Section 22 of CGST Act - Persons Liable for Registration
Section 22 of the Central Goods and Services Tax Act, 2017 lays down the basic turnover-based liability for GST registration. It also deals with registration on transfer or succession of a business and registration following amalgamation or demerger.
Section 22(1): Basic GST registration threshold
As the statutory starting point, a supplier making taxable supplies of goods or services or both from a State or Union territory is liable to registration when aggregate turnover in a financial year exceeds Rs. 20 lakh, subject to the special-category-State provisos, the enhanced threshold available for eligible suppliers exclusively engaged in supplying goods, and other statutory exemptions or compulsory-registration provisions.
Current registration thresholds - important distinction
| Category | Threshold / position |
|---|---|
| General statutory threshold | Aggregate turnover exceeding Rs. 20 lakh in a financial year. |
| Specified special category States | The Act provides a Rs. 10 lakh base threshold, with power to enhance it up to Rs. 20 lakh on request of the State and recommendation of the GST Council. |
| Eligible persons engaged exclusively in supply of goods | The Government may enhance the threshold from Rs. 20 lakh to an amount not exceeding Rs. 40 lakh, subject to notified conditions and limitations. Notification No. 10/2019-Central Tax provides the commonly referred Rs. 40 lakh exemption for eligible exclusive suppliers of goods, subject to its exclusions and conditions. |
Meaning of aggregate turnover
Section 2(6) of the CGST Act defines "aggregate turnover" broadly on an all-India basis for persons having the same Permanent Account Number. It includes taxable supplies, exempt supplies, exports of goods or services or both, and inter-State supplies of persons having the same PAN, while excluding specified taxes and inward supplies on which tax is payable under reverse charge.
For Section 22, the Explanation further provides that supplies made by a taxable person on his own account as well as on behalf of all his principals are included. Goods supplied after completion of job work by a registered job worker are treated, for this purpose, as supplies of the principal referred to in Section 143, and their value is not included in the registered job worker's aggregate turnover.
Who are the special category States for Section 22?
The current Explanation to Section 22 refers to the States specified under Article 279A(4)(g) of the Constitution but expressly excludes Jammu and Kashmir and the States of Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand for this particular Section 22 definition. The remaining States covered for this purpose are Manipur, Mizoram, Nagaland and Tripura.
Exclusive supply of goods and the Rs. 40 lakh threshold
The third proviso to Section 22(1) authorises enhancement of the Rs. 20 lakh threshold to an amount not exceeding Rs. 40 lakh for a supplier engaged exclusively in supplying goods, subject to notified conditions and limitations. Notification No. 10/2019-Central Tax, dated 7 March 2019, provides the relevant exemption from registration up to Rs. 40 lakh for qualifying persons.
For this purpose, the statutory Explanation states that a person may still be treated as engaged exclusively in the supply of goods where the person also makes exempt supplies of services by extending deposits, loans or advances, to the extent that the consideration is represented by interest or discount.
Section 22(2): Persons registered under the earlier law
A person who, immediately before the appointed day, was registered or held a licence under an existing indirect tax law became liable to registration under the CGST Act from the appointed day. This is a transitional provision connected with migration into GST.
Section 22(3): Transfer or succession of a business
Where a business of a taxable person registered under the Act is transferred to another person as a going concern, whether by succession or otherwise, the transferee or successor becomes liable to registration from the date of the transfer or succession.
Section 22(4): Amalgamation and demerger
Where the transfer arises from 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.
Section 22 must be read with Sections 23, 24 and 25
Turnover alone does not determine every registration case. Section 23 identifies persons not liable to registration and also enables notified exemptions. Section 24 prescribes categories requiring compulsory registration, subject to amendments and notified exemptions. Section 25 contains the procedure and time requirements for obtaining registration.
Practical checklist before deciding GST registration liability
Determine the supplier's aggregate turnover on the correct PAN-based, all-India basis; identify the State or Union territory from which taxable supplies are made; determine whether the supplier is exclusively supplying goods; check whether a notified enhanced threshold or exemption applies; and separately test Sections 23 and 24 before concluding that registration is or is not required.
Official GST resources
For the current statutory text, amendments, notifications and registration guidance, refer to the official India Code, CBIC GST portal, GST Council and GST Common Portal.