Compulsory GST Registration

Compulsory GST Registration
By seoauditorshiva GST Registration September 10, 2025

Rules, Criteria, and Categories

GST registration is not just a compliance requirement but also a gateway for businesses to operate legally under India’s indirect tax framework. Introduced under the Central Goods and Services Tax (CGST) Act, 2017, registration ensures that businesses are recognized under the GST system, enabling them to collect taxes from customers and claim input tax credit (ITC) on their purchases.

While the general principle of GST registration depends on the turnover threshold, the law mandates compulsory registration for certain categories of businesses, irrespective of turnover. This article explains compulsory GST registration, its provisions under Section 24 of the CGST Act, exceptions, and important clarifications that every business owner should know.

Why GST Registration is Important?

  1. Legal Recognition – A GSTIN (Goods and Services Tax Identification Number) establishes the legal identity of a business as a tax-compliant entity.

  2. Input Tax Credit (ITC) – Registered businesses can claim credit on taxes paid for inputs, reducing overall tax liability.

  3. Inter-State Operations – Without GST registration, inter-state trade of goods or services is not legally permissible (except in exempt cases).

  4. E-Commerce Participation – Online marketplaces require sellers to have a GSTIN to list and sell products/services.

Avoidance of Penalties – Operating without compulsory GST registration can attract heavy fines and backdated tax liabilities.

Section 24 - Compulsory Registration Under GST

Under Section 24 of the CGST Act, 2017, certain businesses and individuals must obtain GST registration compulsorily, even if their turnover is below the exemption limit under Section 22(1).

Categories Requiring Compulsory Registration:

  1. Persons making inter-state taxable supplies

  2. Casual taxable persons making taxable supplies

  3. Persons liable under reverse charge mechanism (RCM)

  4. Electronic Commerce Operators (ECOs)

  5. Non-resident taxable persons making taxable supplies

  6. Tax Deductors (TDS) under Section 51

  7. Agents making taxable supplies on behalf of others

  8. Input Service Distributors (ISD)

  9. Online service providers from outside India supplying to unregistered persons in India (OIDAR Services)

Other categories notified by the government based on GST Council recommendations

GST Registration Threshold Limits

General Threshold Limits

  • Goods Suppliers: Rs. 40 lakhs annual turnover

  • Service Providers: Rs. 20 lakhs annual turnover

Special Category States

  • Goods Suppliers: Rs. 20 lakhs

  • Service Providers: Rs. 10 lakhs

(Special category states include Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, Uttarakhand, and J&K.)

Detailed Breakdown of Compulsory Registration

1. Inter-State Supplies

  • Rule: Any business making inter-state supply of goods must register, regardless of turnover.

     

  • Exception:

     

    • Service providers making inter-state supplies are exempt if turnover is below Rs. 20 lakhs (Rs. 10 lakhs in special category states).

       

    • Handicraft suppliers and notified goods are also exempt up to the turnover threshold.

       

Example:

  • A Gujarat-based clothing manufacturer supplying goods to Maharashtra must register under GST, even with Rs. 5 lakhs turnover.

     

  • But a freelance graphic designer in Delhi providing services to a client in Karnataka need not register if total turnover is under Rs. 20 lakhs.

     

2. Casual Taxable Persons

A casual taxable person temporarily supplies goods/services in a state where they have no fixed business location.

  • Rule: Compulsory registration, irrespective of turnover.

     

  • Validity: Registration is temporary (90 days) and can be extended.

     

  • Advance Tax: Must deposit estimated tax liability in advance.

     

Example:

An artist from Rajasthan selling handicrafts at a 15-day exhibition in Tamil Nadu needs temporary GST registration.

3. Non-Resident Taxable Persons (NRTPs)

These are businesses or individuals based outside India but making taxable supplies within India.

  • Rule: Compulsory registration, regardless of turnover.

  • Advance Deposit: Similar to casual taxable persons, NRTPs must deposit estimated tax in advance.

Example:

  • A UK-based company supplying event management services in India must obtain GST registration before commencing business.

4. Reverse Charge Mechanism (RCM)

Under RCM, the recipient of goods/services pays GST instead of the supplier.

  • Rule: Persons required to pay tax under RCM must register compulsorily.

  • Exception: If a business makes only outward supplies where the recipient is liable to pay tax under RCM, registration is not required.

Example:

  • A company importing legal consultancy services must register under GST to pay tax under RCM, even if turnover is below the threshold.

5. E-Commerce Operators (ECOs) & Online Sellers

  • ECOs must register and collect tax at source (TCS).

  • Service providers via ECOs (like cab drivers on Ola/Uber or hosts on Airbnb) also need registration under Section 9(5).

  • Small sellers of goods via Amazon/Flipkart also require registration, unless exempted.

6. TDS Deductors

  • Government departments, local authorities, and notified persons required to deduct TDS under Section 51 must obtain GST registration.

  • Separate registration is required, even if they already have a GSTIN for other activities.

7. Input Service Distributors (ISDs)

  • Businesses with multiple branches use ISD registration to distribute Input Tax Credit (ITC) from head office to other units.

  • Mandatory registration under Section 24(viii).

8. Agents Supplying on Behalf of Others

Commission agents, brokers, or consignment agents making taxable supplies for others must register, even if their turnover is below the threshold.

9. Online Information & Database Access or Retrieval Services (OIDAR)

Foreign companies supplying digital services (like software, online subscriptions, e-learning platforms) to unregistered Indian consumers must register and pay GST.

Example:

  • A US-based e-learning company offering courses to Indian students directly must register for GST.

10. Government-Notified Categories

The government may notify additional categories requiring compulsory registration, based on GST Council recommendations.

Exemptions from Compulsory Registration

Even under Section 24, certain exemptions apply:

  1. Agriculturists engaged in cultivation of crops.

  2. Persons exclusively dealing in exempt or non-taxable goods/services.

  3. Businesses making supplies where the recipient pays tax under RCM.

Individuals below threshold limits supplying services inter-state (subject to specified exemptions).

Penalties for Not Registering Under GST

Failure to obtain compulsory registration attracts:

  • Penalty: 10% of tax due (minimum Rs. 10,000).

  • If deliberate tax evasion: 100% of tax due.

Liability to pay backdated GST with interest.

Conclusion

Compulsory GST registration ensures that all key categories of businesses and service providers are integrated into India’s tax system, fostering transparency and accountability. While turnover-based registration applies to most businesses, Section 24 of the CGST Act mandates registration for inter-state suppliers, casual and non-resident taxable persons, ECOs, ISDs, and others.

Understanding these rules is vital not only for legal compliance but also to avoid penalties, unlock ITC benefits, and expand business across states and digital platforms.

What is compulsory GST registration?

Compulsory GST registration refers to mandatory enrollment under GST, irrespective of turnover limits, for specific categories of taxpayers as defined under Section 24 of the CGST Act, 2017.

Who is required to take compulsory GST registration?

Businesses making inter-state supplies, e-commerce operators, agents, input service distributors, non-resident taxable persons, and those liable under reverse charge mechanism are some categories required to register compulsorily.

Is GST registration compulsory for small businesses with low turnover?

Generally, GST registration is based on turnover thresholds (Rs. 40 lakhs for goods, Rs. 20 lakhs for services). However, if a business falls under compulsory registration criteria, it must register even if turnover is below the threshold.

Are service providers supplying through e-commerce platforms required to register?

Yes, service providers offering services through e-commerce operators must compulsorily register under GST, irrespective of their annual turnover.

Are there any exemptions to compulsory GST registration?

Yes. Agriculturists, individuals dealing exclusively in exempted supplies, and inter-state service providers with turnover below the threshold are exempt from compulsory registration.

What happens if someone fails to obtain compulsory GST registration?

Failure to register when required may result in penalties, tax liabilities, and denial of input tax credit benefits. It can also affect business credibility and legal compliance.

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