CGST Section 22 — Persons liable for registration
CGST Act · Persons liable for registration
Quick Answer
Section 22 of the CGST Act, 2017 governs Persons liable for registration. It provides the core statutory basis, outlining the essential legal principles, rights, and liabilities under Indian indirect tax law. Section 22 GST: Persons liable for registration — eligibility, conditions, case laws and compliance impact under Indian tax law.
Plain-English Explanation
Section 22 of the CGST Act, 2017, lays down the rules about who needs to register for GST. It primarily focuses on defining the threshold limits of turnover that trigger the mandatory requirement for a business to obtain GST registration.
This section applies to every supplier of goods or services or both operating in India. If you're making taxable supplies, you need to register when your "aggregate turnover" in a financial year exceeds a certain limit. Generally, for most states and union territories, this limit is ₹20 lakh. However, a lower threshold of ₹10 lakh applies to certain "special category states." It's important to determine if you meet this threshold as soon as possible after starting your business, as delayed registration can lead to penalties.
Here's a breakdown of key conditions and exceptions:
- Aggregate Turnover: This isn't just your profit. It includes the total value of all taxable supplies (including interstate supplies), exempt supplies, and exports made by you. It does not include GST itself. The turnover is calculated on a pan-India basis, meaning if you have multiple branches, their combined turnover is considered. Also includes supplies made on behalf of your principals.
- Special Category States: Initially, these were primarily North-Eastern states and hilly regions. However, the definition has evolved through amendments. As of now, these include Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim, and Uttarakhand. Businesses in these states have a lower registration threshold.
- Exclusive Suppliers of Goods: A significant amendment allows states, on the Council's recommendation, to increase the turnover limit to ₹40 lakh for businesses exclusively supplying goods. This relaxation aims to ease the compliance burden for smaller businesses. The explanation to the section states that if a person is engaged exclusively in the supply of goods even if he is engaged in exempt supply of services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount, it would be considered as supply of goods only.
- Transfer of Business: If a GST-registered business is transferred to someone else, the new owner must register from the date of the transfer or succession. This also applies to business transfers resulting from mergers or demergers sanctioned by a High Court or Tribunal.
- Job Work: If you're a registered job worker, the value of goods you process is not included in your turnover. Instead, it's considered part of the principal's turnover (the person who sent you the goods for processing).
- Pre-GST Registrations: Anyone registered or holding a license under the previous tax regime (like VAT, Service Tax, etc.) automatically needed to register under GST from the "appointed day" (when GST was implemented).
Practical Examples:
- Retail Store in Maharashtra: A retail store in Mumbai, Maharashtra, has a total sales of ₹25 lakh in a financial year. Since this exceeds the ₹20 lakh threshold, the store is liable to register for GST.
- Handicrafts Business in Assam: A small handicrafts business in Guwahati, Assam, makes ₹12 lakh in annual sales. Because Assam is a special category state and the turnover is above ₹10 lakh, the business needs to register for GST.
- Wholesaler in Punjab (Exclusive Goods Supplier): A wholesaler in Punjab exclusively sells agricultural produce, with an annual turnover of ₹35 lakh. If Punjab has opted for the increased ₹40 lakh threshold for exclusive goods suppliers, the wholesaler doesn't need to register.
- Business Transfer: Mr. Sharma sells his GST-registered restaurant to Mr. Verma. Mr. Verma needs to register for GST from the date he takes over the restaurant.
Important Amendments:
The CGST (Amendment) Act, 2018 brought in the provision regarding the increase in turnover threshold to 40 lakhs for suppliers engaged in exclusively supply of goods. Finance (No. 2) Act, 2019, formally allowed the government to enhance the aggregate turnover limit based on requests from states. These amendments aimed to ease compliance for smaller businesses.
In conclusion, Section 22 provides the basic framework for GST registration based on turnover. Business owners should carefully monitor their "aggregate turnover" and understand the specific rules for their state and business type to determine their registration obligations. Staying updated on amendments is also crucial.
No case laws found for this section yet.
Browse all case laws →Frequently Asked Questions
What is the aggregate turnover threshold for mandatory GST registration under Section 22?
Under Section 22 of the CGST Act, a supplier is liable to register if their aggregate turnover in a financial year exceeds ₹20 lakh (₹10 lakh for Special Category States, unless otherwise notified). This threshold applies across all taxable supplies made by the person.
What is included in 'aggregate turnover' for determining GST registration liability under Section 22?
Aggregate turnover includes the total value of all taxable supplies (including inter-state supplies), exempt supplies, exports, and intra-state supplies of a person having the same Permanent Account Number (PAN), computed on all India basis, but excludes central tax, State tax, Union territory tax, integrated tax and cess. It also excludes the value of inward supplies on which tax is payable under reverse charge.
Are there any exceptions to the mandatory registration requirement based on aggregate turnover under Section 22?
Yes, certain categories of persons are exempt from mandatory registration even if they cross the turnover threshold, as notified by the government. Common examples include persons exclusively engaged in making supplies that are wholly exempt from tax under GST.
How is the aggregate turnover calculated if a business has multiple branches in different states under the same PAN?
The aggregate turnover is calculated by combining the turnover of all branches having the same PAN, across all states. This is a consolidated figure used to determine registration liability.
If I am already registered in one state, and my turnover in another state exceeds the threshold, do I need to register in the second state?
Yes, if your aggregate turnover *in a particular state* exceeds the threshold limit, you are required to obtain registration in that state, even if you are already registered in another state under the same PAN. Each state is treated as a separate jurisdiction for GST registration purposes.
What are the consequences of failing to register for GST when liable under Section 22?
Failure to register when liable attracts penalties under the GST law. These penalties can include fines, interest on unpaid tax, and even prosecution in some cases. Additionally, unregistered persons cannot collect GST from their customers or claim Input Tax Credit (ITC).
If a business is transferring as a result of succession, amalgamation, or otherwise, who is liable for registration under Section 22?
When a business is transferred due to succession, amalgamation, demerger, or sale, the transferee (the new owner or the resulting entity) is liable to be registered from the date of such transfer, if the aggregate turnover of the business exceeds the threshold limit in the relevant financial year.
Key Conditions & Requirements
| Condition | Details |
|---|---|
| Aggregate Turnover exceeding INR 20 Lakhs (for States other than Special Category States) | Every supplier making taxable supplies of goods or services or both from a State/UT (other than Special Category States) is liable to register if their aggregate turnover in a financial year exceeds twenty lakh rupees. |
| Aggregate Turnover exceeding INR 10 Lakhs (for Special Category States) | Every supplier making taxable supplies of goods or services or both from any of the Special Category States is liable to register if their aggregate turnover in a financial year exceeds ten lakh rupees. |
| Enhanced Turnover Limit for Special Category States (Optional) | The Government may, at the request of a special category State and on the recommendations of the Council, enhance the aggregate turnover limit from ten lakh rupees to an amount not exceeding twenty lakh rupees. |
| Enhanced Turnover Limit for Goods Suppliers (Optional) | The Government may, at the request of a State and on the recommendations of the Council, enhance the aggregate turnover limit from twenty lakh rupees to an amount not exceeding forty lakh rupees in case of suppliers exclusively engaged in the supply of goods. |
| Existing Registrants under Earlier Laws | Every person registered or holding a license under an existing law on the day immediately preceding the appointed day (GST implementation date) is liable to be registered under the GST Act. |
| Transfer of Business as a Going Concern | If a business registered under the GST Act is transferred (succession or otherwise) as a going concern, the transferee or successor is liable to be registered from the date of transfer or succession. |
| Transfer pursuant to amalgamation or demerger | In case of transfer pursuant to sanction of a scheme/arrangement for amalgamation or demerger by a High Court/Tribunal, the transferee is liable to be registered from the date the Registrar of Companies issues a certificate of incorporation giving effect to the order. |
| Definition of Aggregate Turnover | Aggregate turnover includes all supplies made by the taxable person, whether on their own account or on behalf of all their principals. |
No related notifications found for this section.
Browse all notifications →Amendment History
Inserted by s.11 of The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) - Brought into force w.e.f. 01st February, 2019.
Inserted by s. 94 of The Finance (No. 2) Act, 2019 (No. 23 of 2019) - Brought into force w.e.f. 01st January, 2020 vide Notification No. 1/2020- C.T. dated 1st January, 2020.
Inserted by s. 2 of The Central Goods and Services Tax (Extension to Jammu And Kashmir) Act, 2017 (No. 26 of 2017) (Corrigendum for this provision issued vide Indian Institutes of Management Act, 2017 dated 31st December, 2017 (No. 33 of 2017)) - Brought into force w.e.f. 8th July, 2017
Inserted by s. 11 of The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) - Brought into force w.e.f. 01st February, 2019.