Section 22 – Persons Liable for Registration under CGST Act

Section 22 of the Central Goods and Services Tax (CGST) Act, 2017 deals with persons liable for registration under GST. It explains when a supplier becomes liable to obtain GST registration on the basis of aggregate turnover and also covers certain situations involving transfer, succession, amalgamation and demerger of businesses.

The basic rule under Section 22 is that a supplier making taxable supplies becomes liable for registration when the prescribed aggregate-turnover threshold is crossed. The statutory threshold in Section 22(1) is ₹20 lakh for suppliers in States or Union Territories other than the specified special category States, and ₹10 lakh for suppliers from the special category States. However, the law permits the Government to enhance the threshold for certain suppliers of goods up to ₹40 lakh, subject to conditions and limitations notified by the Government.

It is important to understand that Section 22 provides the basic registration-liability framework, while Section 24 deals with certain categories requiring compulsory registration irrespective of the threshold under Section 22. Section 23, on the other hand, specifies persons who are not liable for registration.

What is Section 22 of the CGST Act?

Section 22 is titled “Persons liable for registration.”

The section primarily answers the question:

When does a person become liable to obtain GST registration because of turnover or a change in the constitution of the business?

Section 22 contains four sub-sections:

Provision	Main subject
Section 22(1)	Registration based on aggregate turnover
Section 22(2)	Persons registered under existing laws immediately before GST
Section 22(3)	Registration after transfer or succession of a business
Section 22(4)	Registration following amalgamation or demerger

The section also contains explanations relating to aggregate turnover, job-work supplies and special category States.

Section 22(1) – Basic Liability for GST Registration

Section 22(1) provides the basic rule for GST registration.

Every supplier is liable to be registered in the State or Union Territory from where the supplier makes taxable supplies if the person’s aggregate turnover in a financial year exceeds the applicable threshold.

The statutory provision starts with a threshold of:

• ₹20 lakh for States or Union Territories other than the specified special category States.
• ₹10 lakh for suppliers making taxable supplies from the specified special category States.

However, Section 22 also permits the Government to increase the threshold for suppliers engaged exclusively in the supply of goods, subject to the conditions and limitations notified by the Government. The Government subsequently provided an exemption from registration for eligible persons exclusively supplying goods whose aggregate turnover does not exceed ₹40 lakh, subject to specified exclusions and conditions.

Therefore, when discussing GST registration thresholds, it is important to distinguish between the threshold written in the Act and the registration exemption actually notified by the Government.

What is Aggregate Turnover?

The concept of aggregate turnover is extremely important for Section 22.

Aggregate turnover is not simply the taxable sales made by a business from one particular GST registration.

Under Section 2(6) of the CGST Act, aggregate turnover is generally calculated on an all-India PAN basis and includes relevant taxable supplies, exempt supplies, exports and inter-State supplies of persons having the same PAN, while excluding applicable GST taxes and certain inward supplies on which tax is payable under reverse charge.

Section 22 further explains that aggregate turnover includes supplies made by the taxable person:

• On the person’s own account; and
• On behalf of all principals.

Simple Example

Suppose a business has:

• Taxable sales: ₹25 lakh
• Exempt supplies: ₹5 lakh
• Export supplies: ₹10 lakh
• Inter-State supplies: ₹5 lakh

The registration calculation is not based only on the ₹25 lakh taxable sales.

Relevant supplies forming part of aggregate turnover have to be considered according to the definition under Section 2(6).

Aggregate Turnover is PAN-Based

For GST registration purposes, aggregate turnover is generally considered across the same PAN.

For example, suppose a company has GST registrations in:

• Delhi
• Maharashtra
• Karnataka

The turnover of the relevant registrations is not treated as three completely independent turnover figures for determining aggregate turnover.

The aggregate turnover concept operates on the basis prescribed under Section 2(6), including supplies made by persons having the same PAN.

This is why a business with multiple GST registrations needs to monitor its turnover on an all-India basis.

Taxable Supplies and Registration Liability

Section 22 is primarily concerned with persons making taxable supplies.

A person who deals exclusively in supplies that are not liable to GST or are wholly exempt is covered separately by Section 23 and generally does not become liable for registration merely because the value of such exempt supplies exceeds the normal threshold.

Example

Suppose a trader deals exclusively in goods that are wholly exempt from GST.

If the trader has ₹50 lakh of such exclusively exempt turnover, the turnover itself does not automatically create registration liability under Section 22 because Section 23 provides the relevant exclusion for persons exclusively supplying non-taxable or wholly exempt goods or services.

The nature of the supplies therefore matters, not merely the total amount of turnover.

GST Registration Threshold for Goods

The Government has provided a higher registration-exemption threshold of ₹40 lakh for eligible persons engaged exclusively in the supply of goods, subject to the conditions and exclusions prescribed through notification. The Central Government issued Notification No. 10/2019-Central Tax for this purpose.

This means that a person dealing exclusively in eligible goods may have a registration-exemption threshold higher than the basic ₹20 lakh threshold appearing in Section 22(1).

However, the ₹40 lakh exemption is not automatically available to every person selling goods. The conditions and exclusions in the relevant notification must be checked.

GST Registration Threshold for Services

For suppliers of services, the general threshold remains ₹20 lakh, with the applicable lower threshold for the specified special category States, subject to the provisions and exemptions under the GST law. The GST Council’s registration-threshold material confirms the distinction between the goods threshold and the services threshold.

Therefore, a service provider should not automatically apply the ₹40 lakh goods threshold to a service business.

Example

Suppose a digital marketing consultant in Delhi has an annual aggregate turnover of ₹25 lakh.

The person is a service provider. The ₹40 lakh exemption available for eligible exclusive suppliers of goods cannot simply be applied to this service business.

The applicable service-provider threshold needs to be considered.

Special Category States

Section 22 contains a separate threshold for taxable suppliers making supplies from the specified special category States.

The statutory provision refers to a ₹10 lakh threshold, while the Act also permits enhancement of this threshold for a special category State, on request and on the recommendation of the GST Council, subject to the notified limit and conditions.

Therefore, the applicable threshold for a particular State should be checked with the current statutory and notification framework rather than assuming that the same threshold applies uniformly across India.

Section 22(2) – Existing Registration Before GST

Section 22(2) deals with persons who, immediately before the appointed day, were already:

• Registered under an existing law; or
• Holding a licence under an existing law.

Such persons were liable to be registered under GST with effect from the appointed day.

This provision was particularly relevant when GST was introduced in 2017 because businesses registered under earlier indirect-tax laws had to transition into the GST system.

Why Was Section 22(2) Required?

Before GST, businesses could have registrations under laws such as:

• State VAT;
• Central Excise;
• Service Tax; and
• Other applicable indirect-tax laws.

When GST replaced several indirect taxes, Section 22(2) provided the statutory basis for registration under the new GST regime.

For businesses starting after GST implementation, the practical registration liability is generally determined under the current provisions of Sections 22, 23, 24 and 25 rather than this transitional provision.

Section 22(3) – Transfer or Succession of Business

Section 22(3) deals with the transfer of a business.

Where a business carried on by a taxable person registered under GST is transferred to another person as a going concern, whether because of succession or otherwise, the transferee or successor becomes liable to be registered from the date of the transfer or succession.

What is a Going Concern?

A going concern generally refers to a business that is transferred as an operating business rather than merely selling individual assets.

For example, suppose:

Company A → transfers its running business → Company B

If the business is transferred as a going concern, Company B can become liable for GST registration from the date of transfer or succession under Section 22(3).

Example of Business Succession

Suppose a sole proprietor operates a manufacturing business and later transfers the entire running business to a partnership firm.

If the transfer qualifies as a transfer of the business as a going concern, the successor can become liable for registration from the date of succession.

The registration requirement is therefore not necessarily postponed until the successor crosses the normal turnover threshold.

Section 22(4) – Amalgamation and Demerger

Section 22(4) deals with a special situation involving:

• Amalgamation;
• Merger; or
• Demerger of companies.

Where a transfer takes place pursuant to a sanctioned scheme or arrangement for amalgamation or demerger of two or more companies under an order of a High Court, Tribunal or otherwise, the transferee becomes liable to registration from the date on which the Registrar of Companies issues the certificate of incorporation giving effect to the order.

This provision operates notwithstanding the normal rules in Section 22(1) and Section 22(3).

Example

Suppose:

Company A + Company B → Company C

The merger is approved under the applicable legal process and the Registrar of Companies issues the certificate giving effect to the merger.

Under Section 22(4), the transferee’s registration liability arises from the relevant date specified in the provision, namely the date on which the Registrar of Companies issues the certificate of incorporation giving effect to the order.

Why Section 22(4) is Important

Amalgamations and demergers can create complex GST registration situations.

A company may receive assets, liabilities, employees, contracts and business operations from another company.

Section 22(4) provides a specific registration trigger so that the GST registration of the transferee is linked to the legal effectiveness of the corporate restructuring.

This provision should also be read with the other GST provisions dealing with transfer of business, registration and tax liabilities.

Explanation to Section 22 – Supplies Made on Behalf of Principals

Section 22 explains that aggregate turnover includes all supplies made by the taxable person, whether on the person’s own account or on behalf of all principals.

This is particularly relevant to agents.

Example

Suppose an agent makes taxable supplies on behalf of a principal.

The value of supplies made on behalf of the principal is relevant for determining aggregate turnover under the statutory framework.

Therefore, an agent cannot simply calculate turnover by considering only the commission earned.

The specific GST treatment depends on the nature of the agency arrangement and the applicable provisions.

Explanation to Section 22 – Job Work

Section 22 also contains a specific rule concerning job work.

Where goods are supplied after completion of job work by a registered job worker, such supply is treated as the supply of goods by the principal referred to in Section 143.

The value of those goods is not included in the aggregate turnover of the registered job worker for the purpose of Section 22.

Example

Suppose:

• Principal sends raw material to Job Worker A.
• Job Worker A processes the goods.
• The processed goods are supplied as permitted under the job-work provisions.

The value of the principal’s goods is not simply added to the job worker’s aggregate turnover merely because the goods physically move from the job worker’s premises.

This prevents the principal’s turnover from being incorrectly counted as the job worker’s turnover.

Section 22 and Section 23

Section 22 should be read together with Section 23.

Section 22

Section 22 identifies persons who become liable for registration, particularly based on taxable supplies and the applicable turnover threshold.

Section 23

Section 23 identifies persons who are not liable for registration.

This includes:

• Persons exclusively supplying non-taxable or wholly exempt goods or services; and
• Agriculturists, to the extent of supply of produce out of cultivation of land.

The Government may also notify additional categories that are exempt from obtaining registration.

Therefore, crossing a turnover figure does not automatically mean that every person must obtain GST registration. The nature of supplies and specific exemptions also have to be examined.

Section 22 and Section 24

Section 24 deals with compulsory registration in certain cases.

This is important because Section 24 begins with a non-obstante clause and therefore operates notwithstanding Section 22(1).

Certain categories can require registration even when their aggregate turnover is below the threshold under Section 22. These include specified persons such as:

• Persons making specified inter-State taxable supplies;
• Casual taxable persons making taxable supplies;
• Persons liable to pay tax under specified reverse-charge provisions;
• Non-resident taxable persons making taxable supplies;
• Persons required to deduct tax under Section 51;
• Input Service Distributors;
• Specified suppliers through electronic commerce operators;
• Electronic commerce operators; and
• Other notified categories.

The exact applicability of Section 24 depends on the current statutory provisions and exemptions.

Section 22 and Section 25

Section 22 determines when a person becomes liable for registration.

Section 25 deals with the procedure for obtaining registration.

Under Section 25(1), a person liable to registration under Section 22 or Section 24 generally has to apply for registration in every State or Union Territory in which the person is liable within 30 days from the date on which the person becomes liable for registration. Casual taxable persons and non-resident taxable persons have a separate five-day advance application requirement.

Therefore:

Section 22 → Liability

Section 25 → Registration procedure

Example – When Turnover Crosses the Threshold

Suppose an eligible service provider in Delhi has the following turnover during a financial year:

• April to September: ₹17 lakh
• October sales: ₹4 lakh

After October sales:

Aggregate turnover = ₹21 lakh

If the applicable registration threshold is crossed, the person becomes liable for GST registration under the relevant provisions.

The person should then follow the registration procedure within the prescribed time under Section 25.

Does Every ₹20 Lakh Turnover Create GST Registration Liability?

No.

The answer depends on several factors, including:

• Whether the supplies are taxable;
• Whether the person is exclusively supplying exempt/non-taxable supplies;
• Whether the person is eligible for a higher exemption threshold for exclusive supply of goods;
• Whether the person falls under Section 24;
• The State or Union Territory from which supplies are made;
• The nature of the supplies; and
• Other exemptions or notifications applicable to the taxpayer.

Therefore, the statement “GST registration is compulsory for everyone above ₹20 lakh” is too broad.

Does ₹40 Lakh Apply to Service Providers?

Generally, the higher ₹40 lakh registration exemption is associated with eligible persons engaged exclusively in the supply of goods, subject to the notified conditions and exclusions.

It should not be treated as a general ₹40 lakh threshold for service providers.

The GST Council’s threshold framework distinguishes the ₹40 lakh goods threshold from the ₹20 lakh general service-provider threshold.

What is the Importance of the State of Supply?

GST registration under Section 22 is linked to the State or Union Territory from where taxable supplies are made.

A business operating in multiple States may therefore need registrations in multiple States where the applicable GST registration requirements are met.

CBIC’s registration guidance confirms that a person liable for registration has to apply in each State from which the person makes or intends to make outward supplies under the GST framework.

Example

Suppose a company has business establishments in:

• Delhi;
• Haryana; and
• Maharashtra.

If the company makes taxable supplies from establishments in these States and the registration requirements are triggered, the company may require separate GST registrations in the respective States.

GST registration is therefore not simply one nationwide GSTIN for every place of business.

Section 22 and Aggregate Turnover – Practical Example

Suppose a business has the following annual supplies:

Type of Supply	Value
Taxable supplies	₹28 lakh
Exempt supplies	₹7 lakh
Export supplies	₹5 lakh
Total relevant supplies	₹40 lakh

For aggregate-turnover purposes, the taxpayer cannot simply consider the ₹28 lakh taxable turnover.

The applicable components of aggregate turnover under Section 2(6) have to be considered.

This is why businesses should calculate aggregate turnover using the statutory definition rather than simply looking at taxable sales.

Section 22 – Business Transfer Example

Suppose Company A has a running business and transfers it as a going concern to Company B on 1 August.

Even if Company B has not independently crossed the normal turnover threshold, Section 22(3) can make Company B liable for GST registration from the date of transfer or succession, subject to the conditions of the provision.

The registration liability therefore arises from the specific event of transfer rather than merely from future turnover.

Section 22 – Merger Example

Suppose Company A and Company B are amalgamated into Company C under a scheme sanctioned by the competent authority.

The Registrar of Companies subsequently issues the certificate of incorporation giving effect to the amalgamation.

Section 22(4) links the transferee’s GST registration liability to the date on which the Registrar of Companies issues the certificate giving effect to the relevant order.

This is different from the ordinary turnover-based registration mechanism.

Important Points About Section 22

A few points should be remembered:

1. Section 22 deals with persons liable for GST registration.
2. Aggregate turnover is an important factor in determining registration liability.
3. The statutory threshold in Section 22(1) is ₹20 lakh for the general category and ₹10 lakh for the specified special category States.
4. Eligible exclusive suppliers of goods can have a higher registration-exemption threshold under the Government’s notification, subject to conditions.
5. The higher goods threshold should not automatically be applied to service providers.
6. Exclusively exempt or non-taxable suppliers are dealt with under Section 23.
7. Certain persons require compulsory registration under Section 24 irrespective of the Section 22 threshold, subject to applicable exceptions.
8. Section 22(3) deals with transfer or succession of a business as a going concern.
9. Section 22(4) deals with amalgamation and demerger.
10. Section 25 provides the procedure and time limit for applying for registration after liability arises.
11. Aggregate turnover includes relevant supplies made on the taxpayer’s own account and on behalf of principals.
12. The value of specified post-job-work supplies is not included in the registered job worker’s aggregate turnover.

Section 22 – Quick Comparison

Provision	What it deals with
Section 22	Persons liable for registration
Section 23	Persons not liable for registration
Section 24	Compulsory registration in specified cases
Section 25	Procedure for registration
Section 26	Deemed registration
Section 27	Special provisions relating to validity of registration certificate
Section 28	Amendment of registration
Section 29	Cancellation or surrender of registration

Reading these provisions together gives a clearer picture of the GST registration framework.

Key Points of Section 22 of CGST Act

Section 22 can be remembered through the following points:

• Section 22(1): Provides the basic turnover-based liability for GST registration.
• The statutory general threshold is ₹20 lakh.
• The statutory threshold for taxable suppliers from the specified special category States is ₹10 lakh, subject to the enhancement provisions in the section.
• The Government may permit a higher threshold up to ₹40 lakh for eligible suppliers exclusively engaged in supply of goods, subject to notified conditions and limitations.
• Section 22(2): Covers persons registered or holding licences under existing laws immediately before GST.
• Section 22(3): Covers transfer or succession of a registered business as a going concern.
• Section 22(4): Covers registration liability following specified amalgamation or demerger.
• Aggregate turnover includes relevant supplies made on the person’s own account and on behalf of principals.
• Specified supplies made after job work are treated as supplies of the principal and are excluded from the registered job worker’s aggregate turnover.
• Section 22 should be read with Sections 23, 24 and 25 for a complete understanding of GST registration liability.

Conclusion

Section 22 of the CGST Act provides the basic legal framework for determining who is liable to obtain GST registration. The most important factor is aggregate turnover, but registration liability cannot be determined by looking at turnover alone.

The taxpayer must also consider the nature of supplies, the applicable threshold for goods or services, the State or Union Territory from which supplies are made, the exemptions available under Section 23 and whether the taxpayer falls into a category requiring compulsory registration under Section 24.

The statutory threshold under Section 22(1) is ₹20 lakh for the general category and ₹10 lakh for the specified special category States, while the Government has provided a higher registration-exemption threshold of up to ₹40 lakh for eligible exclusive suppliers of goods subject to notified conditions.

Section 22 also covers special situations such as business transfer, succession, amalgamation and demerger. For practical compliance, it should therefore be read together with Sections 23, 24 and 25, Section 2(6) and the relevant GST notifications.

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