How do I calculate the GST Registration threshold?
The Goods and Services Tax (GST) threshold limit sets the minimum annual turnover that necessitates businesses, whether they are Sole Traders, Companies, Partnership Firms, or LLPs, to register for GST. It’s important to note that the GST Threshold Limit is distinct for Services and Goods but remains consistent across different types of businesses.
How to Calculate the Threshold Limit for GST Registration
Knowing the computation method for determining the threshold is essential; otherwise, one may end up not having GST Registration, which could lead to paying penalties or obtaining it without a requirement, leading to an unnecessary compliance burden.
The GST Threshold Limit Calculation should include the following:
- Turnover of the person or entity across the country for the PAN number
- All taxable supplies
- All exempted supplies
- Exports
And excludes the following:
- Central Goods and Service Tax Amount,
- State or Union Territory Goods and Services Tax Amount,
- Integrated Goods and Services Tax Amount,
- GST Compensation Cess
- Transactions on which Tax is payable on the reverse charge mechanism.
Also Read: GST Registration: Who Needs to Register for GST?
The business must be cautious while computing the Annual Turnover, which determines the threshold limit. Suppose the business is engaged exclusively in the supply of exempted goods or services. In that case, the business is not required to obtain registration under GST, even if the turnover crosses the threshold limit. Exemption from GST means goods or services are taxable, but they are exempt from the levy of GST. The onus to prove that the goods or services are exempt is on the business. The business must be very careful while determining the taxability of goods or services and then classifying them further to determine the tax rate.
To provide ease of understanding, the following table provides an idea of which income is to be added while determining the Aggregate Annual Turnover.
| SR.No | Particulars | Included in Aggregate Annual Turnover |
| 1 | Partners’ salaries from a Partnership Firm | No |
| 2 | Salary as a Director of a Private Limited Company | No |
| 3 | Incentives Received by the executive | No |
| 4 | Interest on Partners Capital in Partnership Firm | Yes |
| 5 | Interest earned on Post Office Deposits | Yes |
| 6 | Interest earned on Bank Deposits | Yes |
| 7 | Rental income on Residential Property | Yes |
| 8 | Rental Income on Commercial Property | Yes |
| 9 | Dividend Income | No |
| 10 | Proceeds from the Maturity of the Insurance Policy | No |
| 11 | Capital Gains Arising on the Sale of Securities | No |
| 12 | Proceeds from the sale of Land | No |
| 13 | Proceeds from the sale of Buildings during construction | Yes |
| 14 | Proceeds from the sale of Buildings after Receipt of an occupancy certificate or any other equivalent Certificate | No |
Wherever required, the business should obtain professional opinions to avoid litigation in the future. Logo’s CaptainBiz provides an exhaustive cloud- and mobile-based bill book app to record and report transactions for the filing of GST Returns.
