Quick Answer: Only once your aggregate turnover crosses the threshold, which is ₹40 lakh for goods and ₹20 lakh for services in most states, and lower in special category states. But turnover is not the only trigger. Selling across state lines makes registration compulsory from your very first supply, whatever you earn.
Most often, people turn the question around and ask it differently. The criteria for a proprietorship and those for a partnership for GST registration is identical. What differs is how you register, not whether you must.
Overview
| Registration | Goods and Services Tax (GST) |
| Administered by | Central Board of Indirect Taxes and Customs, on the GST Council's decisions |
| Who must register | Anyone crossing the threshold, or making inter-state supplies |
| Government fee | Nil |
| Mode | Online, on the GST portal |
| Result | A GSTIN linked to a PAN and a state |
Does a Sole Proprietor Need GST Registration?
A business owner is required to register as soon as the total amount of business done by him in India exceeds the threshold applicable to the category of goods supplied by him.
What Else Triggers Registration?
The threshold is not the only factor that will prompt registration, though. Any business owner must register if they are involved in inter-state commerce regardless of their annual turnover. In addition, different rules apply to sellers who use an e-commerce platform.
Turnover Thresholds: What Actually Applies
The GST threshold limit depends on what you supply and which state you supply from.
| Type of supply | Most states | Special category states |
|---|---|---|
| Goods | ₹40 lakh | ₹20 lakh |
| Services | ₹20 lakh | ₹10 lakh |
Where Are the Thresholds Published?
The ₹20 lakh threshold for services and ₹10 lakh threshold for special category states has been given on GST frequently asked questions according to Central Board of Indirect Taxes and Customs. The threshold for suppliers of goods is a much higher amount of ₹40 lakh, and was introduced through a notification in 2019.
Which Two Points Do People Get Wrong?
Two points people get wrong regularly:
- Aggregate turnover is all-India, not per state. If you supply from more than one state, you add it all up.
- Dealing only in exempt or nil-rated supplies removes the liability entirely. A trader supplying 100% exempt goods is not liable to register whatever the turnover.
Where Can You Read More on Thresholds?
Our guide on the GST registration turnover limit goes into the thresholds in more detail.
GST Registration for Proprietorship vs Partnership: What Changes
Here is the difference that matters most, and it is not the threshold.
| Proprietorship | Partnership firm | |
|---|---|---|
| PAN used | The proprietor's personal PAN | The firm's own PAN |
| Legal identity | Same as the proprietor | Separate from the partners |
| Constitution proof | Not usually applicable | Partnership deed |
| Photograph needed | Of the proprietor | Of the partners |
| Authorised signatory | The proprietor | Named partner, with authorisation |
| If the structure changes | A new registration is required | A new registration is required |
Why Does a New Structure Need a New Registration?
Significance of the last line is noteworthy as GST registration for a partnership firm is carried out through firm's PAN. The Central Board of Indirect Taxes and Customs has stated that proprietorship firms that have been converted into partnership firms need to get fresh registrations. Old registration cannot simply be converted into new registration. The person considering getting a partner in the firm should keep this aspect in mind.
Can You Register With a Personal Current Account?
When we talk about a proprietorship, the proprietor and the business owned by him are treated as one legal entity. Therefore, the information given will more often be the account details of the proprietor being used in managing the business.
How Does a Partnership Firm Differ?
A partnership firm has a separate status, with its own PAN, and has a different bank account in the name of the firm.
What Changes If You Sell Online?
A great deal. Making inter-state supplies makes you liable to register regardless of turnover, and selling through e-commerce platforms brings its own requirements.
Who Gets Caught Out Selling Online?
This is where people get confused about small business GST registration. For instance, a person who sells handmade products from home will have to register even before they cross the ₹40 lakh mark. If you have any questions related to your case, you can check GST eligibility checker for the triggering events.
What About Voluntary Registration?
Many small business owners choose this since customers prefer to buy from suppliers who are registered dealers under the GST in order to take benefit from the input tax credit that is only available to registered persons.
What Follows Voluntary Registration?
It is important to understand what follows registration. When you become registered, you will have to pay taxes for your products and comply with the conditions of submitting the tax return like everyone else.
How Long Does Approval Take?
The registration on the GST portal comes free of charge and is completely an online process. However, the time required for completion of the process depends on the method of filing of the application and the Aadhaar verification process. Applications are more often delayed by mismatched documents, particularly address proof that does not match the premises named, than by anything structural.
Where Do You Apply?
For the process itself end to end, see our full GST registration guide, and you can apply directly on the GST portal.
Getting Registered Without a Rejection
In a nutshell, both refusals and inquiries stem from the same causes: there is a discrepancy between the document and the constitution of the business, proof of residence is different from the address of the business, or authority of the signee is not sufficient.
Can Someone File It for You?
If you would rather have the file checked before it goes in than after a query lands, you can have your GST registration filed and followed up for you. The GSTIN itself is always issued by the tax authorities through the GST portal.
