GST Registration Threshold: ₹20 Lakh for Services vs ₹40 Lakh for Goods
Introduction
One of the most common questions for small businesses is: “When do I need to register under GST?”
The answer depends largely on the nature of supplies being made. Under the current GST framework, the general threshold for service providers is ₹20 lakh, while eligible businesses dealing exclusively in goods can avail a higher threshold of ₹40 lakh, subject to applicable conditions and State-wise provisions.
Understanding this difference is important because crossing the applicable threshold can create a GST registration and compliance obligation.
GST Registration Threshold in 2026
Nature of Business General Threshold
Supply of Services ₹20 lakh
Exclusive Supply of Goods ₹40 lakh
Services in specified special-category States ₹10 lakh
Goods in specified States ₹20 lakh
The threshold is based on aggregate turnover, which is generally computed on an all-India PAN basis and includes taxable supplies, exempt supplies and exports, while excluding GST charged.
₹20 Lakh Threshold for Services
For most service providers, GST registration becomes applicable when aggregate turnover exceeds ₹20 lakh in a financial year.
For example, a consultant, professional, marketing agency or other service provider with an aggregate turnover of ₹18 lakh would generally remain below the registration threshold, subject to the applicable provisions.
However, certain categories covered under Section 24 of the CGST Act can be required to register even without crossing the normal threshold. Therefore, turnover alone should not always be treated as the only test.
₹40 Lakh Threshold for Goods
Eligible persons making exclusive supplies of goods can generally avail the higher registration threshold of ₹40 lakh.
This higher limit was introduced with effect from 1 April 2019, with different thresholds applicable in specified States. For such businesses, the distinction between goods and services becomes particularly important while determining GST registration liability.
For example, a trader dealing exclusively in taxable goods with an aggregate turnover of ₹32 lakh may generally remain below the registration threshold where the ₹40 lakh limit applies.
Important: The ₹40 Lakh Limit Is Not Universal
The ₹40 lakh threshold should not be blindly applied to every business.
Businesses supplying both goods and services, businesses covered by compulsory registration provisions, and businesses operating under specific State-wise conditions need to examine the applicable rules separately.
Certain specified States have a lower threshold for goods, generally ₹20 lakh, while the threshold for services in specified States can be ₹10 lakh.
Conclusion
The GST registration threshold in 2026 can broadly be understood as:
Services → ₹20 lakh
Eligible exclusive suppliers of goods → ₹40 lakh
But the real question is not simply “Has turnover crossed ₹20 lakh or ₹40 lakh?” The nature of supply, State of operation, aggregate turnover and compulsory-registration provisions must also be considered.
For businesses approaching the threshold, reviewing GST registration requirements before crossing the limit can help avoid unnecessary compliance issues and last-minute registration concerns.
Note: GST registration provisions are subject to the CGST Act, applicable notifications and State-specific provisions. Businesses should verify their specific facts before determining registration liability.
Vansh Bhatiya is an Accounts Executive in TAXAJ's Accounts & Taxation team. With over six years of industry experience, Vansh handles bookkeeping, tax filings and day-to-day compliance for clients. TAXAJ is a multi-disciplinary consulting firm spanning finance, taxation, legal, secretarial, FEMA and IPR, with offices in Delhi, Bihar, Bangalore and Goa.
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