An Alumnus of IIM and DU with almost a decade of experience in the banking and finance sectors. I had the opportunity to work with all types of institutions in BFSI ecosystem like Bank, NBFC, Fintech, Consulting and Auditor. I started my professional journey at KPMG and subsequently worked in leading names of the BFSI sector including Ujjivan Bank, Vistaar Finance. Currently building a fintech startup ( PICE) by handling alliances, compliance and creation of GTM strategy for payments and credit product.
19 May 25
7 mins
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Person Liable for Registration Under GST Section 22
GST registration is required if turnover exceeds ₹20 lakh (services) or ₹40 lakh (goods), with lower limits for special category states.
Businesses registered under VAT, service tax, or excise must re-register under GST.
New registration is needed in cases of business transfer, succession, merger, or demerger.
Aggregate turnover includes all supplies (taxable, exempt, exports), excluding GST taxes.
Only registered entities can claim input tax credit, making registration advantageous.
Under the GST system, individuals and businesses dealing in taxable supplies have to register themselves to comply with tax rules. Section 22 of the CGST Act, 2017 relates to the provisions regarding persons chargeable to GST registration.
It mandates compulsory registration for businesses exceeding a specified turnover threshold and for certain categories of suppliers. It also defines the turnover, the inclusions and exclusions of special category states in India and the GST registration requirements due to mergers and demergers.
Explore the details of a person liable to register under GST Section 22 here.
Liability of GST Registration Under Section 22
Suppliers of goods and services are liable to register under GST if their aggregate annual turnover exceeds 20 lakh rupees (for services) or 40 lakh rupees (for goods) in states and union territories of India. In other words, if taxable persons provide taxable supplies with the mentioned annual turnover threshold, they have GST liability. However special category states like Mizoram, Nagaland, Manipur and Tripura have a registration threshold of 20 lakh rupees.
Pre-Existing Registrations
Registered person under previous tax laws such as VAT (Value-added Tax), service tax or excise need to register themselves under GST. For instance, if the supply of goods and the supply of services provided by a supplier (earlier and after GST introduction) are not exempt supply, he/she has to register under GST. This ensures tax compliance in India while promoting transparency and accountability.
If there is a transfer of ownership of a business or succession, the new owner needs to obtain GST registration separately, applicable from the date of transfer. This aligns the new GSTIN with the owner’s unique PAN card number for further transactions.
Arrangement of Amalgamation & Demerger
If there is a merger due to acquisition, or a demerger under the Tribunal order or High Court, the transferee company needs to register under GST separately. The applicable date is the date of incorporation that the Registrar of Companies issues.
Important Definitions:
Here are the important associated definitions under GST:
● Aggregate Turnover: Aggregate turnover of a business in India is the taxable, exempt, export, inter-state supplies undertaken by an individual within the country. Notably, it excludes taxes under the GST system. Further, tax liability differs under the reverse charge mechanism wherein the purchaser pays GST.
● Special Category States: Article 279A(4)(g) defines Northeastern and hilly states under this category. However, it excludes Assam, Arunachal Pradesh, Himachal Pradesh, Sikkim, Meghalaya, and Uttarakhand.
● Job Work Transactions: When a registered job worker considers job work as the supplies of the principal after completion of job work, it is excluded from the job worker's turnover.
In addition to the threshold-based liability for registration under Section 22, there are other essential elements to consider for full compliance under the GST regime. These include input tax credit, categories of registration, the extent of supply, and the application for registration process.
Categories of Persons and Registration Liability
The category of persons required to obtain GST registration includes individuals, Hindu Undivided Families (HUFs), companies, LLPs, and partnership firms, among others. Any taxable persons involved in the supply of products or services above the notified aggregate turnover must apply for compulsory registration.
In contrast, those below the threshold may still opt for voluntary registration to avail benefits such as the credit of input tax on business purchases and improved credibility.
Supply and Turnover Considerations
The extent of supply plays a key role in determining registration liability. This includes both intra-State supply and inter-State supply of goods or services. It’s important to note that all GST supplies, whether taxable or exempt, count toward aggregate turnover, although taxes charged under GST do not.
The registration of persons engaged in intra-State supply is essential if the turnover threshold is breached, particularly in special category states.
One of the critical benefits of GST registration is the eligibility to claim input tax credit. This allows businesses to offset the GST paid on purchases (inputs) against the tax payable on outward supplies. However, only registered persons can avail credit of input tax, which encourages application for registration even in borderline turnover cases.
TDS and Tax at Source
Certain entities are required to deduct tax at source under GST. This typically applies to government departments or agencies making payments to suppliers. If you're a recipient required to deduct TDS, registering under GST is mandatory, regardless of turnover, and forms part of the extended registration liability framework under Section 22.
Conclusion
A registered person under GST Section 22 is defined based on the aggregate annual turnover of a business. Further, the location of the principal palace of business determines the GST liability. For instance, special category states have a separate annual turnover threshold.
Ensure you are well-aware of the GST laws to comply with Indian tax laws in terms of goods and services supplies and compulsory registration.
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FAQs
Who is required to register under GST as per Section 22?
Any person or business involved in the supply of taxable goods or services must register under GST if their aggregate turnover exceeds ₹20 lakh for services or ₹40 lakh for goods in most states. However, for special category states like Mizoram, Nagaland, Manipur, and Tripura, the threshold is ₹20 lakh for both goods and services.
What is considered as ‘aggregate turnover’ under GST?
Aggregate turnover includes the value of taxable supplies, exempt supplies, exports, and inter-State supplies made by a person on an all-India basis. It excludes taxes under GST like CGST, SGST, or IGST. This turnover is critical to determine whether a business needs to register under GST.
Do businesses with old tax registrations (VAT, service tax, excise) need to register under GST?
Yes, any business that was registered under previous tax laws like VAT, service tax, or excise must migrate to GST and obtain a new registration. This ensures uninterrupted compliance and allows such businesses to claim input tax credit and continue lawful supply operations under the new tax regime.
What are the GST implications in case of a business transfer or succession?
If a business is transferred or inherited, the new owner or successor is required to apply for GST registration from the date of transfer or succession. This aligns the new GSTIN with the PAN of the new entity and ensures that tax liabilities and compliance are maintained correctly.
Is GST registration required in case of a merger or demerger?
Yes, in cases of amalgamation, merger, or demerger, the transferee entity must obtain a new GST registration from the date mentioned in the certificate of incorporation issued by the Registrar of Companies. This helps in segregating tax responsibilities and allows proper input credit management between entities.
An Alumnus of IIM and DU with almost a decade of experience in the banking and finance sectors. I had the opportunity to work with all types of institutions in BFSI ecosystem like Bank, NBFC, Fintech, Consulting and Auditor. I started my professional journey at KPMG and subsequently worked in leading names of the BFSI sector including Ujjivan Bank, Vistaar Finance. Currently building a fintech startup ( PICE) by handling alliances, compliance and creation of GTM strategy for payments and credit product.
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