In special category states, that limit drops sharply. Businesses expanding into Sikkim, Manipur, or Nagaland often calculate liability using mainland thresholds, then get caught out when their turnover crosses the lower limit months earlier than expected.
This guide breaks down which states qualify, the exact thresholds that apply, mandatory registration categories, composition scheme limits, and where to get help getting the classification right the first time.
Key Takeaways
- ₹20 lakh goods and ₹10 lakh services thresholds apply in special category states (vs ₹40 lakh/₹20 lakh elsewhere)
- Assam and Jammu & Kashmir opted out and use the standard ₹40 lakh goods limit
- Inter-state suppliers, e-commerce sellers, and casual taxable persons must register regardless of turnover
- Composition scheme goods limit is ₹75 lakh in special category states, not ₹1.5 crore
- Misclassifying your state category leads to penalties, interest, and retrospective registration demands
What Are Special Category States Under GST?
Special category states are a group of Indian states given differentiated treatment under GST because of geography, border sensitivity, and hill-terrain economics. The concept traces back to Article 279A(4)(g) of the Constitution, which authorises the GST Council to make special provisions for these regions.
Special category states under the Constitution:
- Arunachal Pradesh
- Assam
- Himachal Pradesh
- Jammu & Kashmir
- Manipur
- Meghalaya
- Mizoram
- Nagaland
- Sikkim
- Tripura
- Uttarakhand
Not every state on this list uses the lower GST registration thresholds in practice. Assam, Himachal Pradesh, and Jammu & Kashmir follow the standard goods limit—details below.
Why Puducherry Doesn't Quite Fit
Puducherry isn't a hill state or border territory, yet it's grouped with the lower-threshold states for goods registration. That treatment comes from Notification 10/2019-Central Tax, issued after the 32nd GST Council meeting held on 10 January 2019.
The Council let states choose a ₹40 lakh or ₹20 lakh goods threshold. Puducherry took the lower figure alongside the traditional hill states.
Assam, Himachal Pradesh, and J&K's Opt-Out
Despite sitting on the constitutional special-category list, Assam, Himachal Pradesh, and Jammu & Kashmir use the ₹40 lakh goods threshold that applies to normal states. None of them appear in the excluded-state list under Notification 10/2019, so the standard goods limit applies to suppliers there.
GST Registration Thresholds in Special Category States
Special category states use lower GST registration thresholds than normal states. Here is the current comparison:
| Supplier Type | Normal States | Special Category States |
|---|---|---|
| Goods only | ₹40 lakh | ₹20 lakh |
| Services or mixed | ₹20 lakh | ₹10 lakh |
These figures have been in force since 1 April 2019. Before that date, the thresholds were lower across the board: ₹20 lakh for normal states and ₹10 lakh for special category states.
How Aggregate Turnover Is Actually Calculated
A common mistake: businesses assume the threshold only counts local taxable sales. It doesn't. Aggregate turnover is calculated PAN-wise, across all of India, and includes:
- Taxable supplies
- Exempt supplies
- Export turnover
- Inter-state supplies of persons with the same PAN
It excludes GST/cess itself and inward supplies taxed under reverse charge. A Delhi-headquartered company opening a branch in Sikkim doesn't get a fresh threshold for that branch. The entire PAN's turnover counts toward the limit.
Who Must Register Regardless of the Special Category Threshold
Some categories must register the moment they start operating, no matter how small their turnover is. This catches out businesses that assume "we're under ₹10 lakh, so we're fine."
Mandatory registration applies to:
- E-commerce operators and sellers using a TCS-collecting platform
- Casual taxable persons
- Non-resident taxable persons
- Persons making inter-state taxable supplies
- Taxpayers liable under reverse charge
- Input Service Distributors (ISDs)
If your business in a special category state starts selling across state lines, the lower-threshold exemption generally stops applying to you. This is one of the most frequent miscalculations businesses make when expanding from a special category state. They treat the state threshold as a blanket exemption and overlook inter-state supply rules.
A few carve-outs exist. Small service providers using e-commerce platforms with turnover under ₹10 lakh (₹20 lakh in normal states) can stay unregistered under Notification 65/2017-Central Tax. Handicraft suppliers making inter-state supplies also get specific exemption treatment under separate notifications.
Composition Scheme Limits for Special Category States
The composition scheme has its own separate, and lower, ceiling for special category states.
| Category | Normal States | Special Category States |
|---|---|---|
| Goods suppliers | ₹1.5 crore | ₹75 lakh |
| Services/mixed suppliers | ₹50 lakh | ₹50 lakh (uniform) |
Notice that services and mixed suppliers face the same ₹50 lakh cap everywhere. Only the goods-supplier limit changes based on state category.
Conditions that apply regardless of state:
- No inter-state outward supply is permitted
- No sales through e-commerce platforms requiring TCS collection (for services)
- No input tax credit can be claimed under composition
- The taxpayer cannot collect GST separately from customers
A handicraft manufacturer in Meghalaya, for instance, would hit the ₹75 lakh composition ceiling well before a similar business in Punjab hits ₹1.5 crore. Plan for that lower ceiling well before financial year-end.
How VJM Global Helps Businesses Navigate Special Category GST Rules
Getting your state classification wrong isn't a minor paperwork error. It can mean retrospective registration liability, interest, and penalties once the tax department flags the mismatch.
VJM Global's GST registration support is built around understanding the full picture before filing anything. The team reviews:
- The nature of your business and the types of supplies involved
- Whether transactions are inter-state, exempt, or export-linked
- Which registration category and threshold genuinely applies
- Documentation required for accurate, penalty-free filing
This matters just as much for foreign entities entering India through a branch or subsidiary as it does for Indian companies expanding into North-Eastern or hill states. A business assuming the ₹40 lakh national threshold applies everywhere can be registering months late without realising it.
VJM Global's team is led by experienced chartered accountants, including partners specialising in GST and indirect taxation. That background supports accurate classification work rather than guesswork, especially when turnover sits close to a threshold boundary and the filing category has to be right first time.
Frequently Asked Questions
What is the GST registration turnover limit in India?
In normal states, the limit is ₹40 lakh for goods and ₹20 lakh for services. Special category states use lower limits: ₹20 lakh for goods and ₹10 lakh for services.
Is GST registration mandatory below ₹20 lakh?
Generally no, unless your business falls under a mandatory registration category, such as inter-state supply, e-commerce selling, or casual taxable person status. Turnover alone doesn't determine liability in these cases.
Do I need GST registration if my turnover is under ₹10 lakh?
Below ₹10 lakh, even service providers in special category states typically remain exempt from registration. This exemption doesn't apply, though, if you fall under a mandatory category like reverse charge or inter-state supply.
Is GST applicable in Assam?
Assam is technically listed as a special category state, but it opted for the standard ₹40 lakh goods threshold rather than the lower ₹20 lakh limit. Services in Assam still follow the standard ₹20 lakh service threshold.
What are the GST registration requirements for 2026?
Thresholds haven't changed since 1 April 2019. However, ISD registration rules under Section 24 changed effective April 2025 following Finance Act 2024 amendments, so ISDs should confirm their current obligations.
