Do I Need GST Registration for My New Business? Thresholds, Exemptions & Rules

GST Registration Thresholds in 2026

In my 15+ years advising new businesses in Karol Bagh and Connaught Place, this is the single most common question I get: "Parul ji, mera naya business hai — kya mujhe GST lena padega?" The answer depends entirely on your turnover and the type of supply you make. Under Section 22 of the CGST Act 2017, every supplier whose aggregate turnover exceeds the threshold limit in a financial year must register for GST.

As of 2026, the GST registration thresholds in India are:

• Goods suppliers in normal category states (including Delhi): ₹40 lakh aggregate turnover per financial year
• Service providers in normal category states: ₹20 lakh aggregate turnover per financial year
• Goods suppliers in special category states (North-East, J&K, Himachal, Uttarakhand): ₹20 lakh
• Service providers in special category states: ₹10 lakh

When GST Registration is Mandatory Regardless of Turnover

Even if your turnover is below the threshold, GST registration is compulsory in certain cases. Section 24 of the CGST Act 2017 lists these mandatory registration categories. I have seen many small business owners in Chandni Chowk and Lajpat Nagar get caught by surprise on these rules.

You MUST register for GST, irrespective of turnover, if you:

1. Make inter-state taxable supply — Selling goods or services to a buyer in another state requires GST registration (Section 24(i))
2. Are a casual taxable person — Setting up a temporary stall or shop, like at trade fairs in Pragati Maidan
3. Are a non-resident taxable person — Foreign businesses making supplies in India
4. Supply through e-commerce operators — Selling on Amazon, Flipkart, Meesho requires GST registration regardless of turnover (Section 24(ix))
5. Are an e-commerce operator — Running a platform like Amazon or Flipkart itself
6. Are required to pay tax under reverse charge — Receiving services where you must pay GST under RCM
7. Supply online information or database access — IT/ITeS companies providing services from India
8. Are an agent of a supplier — Supplying goods on behalf of another registered person
9. Are an Input Service Distributor (ISD) — Distributing ITC among units

Benefits of Voluntary GST Registration

Under Section 25(3) of the CGST Act, any person can apply for voluntary GST registration even if their turnover is below the threshold. In my practice, I always recommend voluntary registration to businesses in Connaught Place and South Extension for several strategic reasons.

Key benefits of voluntary GST registration:

• Claim Input Tax Credit (ITC): You can claim ITC on all business purchases — rent, raw materials, services. Without GSTIN, you lose this credit entirely. For a business purchasing ₹5 lakh of taxable inputs annually at 18% GST, that is ₹90,000 of ITC you can claim.
• Business credibility: A GSTIN instantly tells your B2B clients that you are a legitimate, registered business. Many large companies in Nehru Place and Bhikaji Cama Place will not deal with unregistered vendors.
• E-commerce eligibility: You need GSTIN to sell on Amazon, Flipkart, and other platforms.
• Expand to inter-state supply: If you ever sell outside your state, you need GSTIN. Having it ready avoids last-minute registration delays.
• Government tenders: Most government tenders require a valid GSTIN as a mandatory document.
• Bank loan facilitation: Banks often ask for GST returns as proof of business turnover when processing business loans.

Who is Exempt from GST Registration

Not everyone needs GST registration. Under Section 23 of the CGST Act 2017, certain persons are specifically exempted from registration even if they are engaged in making supplies.

Persons exempt from GST registration:

• Persons making only exempt supplies — If you sell only GST-exempt goods (fresh fruits, vegetables, milk, eggs, unbranded flour), no registration needed
• Persons engaged exclusively in non-taxable supply — Alcohol for human consumption, petroleum products (still under state VAT)
• Agriculturists — Cultivation of land, sale of agricultural produce (with conditions)
• Persons below threshold making only intra-state supply — As discussed above

Inter-State Supply and GST Registration

This is where most new business owners in Delhi get confused. Under Section 24(i) of the CGST Act, any person making inter-state taxable supply must register for GST regardless of turnover. There is no threshold exemption for inter-state supply — even ₹1 of inter-state taxable supply triggers mandatory registration.

What counts as inter-state supply?

• Selling goods from Delhi to a buyer in Haryana, UP, or any other state
• Providing services where the location of the supplier and place of supply are in different states
• Export of goods or services (treated as inter-state supply under IGST Act)
• Supply to or by SEZ units (treated as inter-state supply)

Exception: Service providers making inter-state supply of services with aggregate turnover up to ₹20 lakh (₹10 lakh in special category states) are exempt from mandatory registration under a notification. But this exemption does NOT apply to goods suppliers.

GST for E-Commerce Operators and Sellers

E-commerce has created a massive compliance trap for new businesses. Under Section 24(ix) and Section 24(x), both e-commerce operators and e-commerce sellers must register for GST regardless of turnover.

E-commerce seller rules:

• Any person supplying goods through e-commerce operators (Amazon, Flipkart, Meesho, Myntra) must have GSTIN
• No threshold exemption applies — even ₹1 of e-commerce sales requires registration
• The e-commerce operator is required to collect TCS at 1% under Section 52

E-commerce operator rules:

• Any platform facilitating supply between supplier and customer must register
• Must collect TCS (Tax Collected at Source) at 0.5% CGST + 0.5% SGST (or 1% IGST)
• Must file GSTR-8 monthly

Composition Scheme vs Regular Registration

For new businesses with turnover up to ₹1.5 crore (₹75 lakh for service providers), the Composition Scheme under Section 10 of the CGST Act offers a simpler, lower-tax option. I often recommend this to small traders in Gandhi Nagar and Sadar Bazar who want to minimize compliance burden.

Composition Scheme tax rates:

• Goods manufacturers: 1% (0.5% CGST + 0.5% SGST)
• Restaurants (not serving alcohol): 5% (2.5% CGST + 2.5% SGST)
• Service providers (turnover up to ₹75 lakh): 6% (3% CGST + 3% SGST)
• Traders: 1% (0.5% CGST + 0.5% SGST)

Key limitations of Composition Scheme:

• Cannot claim Input Tax Credit
• Cannot make inter-state supply
• Cannot sell through e-commerce operators
• Must mention "Composition Taxable Person" on all invoices and signboards
• Quarterly return filing (CMP-08) instead of monthly

How to Register for GST — Step by Step

The GST registration process is fully online through the GST portal (gst.gov.in). Here is the step-by-step process I walk every new client through:

1. Go to gst.gov.in → Click "Services" → "Registration" → "New Registration"
2. Fill Part A: Enter your state, district, business name, PAN, email, and mobile number
3. Verify OTP — You will receive OTP on both email and mobile
4. Receive Temporary Reference Number (TRN) — Save this carefully
5. Fill Part B using TRN: Business details, principal place of business, additional places, goods/services details, bank account details
6. Upload documents: PAN, Aadhaar, photograph, business address proof, bank statement/cancelled cheque, authorization letter (for companies)
7. Submit using DSC or EVC — Digital Signature Certificate for companies, Electronic Verification Code for others
8. Receive ARN (Application Reference Number) — Track status using ARN
9. GSTIN issued within 3-7 working days — If the officer has no queries

Documents required for GST registration:

• PAN card of the business/applicant
• Aadhaar card of the proprietor/partners/directors
• Photograph of the proprietor/partners/directors
• Proof of business address (electricity bill, rent agreement, NOC from owner)
• Bank account details (cancelled cheque or bank statement)
• Authorization letter / Board Resolution (for LLPs and companies)

Common Mistakes New Business Owners Make

In my 15+ years of practice, I have seen these registration mistakes cost businesses lakhs in penalties. Here are the most common ones I encounter:

1. Waiting too long to register: If you cross the threshold on 15th August, you must apply by 14th September. Many businesses in Mayapuri and Okhla delay registration and end up paying penalty under Section 122 — minimum ₹10,000 or the tax amount, whichever is higher.
2. Not registering for inter-state supply: Even a single inter-state sale triggers mandatory registration. I had a client in South Extension who shipped one order to Bangalore and got a notice for not being registered.
3. Wrong business constitution: Selecting "Proprietorship" when you have an LLP or Pvt Ltd company. This creates mismatches with your PAN and delays registration.
4. Incorrect place of business: Your principal place of business must match your address proof documents exactly. Even minor differences (like "1st Floor" vs "Ground Floor") can trigger SCN.
5. Not adding all places of business: If you operate from multiple locations — say a shop in Karol Bagh and a warehouse in Narela — both must be added as additional places of business.
6. Applying for Composition without understanding limitations: Composition dealers cannot sell inter-state or online. If you plan to expand, regular registration is better.

Frequently Asked Questions