India’s Goods and Services Tax (GST) regime, introduced in 2017, has significantly transformed the country’s indirect taxation system. One of the major concerns among small business owners, freelancers, and service providers is whether they need to charge GST if their annual turnover is below a certain threshold. If your annual turnover is less than ₹20 lakhs (₹10 lakhs for special category states), you’re exempt from mandatory GST registration. But does that mean you can charge 0% GST? Or should you charge any GST at all? Let’s explore the topic in depth.
How GST Registration Works
GST registration is a legal requirement for businesses whose aggregate turnover exceeds the threshold limit. The current threshold is ₹20 lakhs for most states and ₹10 lakhs for North-Eastern and hill states. This threshold determines whether a person or business must obtain a GST registration number.
If your business turnover is below ₹20 lakhs, you’re categorized as an unregistered person under GST unless you voluntarily register. Being unregistered comes with its own set of implications:
- You cannot charge GST on invoices.
- You cannot claim Input Tax Credit (ITC) on your purchases.
- You must comply with other regulations applicable to unregistered businesses.
If you do register voluntarily under GST despite having a turnover below ₹20 lakhs, you are legally obliged to charge GST as per applicable rates.
Can I Charge 0% GST?
The short answer is No, you cannot charge 0% GST just because your turnover is less than ₹20 lakhs. Here’s why:
- If you’re not registered under GST, you cannot charge GST at all—neither 0%, nor 5%, nor any other rate.
- If you are registered voluntarily, then you must charge GST at the applicable rate. You cannot arbitrarily choose to charge 0% unless your goods or services are officially rated at 0% under GST law.
In GST terms, 0% GST only applies to specific goods and services that are zero-rated, like exports and certain goods/services specified in the law. It does not apply to unregistered persons who simply wish to avoid charging GST.
Advantages of Not Registering for GST (Below ₹20 Lakhs Turnover)
- Simplicity: You are not required to file GST returns every month or quarter.
- Cost Saving: No need for GST software, accountant fees, or compliance burden.
- Competitive Pricing: Since you don’t charge GST, your overall pricing may be slightly lower than GST-registered competitors.
- Flexibility: You are not bound by GST norms such as maintaining specific invoice formats, HSN codes, etc.
Steps to Understand Whether to Register for GST or Not
- Calculate Aggregate Turnover
Aggregate turnover includes the total value of all taxable supplies, exempt supplies, exports, and interstate supplies. - Know the Exemption Threshold
- ₹20 lakhs for most Indian states.
- ₹10 lakhs for North-Eastern and special category states.
- Identify the Nature of Your Business
Certain businesses must register for GST regardless of turnover:- Inter-state supply of goods
- E-commerce sellers
- Input Service Distributors (ISD)
- Non-resident taxable persons
- Check for Voluntary Registration Benefits
If you want to deal with large companies or government bodies, being GST registered helps in credibility and getting more contracts. - Make a Decision
Based on your turnover, industry, client needs, and future plans, decide whether GST registration is necessary or if you can operate without it.
Types of GST Registration
- Compulsory Registration
If your turnover exceeds the threshold or you’re involved in certain business types (like inter-state supply), registration is mandatory. - Voluntary Registration
Even if you’re below the limit, you can opt for GST registration to avail input tax credit and gain credibility. - Composition Scheme
For businesses with turnover up to ₹1.5 crore, this scheme offers lower tax rates and minimal compliance. However, you cannot charge GST on invoices under this scheme. - Casual Taxable Person or Non-Resident Taxable Person
Temporary businesses or non-residents doing business in India need to register under specific GST categories.
Conclusion
If your turnover is less than ₹20 lakhs, GST registration is not mandatory, and you’re not allowed to charge GST—not even at 0%. Charging 0% GST doesn’t mean simply putting a “0%” rate on your invoice. It is a legally defined rate that applies only to certain zero-rated goods and services. If you’re not registered, you must issue a normal invoice without any GST.
If you choose to register voluntarily, you must comply with all GST laws, including charging applicable tax rates and filing regular returns. Whether or not you should register depends on your business goals, your clientele (B2B vs B2C), and future scalability.
FAQ
Q1. Can I voluntarily register for GST if my turnover is below ₹20 lakhs?
Yes, you can register voluntarily. Once registered, you must comply with all GST rules.
Q2. Can I show 0% GST on my invoice without registration?
No. If you are not registered, you cannot mention GST on your invoice at all.
Q3. What happens if I charge GST without registration?
It is illegal and can result in penalties. Only registered taxpayers can collect GST.
Q4. What are the benefits of not registering under GST?
You avoid compliance, tax filing, and administrative costs, and may offer competitive pricing.
Q5. Is the ₹20 lakhs threshold applicable to all states?
No. For special category states like those in the North-East, the threshold is ₹10 lakhs.
Q6. What is the difference between 0% GST and exempt supply?
Zero-rated supplies (like exports) are taxed at 0% but allow ITC. Exempt supplies are not taxed and do not allow ITC.
Q7. Can I claim Input Tax Credit (ITC) if I’m not registered?
No. Only registered persons are eligible to claim ITC on their purchases.
Q8. Is the Composition Scheme available for businesses under ₹20 lakhs turnover?
No need. If you’re below ₹20 lakhs, GST registration itself is optional, and Composition Scheme is generally for those already registered.
Q9. Should freelancers register for GST if earning less than ₹20 lakhs?
It’s optional unless you are doing inter-state supply or dealing with registered businesses that require GST invoices.
Q10. What kind of invoice should I issue without GST registration?
Issue a bill of supply or a simple invoice without any GST component.