Compulsory GST Registration: A Complete Guide to Section 24 (2025 Update)
- Farheen Mukadam
- Aug 31
- 9 min read
Even if your business turnover is below the threshold limit, you might still need to register for GST. Compulsory GST registration is a mandate for certain businesses and individuals. This requirement ensures that specific types of transactions and business activities are part of the formal tax system from the very beginning.
Section 24 of the Central Goods and Services Tax (CGST) Act lists these specific categories. It makes GST registration mandatory for them, no matter their annual turnover. This guide explains every category of person who must register compulsorily, with easy-to-understand examples.
Key Takeaway: Registration is mandatory for specific categories, irrespective of turnover.
Table of Content
Section 24 vs. Section 22: What's the Difference?
Understanding compulsory vs threshold registration provides important context. The main difference is the trigger for registration. Section 22 requires registration only when a business crosses a certain turnover limit. Section 24, however, requires registration based on the nature of the business or its transactions.
Here’s a simple comparison:
Basis of Difference | Section 22 (Threshold Based) | Section 24 (Compulsory) |
Trigger | Crossing the specified annual turnover limit. | The nature of business or supply. |
Turnover | Registration is mandatory only after turnover exceeds the limit (e.g., ₹40 lakh for goods). | Registration is mandatory regardless of turnover. It can be zero. |
Applicability | Applies to most general businesses. | Applies only to specific categories of persons listed in the act. |
Example | A local shop whose turnover exceeds ₹40 lakh in a financial year. | A person selling goods from one state to another, even with a single transaction. |
Persons Liable for Compulsory GST Registration Under Section 24
Section 24 lists specific types of suppliers who must register for GST. It’s crucial for businesses to check if they fall into any of these categories to avoid penalties. Below is a complete list with simple explanations.
1. Persons Making Inter-State Taxable Supplies
Inter-state supply GST registration is required for any person who supplies taxable goods from one state to another. This is a common reason for compulsory registration. The Integrated Goods and Services Tax (IGST) Act governs these transactions.
Example: A seller in Maharashtra selling goods to a buyer in Karnataka must register for GST, even for a single transaction.
There are exceptions to this rule:
Inter-state service providers are exempt from compulsory registration up to the turnover threshold of ₹20 lakhs (or ₹10 lakhs in special category states).
Persons making inter-state supplies of certain handicraft goods are also exempt up to the threshold limit.
2. Casual Taxable Persons (CTP)
A casual taxable person under GST is someone who occasionally supplies goods or services in a place where they don't have a permanent business location. CTPs need temporary GST registration to operate legally in that taxable territory.
A casual taxable person must apply for registration at least five days before starting their business. They also need to deposit an advance amount of tax based on their estimated liability.
Example: A jeweler from Jaipur who sets up a stall for a 3-day exhibition in Delhi is considered a casual taxable person in Delhi.
3. Persons Required to Pay Tax Under Reverse Charge (RCM)
The reverse charge mechanism in GST shifts the responsibility of paying tax from the supplier to the recipient. If a person receives goods or services that fall under RCM, they must register for GST to pay the tax directly to the government. This is required even if their turnover is below the threshold.
Example: A company that takes legal services from a lawyer must register and pay GST on the legal fees under the reverse charge mechanism.
4. Non-Resident Taxable Persons (NRTP)
A non-resident taxable person in GST is someone who occasionally supplies goods or services in India but does not have a fixed place of business or residence here. Similar to a CTP, an NRTP must register for GST before starting business, regardless of turnover.
They must apply for registration at least five days before commencing business and pay an advance tax deposit.
Example: A US-based consultant who comes to India for a two-month project for an Indian client is an NRTP.
5. E-commerce Operators and Their Suppliers
GST for e-commerce sellers has specific rules under Section 24. This category has two parts:
E-commerce operators: An e-commerce operator, like Amazon or Flipkart, that collects payment from customers must register for GST. They are required to collect Tax at Source (TCS) under Section 52 of the CGST Act on the payments made to their suppliers.
Suppliers on e-commerce platforms: Any person who supplies goods through an e-commerce platform must have a GST registration. The standard turnover threshold does not apply to them. However, service providers (like content writers or consultants) supplying through these platforms can avail the threshold limit.
Example: Amazon itself must register as an e-commerce operator. A person selling shoes on Amazon must also register for GST, regardless of their turnover.
6. Input Service Distributors (ISD)
An Input Service Distributor (ISD) is an office of a business that receives tax invoices for services used by its different branches. The ISD's role is to distribute the Input Tax Credit (ITC) on these common services to the branches that have different GSTINs but share the same PAN.
Registering as an ISD is mandatory for any office that functions in this capacity.
Example: The head office of a company in Mumbai receives a single invoice for advertising services that benefit its branches in Delhi, Kolkata, and Chennai. The Mumbai office must register as an ISD to distribute the GST credit to the three branches.
7. Persons Required to Deduct Tax at Source (TDS)
TDS under GST (Section 51) is different from income tax TDS. Certain notified entities must deduct tax when making payments to suppliers.
Entities required to deduct TDS under Section 51 must compulsorily register for GST. These entities typically include:
Government departments and establishments.
Local authorities.
Governmental agencies.
Public Sector Undertakings (PSUs).
8. Agents and Principals
GST for agents is mandatory if they supply taxable goods or services on behalf of another person (the principal). An agent who issues invoices or receives payments in their own name on behalf of the principal must register for GST, irrespective of their turnover.
Example: An agent who sells paintings on behalf of several artists and issues invoices to customers in their own name needs to register for GST.
9. Online Information and Database Access or Retrieval (OIDAR) Services
OIDAR services GST rules apply to digital services delivered over the internet with minimal human intervention. This includes services like streaming subscriptions, cloud storage, and e-books.
A provider of OIDAR services from a location outside India to an unregistered person in India must compulsorily register for GST. They have to collect and pay IGST on such supplies.
Example: A subscription to a foreign online streaming service or a foreign stock photo website by an individual in India requires the foreign provider to register for GST in India.
Do You Need Compulsory GST Registration? A Quick Checklist
This quick self-assessment tool can help you determine if you need to register under Section 24. Answer these questions about your business activities.
Compulsory GST Registration Check
Do you sell goods to customers in other states?
Yes -> Registration Required (Inter-State Supplier of Goods)
No -> Move to next question.
Do you temporarily sell goods or services at an exhibition or event in a state where you don't have an office?
Yes -> Registration Required (Casual Taxable Person)
No -> Move to next question.
Are you a non-resident of India providing services or goods in India?
Yes -> Registration Required (Non-Resident Taxable Person)
No -> Move to next question.
Do you sell goods on an e-commerce platform like Amazon or Flipkart?
Yes -> Registration Required (E-commerce Supplier)
No -> Move to next question.
Do you receive services where you are liable to pay tax under the Reverse Charge Mechanism (RCM)?
Yes -> Registration Required (Recipient under RCM)
No -> Move to next question.
Are you an agent making sales on behalf of a principal?
Yes -> Registration Required (Agent)
No -> Move to next question.
Do you provide digital services (like streaming or cloud storage) from outside India to unregistered individuals in India?
Yes -> Registration Required (OIDAR Service Provider)
No -> You might not fall under Section 24. Check your turnover against Section 22 limits.
Conclusion
Understanding your GST obligations is essential for running a compliant business. The main point to remember is that several types of businesses require compulsory GST registration under Section 24, no matter how low their turnover is. Ignoring this can lead to significant penalties.
Always check if your business activities fall under any of the special categories, especially if you sell goods across states or through e-commerce platforms.
Remember that rules for goods and services can differ, particularly for inter-state supplies.
Failing to register when required means you cannot collect tax from customers and lose out on claiming Input Tax Credit.
Navigating GST rules can sometimes feel complex. If you are unsure about your registration requirements or need help with the process, it's always a good idea to seek professional advice.
For expert help, you can Get expert assistance with your GST registration to ensure your business stays compliant from day one.
Frequently Asked Questions about Section 24
1. Is GST registration compulsory for inter-state service providers?
No, compulsory registration is not required for inter-state service providers as long as their aggregate annual turnover is below ₹20 lakhs (₹10 lakhs for special category states). The exemption from compulsory registration is a key difference between suppliers of goods and suppliers of services.
2. What is the penalty for not obtaining compulsory GST registration?
A person who is liable to register but fails to do so must pay a penalty. The penalty is 10% of the tax amount due or ₹10,000, whichever is higher. If the non-registration is found to be a deliberate act of tax evasion, the penalty can be 100% of the tax due.
3. Can a person voluntarily register for GST if not covered by Section 22 or 24?
Yes, a business can opt for voluntary GST registration even if its turnover is below the threshold and it's not covered by Section 24. This allows the business to issue tax invoices and claim Input Tax Credit (ITC), which can be beneficial when dealing with other registered businesses.
4. Do I need to register for GST if I sell only on my own website?
If you sell your own products on your own website, you are not considered an "e-commerce operator" required to collect TCS under Section 52. In this case, your requirement to register for GST depends on your turnover, as per Section 22. However, if you make inter-state sales of goods, you must register regardless of turnover.
5. Is there any turnover limit for e-commerce sellers on Amazon or Flipkart?
No, there is no turnover limit for persons supplying goods through e-commerce operators like Amazon or Flipkart. They must register for GST from their first sale. This rule does not apply to service providers, who can use the standard turnover threshold.
6. What documents are required for compulsory GST registration?
The documents are generally the same as for regular registration. Key documents include the PAN card, Aadhaar card, proof of business address (like a rent agreement or electricity bill), bank account details (cancelled cheque or statement), and photographs of the applicant.
7. How is a Casual Taxable Person different from a Non-Resident Taxable Person?
A Casual Taxable Person (CTP) has a place of business somewhere in India but occasionally makes supplies in another Indian state where they don't have a fixed business place. A Non-Resident Taxable Person (NRTP) does not have a fixed place of business or residence anywhere in India.
8. If I pay tax under RCM, do I still need to register if my turnover is low?
Yes, if you are required to pay tax under the Reverse Charge Mechanism (RCM), you must register for GST irrespective of your turnover. This is one of the specific categories listed under Section 24.
9. Does Section 24 apply to individuals earning rental income from different states?
If an individual earns commercial rental income from a property in a different state, it is considered an inter-state supply of services. Service providers have a threshold exemption of ₹20 lakhs for inter-state supplies. So, registration is only mandatory if the total rental income exceeds this limit.
10. Are farmers making inter-state supplies required to register under GST?
No, an agriculturist is not required to register under GST to the extent of the supply of produce out of cultivation of land. This exemption generally applies even if they make inter-state supplies.
11. What is an 'Input Service Distributor' in simple terms?
An Input Service Distributor (ISD) is simply a company's head office or corporate office that receives bills for common services (like advertising or software licenses) used by its various branches. The ISD's only job is to pass on the GST credit for these services to the branches that actually used them.
12. How long does the compulsory GST registration process take?
The GST registration process is online and usually takes between 3 to 7 working days if all documents and details are correct. In some cases where additional verification is needed, it might take longer.
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