Special-category states and the lower GST registration threshold
Why a business in some north-eastern and hill states must register for GST sooner
Most states use the standard GST registration thresholds of Rs 40 lakh turnover for goods and Rs 20 lakh for services. A small group of states, designated special-category for GST, use lower thresholds, with Rs 10 lakh for services applying in the smaller north-eastern states. If you operate in one of these states you may have to register for GST at a lower turnover than a business elsewhere, so check your own state's current notified threshold before assuming the Rs 40 lakh or Rs 20 lakh figure applies to you.
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What special-category status means for GST registration
The GST law sets a default registration threshold of Rs 40 lakh aggregate turnover for a supplier of goods and Rs 20 lakh for a supplier of services. For a designated set of special-category states, a lower threshold applies, and for the smaller north-eastern states the threshold is Rs 10 lakh for services and Rs 20 lakh for goods. The practical effect is that a small business in one of these states can cross the registration line at a turnover where a business in a standard state would still be exempt. The exact threshold that applies depends on the state and on whether you supply goods, services, or both, so confirm the current notified figure for your state.
warningThe special-category list and the threshold a given state has opted into have changed over time. Treat the figures here as the framework and verify your own state's current notification before relying on it.
Which states are affected
The special-category states for GST purposes are drawn from the north-eastern and certain hill states. The smaller north-eastern states (such as Manipur, Mizoram, Nagaland and Tripura) carry the lowest Rs 10 lakh services threshold. Several other states that are constitutionally special-category opted to keep the standard Rs 40 lakh goods threshold, so special-category status under the Constitution and the GST registration threshold a state actually applies are not always the same thing. This is why the rule of thumb is to check the state, not to assume.
When you must register regardless of the threshold
The threshold only matters if none of the compulsory-registration triggers apply. Under section 24 of the CGST Act, registration is compulsory regardless of turnover for inter-state supply of goods, for supplies made through an e-commerce operator, and where you are liable to pay tax under reverse charge, among other categories. So a small business below the special-category threshold can still be required to register because of how or to whom it supplies.
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Source / notes
- CGST Act 2017 s.22 (registration threshold)
- CGST Act 2017 s.24 (compulsory registration)
Frequently asked questions
Does the lower threshold apply to every north-eastern state?+
No. The smaller north-eastern states carry the Rs 10 lakh services threshold, but several special-category states opted to keep the standard Rs 40 lakh goods threshold. Check the current notified threshold for your specific state rather than assuming the lowest figure applies everywhere.
I supply services from a special-category state below Rs 10 lakh. Am I exempt?+
Only if none of the compulsory-registration triggers apply. If you supply inter-state, sell through an e-commerce operator, or are liable under reverse charge, you must register regardless of turnover under section 24. The threshold exemption is for ordinary intra-state supply.
How do I confirm my state's threshold?+
Check the current CGST notification on the registration threshold and your state's GST portal. The framework is Rs 40 lakh goods / Rs 20 lakh services for standard states and a lower figure (Rs 10 lakh services in the smaller north-eastern states) for special-category states, but the figure a given state applies can change by notification.
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