Persons Liable for Registration

1. What Section 22 does

Section 22 answers the first registration question: when does a supplier become liable to obtain GST registration because of turnover?

The provision works together with Sections 23 and 24. Section 22 contains the ordinary turnover-based rule; Section 23 identifies persons who are not liable or who may be exempted by notification; and Section 24 creates specified compulsory-registration situations notwithstanding the ordinary threshold.

The GST Council's 32nd meeting recommended the higher threshold for suppliers of goods, and Notification No. 10/2019-Central Tax dated 7 March 2019 implemented an exemption for eligible persons exclusively supplying goods up to ₹40 lakh from 1 April 2019. citeturn0search0turn0search4

2. Complete statutory structure

3. Basic registration threshold

Section 22(1) provides that every supplier is liable to be registered in the State or Union territory from which taxable supplies are made when the person's aggregate turnover in a financial year exceeds the applicable threshold.

The basic statutory amount is ₹20 lakh for suppliers in the ordinary framework. The first proviso provides a lower statutory threshold of ₹10 lakh for supplies from special-category States, while subsequent provisos permit the Government, on Council recommendation and subject to conditions, to enhance the threshold.

CBIC's registration FAQ explains the basic PAN-level aggregate-turnover concept and notes that compulsory-registration exceptions must also be considered. citeturn1search2

4. Aggregate turnover — the number that drives Section 22

Section 2(6) defines aggregate turnover on an all-India PAN basis. Broadly, it includes the aggregate value of taxable supplies, exempt supplies, exports and inter-State supplies of persons having the same PAN, while excluding specified inward supplies on which tax is payable under reverse charge and the GST/cess components themselves.

Therefore, a business cannot normally calculate the threshold simply from the taxable sales of one GSTIN. The relevant turnover must be tested across the PAN as prescribed.

5. ₹40 lakh threshold for eligible exclusive suppliers of goods

This is one of the most misunderstood aspects of Section 22.

The Act permits enhancement of the threshold for a supplier engaged exclusively in the supply of goods, subject to notified conditions. The Government exercised the registration-exemption power through Notification No. 10/2019-Central Tax dated 7 March 2019, effective from 1 April 2019.

The notification provides exemption from registration for a person engaged in exclusive supply of goods whose aggregate turnover does not exceed ₹40 lakh, subject to its conditions and exclusions.

The notification's original text specifically excluded compulsory-registration persons, specified goods, intra-State suppliers in Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura and Uttarakhand, and persons opting for/continuing registration. citeturn2search37

6. Special-category States and the ₹20 lakh enhanced ceiling

Section 22 originally used ₹10 lakh for supplies from special-category States. The 2019 amendments created a mechanism allowing the Government, at the request of a special-category State and on Council recommendation, to enhance the amount up to ₹20 lakh subject to conditions.

This is why historical GST material can show ₹10 lakh, ₹20 lakh and different State combinations depending on the date and the particular notification.

7. Services — why ₹20 lakh generally remains the key threshold

The ₹40 lakh notification was designed for persons engaged in exclusive supply of goods. It should not be treated as a general ₹40 lakh threshold for service providers.

For ordinary service providers, the ₹20 lakh threshold remains the central benchmark, with the special-category framework and specific notification-based exemptions needing to be checked where relevant.

CBIC's historical registration update specifically distinguished the ₹40 lakh goods threshold from the ₹20 lakh services threshold. citeturn1search27

8. Threshold history — 2017 to the present framework

The GST Council's 32nd meeting records the decision to provide States an option around the ₹20 lakh/₹40 lakh threshold structure for suppliers of goods and states that the change was to become operational from 1 April 2019. citeturn0search25turn0search26

9. Existing registrations — Section 22(2)

Section 22(2) is principally a transitional provision. A person who, immediately before the appointed day, was registered or held a licence under an existing law was liable to registration under GST with effect from the appointed day.

This provision was important at GST migration because businesses already registered under central excise, service tax, VAT and other predecessor laws needed to transition into the GST registration framework.

10. Transfer or succession of business — Section 22(3)

Where a business carried on by a taxable person registered under GST is transferred, whether by succession or otherwise, to another person as a going concern, the transferee or successor becomes liable to registration from the date of the transfer or succession.

Why this is different from turnover registration

This provision does not wait for the transferee to cross the ordinary turnover threshold. The liability arises because the registered business has been transferred as a going concern.

11. Amalgamation and demerger — Section 22(4)

Section 22(4) contains a special registration rule for a transfer pursuant to a sanctioned scheme or arrangement for amalgamation or demerger of companies.

The transferee becomes liable to registration from the date on which the Registrar of Companies issues the certificate of incorporation giving effect to the relevant order of the High Court, Tribunal or other competent process referred to in the provision.

This provision should be coordinated with Section 18(3), Rule 41 and the GST registration/cancellation process so that ITC and business continuity are not disrupted.

12. Job-work turnover — special explanation

Section 22 contains a specific explanation dealing with goods supplied after completion of job work by a registered job worker.

Where the statutory Section 143 framework treats the post-job-work supply as the supply of the principal, the value of those goods is not included in the aggregate turnover of the registered job worker for Section 22 purposes.

13. PAN and multi-State turnover

Registration is State/UT specific, but aggregate turnover is broadly computed on an all-India basis for persons having the same PAN.

CBIC's FAQ illustrates the all-India PAN approach: turnover of businesses in several States is aggregated for determining the registration threshold. citeturn1search2

14. Section 23 — persons not liable for registration

Section 22 cannot be read alone. Section 23 excludes certain persons from registration, including persons engaged exclusively in supplies that are not liable to tax or are wholly exempt and agriculturists to the extent of produce from cultivation of land.

Section 23(2) also empowers the Government, on Council recommendation, to notify additional categories exempt from obtaining registration.

CBIC's statutory text confirms the Section 23 exclusions and notification power. citeturn1search7

15. Section 24 — compulsory registration overrides Section 22

Section 24 begins with a non-obstante clause and identifies categories requiring compulsory registration notwithstanding the normal Section 22 threshold, subject to specific statutory and notification-based exceptions.

Historically, these categories have included specified inter-State suppliers, casual taxable persons, persons liable under reverse charge, non-resident taxable persons, TDS/TCS-related persons, agents, certain e-commerce participants and OIDAR suppliers, among others.

CBIC's statutory material sets out the compulsory-registration categories under Section 24. citeturn1search7

16. Detailed practical examples

Example 1 — goods trader at ₹38 lakh

An eligible trader exclusively supplying goods has aggregate turnover of ₹38 lakh and satisfies Notification 10/2019 conditions. The ₹40 lakh exemption may apply.

Example 2 — goods trader at ₹42 lakh

Once the relevant aggregate turnover exceeds ₹40 lakh, the exclusive-goods exemption is no longer available and registration should be examined from the date liability arises.

Example 3 — service provider at ₹38 lakh

A consultancy business cannot simply use the ₹40 lakh goods exemption. The ordinary service threshold and applicable notifications must be considered.

Example 4 — PAN has three GST locations

Telangana ₹14 lakh + Karnataka ₹9 lakh + Maharashtra ₹4 lakh = ₹27 lakh aggregate turnover. The threshold test is not performed independently for each GSTIN.

Example 5 — exempt-only business

A person exclusively making wholly exempt supplies may fall within Section 23 even if the gross value is high.

Example 6 — business transfer

A registered business is transferred as a going concern to another entity. The transferee's registration liability arises under Section 22(3) from the transfer/succession date, not merely when its turnover crosses ₹20/₹40 lakh.

Example 7 — merger

A company is amalgamated pursuant to an approved scheme. Section 22(4) links registration liability to the certificate of incorporation giving effect to the order.

Example 8 — job worker

A registered job worker processes ₹30 lakh of principal-owned goods and supplies the processed goods under Section 143. The statutory Section 22 explanation prevents that principal's supply from inflating the job worker's aggregate turnover.

Example 9 — inter-State service provider

A service provider below the normal threshold should separately test the applicable Section 24 provisions and notifications governing inter-State services. A generic “below ₹20 lakh = no registration” conclusion can be wrong.

Example 10 — compulsory category

A person may have only ₹8 lakh turnover but still require registration if a compulsory-registration provision applies and no relevant exemption notification removes the requirement.

17. Construction and infrastructure examples

Large construction groups commonly have multiple project offices, contracts and registrations. Section 22 should therefore be built into the group's GST registration matrix.

18. Registration decision workflow

19. Internal controls

20. Documentation to support registration analysis

• PAN and constitution documents.
• State-wise sales/turnover reports.
• GSTIN master.
• Nature-of-supply classification.
• Exempt and non-GST supply analysis.
• Export and inter-State supply reports.
• Section 23 exemption analysis.
• Section 24 compulsory-registration checklist.
• Relevant threshold/exemption notifications.
• Contracts and evidence for new places of business.
• Business-transfer agreements.
• Amalgamation/demerger orders and ROC certificate.
• Job-work records where the Section 22 explanation is relevant.

21. GST Council development

The official 32nd GST Council minutes record the discussion and eventual decision to provide a ₹20 lakh/₹40 lakh threshold option for suppliers of goods. citeturn0search25turn0search26

22. Important notifications and legal instruments

CBIC's notification archive records Notification 10/2019-Central Tax and its purpose of exempting eligible exclusive goods suppliers up to ₹40 lakh. citeturn1search1

23. Common mistakes

• Calling ₹40 lakh the universal GST registration threshold.
• Applying the goods threshold to service providers.
• Calculating turnover separately for each GSTIN instead of applying the PAN-level aggregate-turnover concept.
• Ignoring exempt and zero-rated supplies in aggregate turnover.
• Including inward RCM supplies in aggregate turnover.
• Ignoring Section 23 because turnover is high.
• Ignoring Section 24 because turnover is low.
• Assuming every special-category State automatically has a ₹10 lakh threshold without checking later amendments/notifications.
• Ignoring the conditions in Notification 10/2019-Central Tax.
• Failing to examine transfer/succession separately from turnover threshold.
• Missing the ROC effective date in an amalgamation/demerger.
• Including principal-owned post-job-work supplies in a registered job worker's turnover where the statutory explanation excludes them.

24. Related provisions