Is GST mandatory for shops under ₹40 lakh turnover?

No — for most small shops, GST registration is optional below ₹40 lakh annual turnover. But three exceptions make it mandatory regardless of size.

29 April 2026 · Bikri team

For shops selling goods in most Indian states, GST registration is not mandatory until annual turnover crosses ₹40 lakh (₹20 lakh in special-category states like the North-East, Uttarakhand, and Himachal Pradesh). Below that, registration is voluntary.

But "voluntary" comes with three exceptions that override the turnover rule. If any of these apply to your parents' shop, GST registration is mandatory even at ₹0 turnover.

The three exceptions

1. Inter-state sales. A single sale to a customer in a different state — even one — triggers mandatory registration regardless of how small the transaction was. This catches a lot of small shops that occasionally ship to relatives or fulfil one-off online orders.

2. Selling on e-commerce platforms. Listing products on Amazon, Flipkart, Meesho, Myntra, or any registered e-commerce operator requires GST registration upfront. The platforms enforce this at signup — they won't let you list without a GSTIN.

3. Casual or non-resident taxable supplies. If the shop sells temporarily in a state where it isn't normally registered — say, a stall at a Diwali fair in a different city — it qualifies as a "casual taxable person" and needs GST registration before the activity starts. This rarely affects a regular kirana, but worth knowing if your parents do occasional exhibitions or seasonal fairs.

A few narrower categories (reverse-charge notified goods, certain service providers) also require registration regardless of turnover, but these almost never apply to a typical kirana selling to walk-in customers.

When you're genuinely safe to stay unregistered

If your parents' shop ticks all of these:

  • Annual turnover under ₹40 lakh (₹20 lakh in special-category states).
  • Sells goods only, not services (services threshold is ₹20 lakh nationally).
  • Sells only within one state.
  • Doesn't list on e-commerce platforms.
  • No B2B customers demanding GST invoices.

…then registration is genuinely optional, and skipping it is the cleaner choice.

Why some sub-threshold shops register anyway

Voluntary registration makes sense in two specific cases:

  • Regular B2B customers ask for it. Distributors, restaurants, or wholesale buyers often need GST invoices to claim input tax credit. Refusing to provide one can lose you the relationship.
  • Your suppliers are already GST-registered. If you're paying GST on your purchases (which you can't recover without a GSTIN of your own), voluntary registration lets you claim that input tax credit back. Whether it's worth the compliance overhead depends on volume.

If neither applies, voluntary registration adds monthly returns, HSN coding, and formal invoicing without much benefit.

The practical answer

For a typical small kirana selling to walk-in customers within one state, GST is not mandatory below ₹40 lakh. The exceptions are narrow and easy to check. If you want the broader framework — composition scheme, what changes if you do register, how to think about it — see our overview, What is GST for a kirana shop?