GST Registration Rules and Applicability: Latest Guide for 2025

GST (Goods and Services Tax) is India’s unified indirect tax regime, replacing multiple indirect taxes (like VAT, service tax, excise). Under GST, businesses making taxable supplies must register and obtain a GSTIN (GST Identification Number). Registration enables businesses to:

• Legally collect GST from customers
  
  
• Claim input tax credit (ITC) on inward supplies
  
  
• File periodic GST returns
  
  
• Operate inter-state business if eligible

Without registration (when it is required), you cannot issue GST invoices, nor benefit from ITC, and you may be penalised.

Key “GST Rules” Governing Registration

While the GST law is detailed and technical, here are the principal rules and provisions relevant to registration:

1. Sections 22 & 24 of the CGST Act, 2017
   
   • Section 22 lays down the turnover thresholds above which a person must register (for goods or services).
     
     
   • Section 24 lists specific categories of persons who must register regardless of turnover.
     
2. Aggregate Turnover Definition
   
   Aggregate Turnover is the total value of all supplies made by a person having the same PAN, computed on an all-India basis, including:
   
   

• Taxable supplies (inter-state and intra-state)
• Exempt supplies 
• Exports of goods or services
• Supplies made on behalf of principals (by an agent)
  

However, the following are excluded from Aggregate Turnover:

1. Inward supplies under Reverse Charge – Purchases where tax liability is on the recipient.
2. CGST, SGST/UTGST, and IGST – The tax components themselves are not counted.
3. Cess – Any GST Compensation Cess charged on supplies is excluded.
4. Value of Non-GST supplies – Such as alcohol for human consumption and certain petroleum products (till they are brought under GST).
5. Inter-state supply of goods/services between establishments with the same PAN – Supplies between two branches/offices of the same entity in different states are not included in aggregate turnover.
6. Any taxes levied under laws other than GST – e.g., Stamp duty, property tax, etc.
   
   

3. Time for Registration
   If a person becomes liable to register, the law generally requires them to apply within 30 days of becoming liable.
   
   
4. Voluntary Registration
   Even if you don’t cross the threshold, you may opt to register voluntarily, so as to claim ITC or carry on interstate business.
   
   
5. Multiple/State-wise Registrations
   If you have business premises in more than one state, you need separate GST registrations in each state (i.e. you can’t use one GSTIN for all states).
   
   
6. Physical Verification and Aadhaar / Biometric Verification
   The authorities may require verification of your business address or Aadhaar-based biometric authentication, per recent instructions.
   
   
7. Penalty for Non-registration
   If you are required to register but fail to do so, you could face penalties (for example, 10% of tax due or ₹10,000 minimum) or even prosecution depending on severity.

Section 22 of the CGST Act – Threshold for GST Registration

Section 22 of the Central Goods and Services Tax (CGST) Act, 2017 lays down the turnover limits above which a person is liable to register under GST.

Threshold Limits for Registration

1. For Supply of Goods
   
   
   • Normal States: Registration is mandatory if aggregate turnover exceeds ₹40 lakh in a financial year.
     
     
   • Special Category States (like Assam, Manipur, Mizoram, Nagaland, etc.): The threshold is ₹20 lakh.
     
     
2. For Supply of Services
   
   
   • Normal States: Registration is mandatory if aggregate turnover exceeds ₹20 lakh.
     
     
   • Special Category States: The threshold is ₹10 lakh.
     
     
3. Mixed Supplies (Goods + Services)
   
   
   • If a person is engaged in both, the threshold applicable depends on whether goods are supplied or not. Generally, the lower threshold (₹20 lakh/₹10 lakh) applies for service providers.

Important Points under Section 22

• PAN-based Calculation: Turnover is calculated on a PAN-India basis, not state-wise.
  
  
• Exclusions in Turnover: As explained in the Aggregate Turnover Definition, GST taxes, cess, non-GST supplies, etc., are not included in the calculation.
  
  
• Compulsory Registration Override: Even if turnover is below these limits, certain cases listed in Section 24 (like inter-state supplies, ECOs, ISDs, etc.) must register.
  
  
• Voluntary Registration: Businesses below threshold may still register voluntarily to avail Input Tax Credit (ITC) or expand inter-state business.

Compulsory Registration: When You Must Register Regardless of Turnover

While you may think of registration being tied merely to crossing certain turnover limits, Section 24 of the CGST Act imposes mandatory registration on various classes of persons even if their turnover is below thresholds. Here are key categories:

Important nuance: The standard threshold exemptions under Section 22 do not apply to the above categories i.e. even if your turnover is small, these categories override the threshold exemption.

Also note: in “special category states” (like Assam, Manipur, etc.), the thresholds are lower (for goods ₹20 lakh, for services ₹10 lakh).

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Latest Updates (2024–2025) in GST Registration & Compliance

Given the evolving GST regime, here are some of the latest developments you should know:

1. Mandatory ISD Registration from April 1, 2025
   Businesses that operate multiple GSTINs under the same PAN must now mandatorily register as an Input Service Distributor (ISD). Previously ISD registration was optional for some; now it's compulsory.
   
   
2. CBIC Instruction on Registration Application Handling (April 2025)
   Central Board of Indirect Taxes & Customs (CBIC) issued Central Tax Instruction No. 03/2025-GST, guiding officers on processing registration applications — strong emphasis on avoiding unnecessary queries, ensuring timely approvals, and verifying business premises carefully.
   
   
3. Use of Aadhaar / Biometric Authentication
   GSTN has issued advisories dividing applicants into categories: those opting for Aadhaar authentication (with required biometric verification) vs those not.
   
   
4. No Change in Registration Thresholds (as of Sep 2025)
   As confirmed by the GST Council, the threshold for goods (₹40 lakh) under CGST has not been changed.
   
   
5. GST 2.0 Reform Launch
   On 22 September 2025, India implemented an upgraded GST system dubbed GST 2.0. One of the goals is to simplify tax structure and reduce compliance burden.
   
   While this is more about rates and structure, it may influence registration / compliance norms in the future.
   
   
6. Faster Registration for Non-Risky Businesses
   The GST Council approved reforms to reduce registration processing time to three days for non-risky businesses.
7. Crackdown on Unregistered Traders via UPI Data
   Tax authorities are now leveraging UPI transaction data to detect traders who cross registration thresholds but haven’t registered. Notices are being issued to such persons.
   
   
8. Fake / Fraud Registrations Cancelled
   Several fake GST registrations have been cancelled across the country in recent months, particularly those with phantom addresses or false documents.

These updates show that compliance scrutiny is increasing and the authorities aim to streamline and automate processes.

Step-by-Step: How to Get GST Registration (Brief Guide)

1. Go to the GST Portal (www.gst.gov.in)
   
   
2. Apply via Form REG-01
   
   
3. Provide Required Documents
   
   • PAN of applicant
     
     
   • Aadhaar
     
     
   • Proof of business registration / incorporation
     
     
   • Identity & address proof of promoters / directors
     
     
   • Address proof of business premises
     
     
   • Bank account details (cancelled cheque / statement)
     
     
   • Digital Signature (for companies / LLPs)
     
     
   • Board resolution / authorization letter, if needed
     
     
4. Verification / Physical Verification (if required)
   
   
5. Issue of GSTIN and Registration Certificate (Form REG-06)
   
   
6. Start Issuing GST Invoices and Filing Returns

Note: There is no registration fee for applying via the portal.

Also, if your registration application is rejected, you have opportunities to respond to the objection or reapply after rectifying.

Tips & Best Practices for GST Registration

• Be accurate and complete with address proof and documentary evidence, as physical verification is common.
  
  
• For businesses in multiple states, plan your state-wise registrations in advance.
  
  
• Maintain proper records from the start, so your input credit claims are supported.
  
  
• Keep an eye on biometric / Aadhaar linkage requirements.
  
  
• If you fall under a “compulsory registration” category (e.g., inter-state supplies, reverse charge), don’t wait till turnover crosses the threshold — register immediately.
  
  
• Monitor policy changes (e.g. further simplifications under GST 2.0) which might affect registration or compliance norms.
  
  
• Respond promptly to GST portal communications or objections during registration processing.

Conclusion

GST registration is a foundational compliance requirement for businesses engaged in taxable supplies in India. The law provides for threshold-based registration (Section 22), but also mandates registration for certain categories of persons (Section 24) irrespective of turnover. The government has introduced several reforms in 2024 2025 particularly the compulsion of ISD registration, streamlined processing, and increasing reliance on data analytics making it imperative for businesses to stay updated.