01 When you must register
GST registration depends on your aggregate turnover in a financial year: the total of all your sales across India under the same PAN. CBIC sets these limits.
If you supply only goods, you must register once turnover exceeds ₹40 lakh. In Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura and Uttarakhand the limit is ₹20 lakh.
If you supply services, you must register once turnover exceeds ₹20 lakh, or ₹10 lakh in Manipur, Mizoram, Nagaland and Tripura.
Some businesses must register whatever their turnover, for example those making inter-state supplies of goods. Since 1 Oct 2023 a goods seller below the limit who sells only within their own state can sell through an e-commerce operator with a GST enrolment number on PAN instead of full registration (Notification 34/2023-Central Tax). Service providers with turnover up to ₹20 lakh are exempt even for inter-state or e-commerce supplies. Confirm your case on the GST portal; limits can change by notification.
Example (hypothetical numbers, not data): you make pickles in Madhya Pradesh and sell ₹30 lakh a year, only within the state. That is below the ₹40 lakh goods limit, so registration is optional. But if your buyers are shops and hotels that want a GST invoice to claim input tax credit, registering voluntarily may win you more orders.
02 How GST works in one line
A registered business collects GST on its sales, subtracts the GST it already paid on its purchases (input tax credit), and pays the difference to the government. This is why buyers prefer registered suppliers: they can claim back the GST on your invoice.
03 The composition scheme
Small businesses can choose the composition scheme: pay a low flat rate on turnover, file fewer returns, and skip detailed invoice matching.
For goods, it is open if last year's turnover was up to ₹1.5 crore (₹75 lakh in Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand). The rate is 1% for traders and manufacturers and 5% for restaurants.
Service providers who are not eligible for the main scheme can opt for a separate composition scheme at 6% if last year's turnover was up to ₹50 lakh.
The trade-offs: you cannot charge GST to customers, you cannot claim input tax credit, you cannot make inter-state outward supplies, and you issue a bill of supply instead of a tax invoice. Some manufacturers are excluded.
Example (hypothetical numbers, not data): a kirana trader with ₹80 lakh turnover in the composition scheme pays 1% = ₹80,000 for the year from his own margin, and files fewer returns. If most of his buyers were businesses wanting input tax credit, the regular scheme might suit him better.