GST Registration for Startups — When to Register, How to File
Quick Summary
Goods and Services Tax (GST) registration is mandatory for every Indian business crossing the threshold turnover — ₹20 Lakh for services, ₹40 Lakh for goods. But early-stage startups often need GST even below the threshold for B2B credibility, ITC (Input Tax Credit) claims, and inter-state supply. This article explains when to register and how Founding Legals automates it.
The Legal Breakdown / Why It Matters
Central GST Act, 2017 + State GST Act, 2017 + Integrated GST Act, 2017 govern GST in India. Administered by the CBIC and respective State GST Departments.
Mandatory GST Registration Triggers
| Trigger | Threshold |
|---|---|
| Aggregate turnover — Services | ₹20 Lakh/year (₹10 Lakh in special category states) |
| Aggregate turnover — Goods | ₹40 Lakh/year (₹20 Lakh in special category states) |
| Inter-state supply | Mandatory, regardless of turnover |
| E-commerce operator (selling on Amazon, Flipkart, etc.) | Mandatory, regardless of turnover |
| Reverse Charge Mechanism (RCM) liability | Mandatory |
Special category states include Manipur, Mizoram, Nagaland, Tripura, Arunachal Pradesh, Meghalaya, Sikkim, Uttarakhand, and Puducherry.
Why Voluntary Registration Often Makes Sense
| Benefit | Why It Helps a Pre-Threshold Startup |
|---|---|
| Input Tax Credit (ITC) | Claim GST paid on AWS, software subscriptions, office rent, legal fees |
| B2B Credibility | Corporate clients require GST invoices to claim ITC themselves |
| Inter-state Supply Readiness | Avoid scrambling when first out-of-state client arrives |
| Export Refunds | Claim full IGST refund or zero-rated supply benefit (LUT-driven) |
Key GST Returns to File
| Return | Frequency | Deadline |
|---|---|---|
| GSTR-1 | Monthly (turnover > ₹5 Cr) or Quarterly | 11th / 13th of next month |
| GSTR-3B | Monthly | 20th of next month |
| GSTR-9 & 9C | Annual (Reconciliation if > ₹5 Cr) | 31st December following FY |
How to Do It on Founding Legals
- Step 1: Go to Compliance → GST → Registration. Enter your business details and turnover. The platform flags whether registration is mandatory.
- Step 2: Upload PAN, COI, MOA, bank, and signatory details. The platform prepares the GST REG-01 application and submits via the GSTN portal.
- Step 3: Track the application status. GSTIN is typically issued in 3–7 working days post-Aadhaar authentication.
- Step 4: Configure HSN/SAC codes and rates. The platform generates GST-compliant invoices directly from the Billing Module.
- Step 5: Monthly returns (GSTR-1 and GSTR-3B) are auto-prepared. Review, approve, and file with auto-generated payment challans.
If you export software/SaaS services, file a Letter of Undertaking (LUT) on the GST portal at the start of each financial year. Without it, you must pay IGST on exports and claim refund later — a 90-day cash flow drag. With LUT, your exports are zero-rated immediately. Renew every April.
If you're a B2C startup (D2C, consumer app) and below threshold, delay GST registration until necessary. Once registered, you must charge GST to customers (raising your price by 18%) and comply with monthly filings — a significant operational burden. For B2B startups, register immediately for ITC and credibility.