GST Registration under Section 22: Eligibility, Threshold Limits & Turnover Criteria Explained

Section 22 of the CGST Act, 2017 outlines the criteria for mandatory GST registration based on aggregate turnover, with thresholds set at ₹20 lakh for most states, ₹10 lakh for special category states, and up to ₹40 lakh for suppliers dealing exclusively in goods.

It also mandates registration for businesses transitioning from the pre-GST regime, undergoing transfers, mergers, or demergers. The section includes detailed definitions for aggregate turnover and special category states. As explained by AUBSP, understanding these provisions is crucial for ensuring compliance and avoiding penalties under the GST framework.

GST Registration under Section 22: Persons Liable for Registration

Welcome to AUBSP, your trusted source for simplified and updated tax and regulatory information. Today, let’s decode Section 22 of the CGST Act, 2017, which outlines the persons required to obtain GST registration in India. Whether you are a supplier, a transferee of a business, or operating from special category states, this guide will walk you through all scenarios where registration becomes mandatory.

Understanding Section 22: Who Needs GST Registration?

Section 22 of the CGST Act defines the mandatory registration criteria for suppliers under the Goods and Services Tax regime. AUBSP explains each subsection below in a simplified and practical format for better clarity.

Section 22(1): Basic Registration Threshold

Every supplier is liable for GST registration in the State or Union Territory (excluding special category States) from where taxable supplies are made if the aggregate turnover exceeds:

• ₹20 lakh in a financial year (Standard threshold)
• ₹10 lakh for special category States

Special Provision for Goods-Only Suppliers

The Government, based on GST Council recommendations, can increase the threshold up to ₹40 lakh if the supplier is engaged exclusively in the supply of goods. This excludes services, except exempt services like interest on loans.

Note by AUBSP: Even if the supplier also earns interest from deposits or loans (exempt supply of services), they’re still considered “exclusively supplying goods” for registration exemption.

Section 22(2): Transition from Pre-GST Regime

Any person who was already registered or held a valid license under previous indirect tax laws before the appointed date of GST implementation (i.e., 1st July 2017), is automatically required to register under GST from that date.

Section 22(3): Transfer of Business

If a business is transferred—due to succession or sale—the new owner or transferee must get registered from the date of transfer. This ensures continuity in tax compliance.

Section 22(4): Amalgamation or Demerger

When companies undergo merger, amalgamation, or demerger as per court or tribunal orders, the new entity (transferee) must register from the date mentioned in the certificate of incorporation issued by the Registrar of Companies (ROC).

Explanation to Section 22: Key Clarifications

The law provides several important definitions and clarifications, as summarized below by AUBSP:

(i) Aggregate Turnover

Includes all taxable and exempt supplies made by the person across India on their own account or on behalf of principals. It excludes inward supplies and GST.

(ii) Job Work Exclusion

The value of goods supplied after job work is counted in the principal’s turnover, not the job worker’s. This avoids double counting.

(iii) Special Category States Defined

Initially, “special category states” included many North-Eastern states. However, as of the latest updates, only the following are considered under this category for threshold limits:

The other North-Eastern states—Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim, and Uttarakhand—are no longer treated as “special category states” for the purpose of ₹10 lakh threshold after amendments.

Timeline of Key Legal Updates

AUBSP’s Final Words: Who Should Act Now?

If you are:

• A new supplier crossing the turnover threshold,
• A business successor or transferee,
• An entity undergoing merger or demerger,
• Operating in a special category state,

You must check your eligibility for registration under GST to avoid penalties and ensure compliance.

As AUBSP always emphasizes, staying updated with such provisions not only keeps your business legally compliant but also builds trust and transparency with your clients and government authorities.

FAQs on Section 22 of the CGST Act 2017

Who is required to register under Section 22 of the CGST Act?
Every supplier whose aggregate turnover exceeds the specified threshold limit in a financial year is required to register under GST as per Section 22.

What is the threshold limit for GST registration under Section 22?
The threshold is ₹20 lakh for most states and ₹10 lakh for special category states. It may be increased to ₹40 lakh for exclusive suppliers of goods.

Which states are considered special category states for the ₹10 lakh threshold?
Manipur, Mizoram, Nagaland, and Tripura are considered special category states for GST registration purposes.

Can the threshold limit be enhanced for special category states?
Yes, the Government can enhance the threshold from ₹10 lakh to up to ₹20 lakh for special category states based on GST Council recommendations.

What is the threshold for suppliers engaged exclusively in the supply of goods?
The threshold may be enhanced up to ₹40 lakh for such suppliers, subject to conditions and government notification.

Is interest income from loans considered as supply of services?
Yes, but it is considered an exempt supply. Even with such exempt services, a person can be considered to be supplying only goods for threshold purposes.

Is registration required if I was already registered under the old tax regime?
Yes, any person registered under the pre-GST laws must register under GST from the appointed date (1st July 2017).

Do I need to register under GST if I take over an existing registered business?
Yes, the transferee or successor must obtain GST registration from the date of transfer or succession.

What if my business undergoes amalgamation or demerger?
The new entity must register under GST from the date of incorporation issued by the Registrar of Companies.

What does aggregate turnover include under Section 22?
It includes all taxable and exempt supplies, exports, and inter-state supplies, on own account or on behalf of principals, across India.

Does aggregate turnover include GST or inward supplies?
No, aggregate turnover excludes GST and inward supplies on which tax is paid under reverse charge.

Is job work considered under the principal’s or job worker’s turnover?
Supplies after job work are considered as supplies by the principal, not the job worker, for aggregate turnover calculations.

Is GST registration mandatory for inter-state supply of services?
Section 22 does not mandate it for inter-state services unless threshold is crossed. However, Section 24 may override this in certain cases.

When did Section 22 of the CGST Act come into force?
Section 22 came into effect on 22nd June 2017, as notified by Notification No. 1/2017-Central Tax.

Are there any exceptions to mandatory registration under Section 22?
Yes, small suppliers below the threshold, agriculturists, and those dealing exclusively in exempt goods/services are exempt under certain conditions.

Can voluntary registration be taken even below the threshold?
Yes, anyone can opt for voluntary GST registration even if their turnover is below the prescribed limit.

What happens if I fail to register under Section 22 despite being liable?
Failure to register may result in penalties, interest on tax dues, and disallowance of input tax credit to buyers.

Who recommends changes to threshold limits under Section 22?
The GST Council recommends any enhancement or modification of threshold limits for states and goods-only suppliers.

Are Union Territories treated differently under Section 22?
No, the same threshold rules apply to Union Territories unless otherwise specified.

How does AUBSP help in understanding Section 22?
AUBSP simplifies complex GST provisions, like Section 22, with practical examples, updated legal context, and authentic guidance for businesses.

For more such detailed breakdowns of tax laws, stay connected with AUBSP.com—your professional companion in taxation and compliance.