Charge Mechanism [Clause (iii)]
If you're buying goods or services where you (the recipient) must pay GST instead of the supplier, registration is required.
4. E-Commerce Operators [Clause (x)]
Platforms like Amazon, Flipkart, Swiggy, and Zomato must register and collect Tax Collected at Source (TCS) on behalf of sellers, regardless of their own turnover.
5. Sellers Through E-Commerce Platforms [Clause (ix)]
If you're selling through e-commerce operators who collect tax at source, you need registration (except for certain notified supplies).
6. Non-Resident Taxable Persons [Clause (v)]
Foreign businesses making taxable supplies in India must register, even for a single transaction.
7. Agents and Aggregators [Clause (vii)]
Supplying goods or services on behalf of others? You need registration regardless of your turnover.
8. Tax Deduction at Source (TDS) Entities [Clause (vi)]
Government departments, local authorities, and notified entities deducting tax at source under Section 51 must register.
9. Input Service Distributors [Clause (viii)]
Businesses distributing input tax credit to their branches need separate registration as Input Service Distributors.
10. Digital Service Providers [Clauses (xi) & (xia)]
Foreign companies providing:
- Online information and database access services
- Online money gaming services
to Indian customers (other than registered persons) must register.
Practical Implications for Businesses
Common Scenarios Requiring Mandatory Registration
Scenario 1: Small trader selling on Amazon
- Annual turnover: ₹5 lakh
- Status: Must register under Section 24(ix) as selling through e-commerce operator
Scenario 2: Local retailer with ₹15 lakh turnover
- Only local sales within state
- Status: No registration required (below ₹20 lakh threshold)
Scenario 3: Same retailer ships one order to another state
- Status: Must immediately register under Section 24(i) for inter-state supply
Scenario 4: Service provider with ₹18 lakh turnover
- Receives advance from government department that deducts TDS
- Status: Must register under Section 24(iii)
Common Mistakes to Avoid
- Ignoring inter-state supplies: Even one supply to another state triggers mandatory registration under Section 24
- Assuming turnover threshold applies universally: Section 24 overrides Section 22 thresholds
- Not registering when joining marketplaces: Most e-commerce platforms require sellers to have GST registration
- Mixing personal and business transactions: Only business turnover counts toward the threshold
- Delayed registration during business transfer: Registration is required from the date of transfer, not after completing paperwork
Benefits of Voluntary Registration
Even if not mandatory under Sections 22 or 24, voluntary GST registration offers advantages:
- Input Tax Credit: Claim credit on business purchases and reduce tax liability
- Business Credibility: Enhanced trust with B2B customers who need input credit
- Seamless Scaling: No disruption when you cross mandatory thresholds
- Interstate Expansion: Freedom to expand business across states
- Formal Business Recognition: Better access to institutional credit and tenders
Penalties for Non-Compliance
Under Section 122 of the GST Act, failure to register when required can result in:
- Penalty: 10% of tax due (minimum ₹10,000)
- Interest: On unpaid tax from the due date
- Recovery Proceedings: Attachment of bank accounts and property
- Imprisonment: Up to 5 years in cases of willful evasion exceeding ₹5 crore
Timeline for Registration
Once you become liable for registration:
- Section 22 cases: Within 30 days of becoming liable
- Casual/Non-resident taxable persons: At least 5 days before commencing business
- Transfer/Succession: From the date of transfer
Conclusion
GST registration isn't just about crossing the ₹20 or ₹40 lakh turnover mark. Section 24 creates numerous scenarios where registration becomes mandatory regardless of turnover.
Key Takeaways:
✓ Section 22 sets turnover-based thresholds (₹20 lakh standard, ₹40 lakh for goods-only suppliers in some states)
✓ Section 24 mandates registration for specific categories regardless of turnover
✓ Inter-state supplies, e-commerce sales, and reverse charge purchases are common triggers
✓ Non-compliance can lead to significant penalties and legal consequences
✓ When in doubt, voluntary registration often provides more benefits than risks
Action Steps:
- Evaluate if your business falls under any Section 24 category
- Track your aggregate turnover monthly
- Set up alerts at 80% of threshold limits
- Maintain detailed supply records
- Consult a GST practitioner before expanding operations
Understanding these provisions helps ensure compliance and avoids costly penalties. Stay informed, track your supplies carefully, and register proactively when required.
About the Authors
Disclaimer: This blog provides general educational information about GST registration requirements under Sections 22 and 24 of the CGST Act, 2017. While every effort has been made to ensure accuracy, this content should not be construed as professional tax advice. GST laws are subject to frequent amendments, notifications, and judicial interpretations. For personalized guidance specific to your business circumstances, please consult with a qualified tax professional. The author assumes no liability for actions taken based solely on the information provided in this article.