Over four parts we have covered where GST begins, what happens when goods and services mix, how bundled sales are taxed, and what the composition scheme really costs. We close with the two moments that generate the most defaults — and both of them are about timing.

Part A: When turnover crosses the composition limit

Under Section 10(3) read with Rule 6(2) of the CGST Rules, the option to pay tax under composition lapses with effect from the day on which aggregate turnover during the financial year exceeds the applicable limit.

Not from the next quarter. Not from the next financial year. From that day. There is no grace period anywhere in the provision.

From that date you are a regular taxpayer and must pay tax under Section 9(1) at normal rates.

What has to happen, and when:

• Immediately: stop paying at the composition rate and pay at normal rates on all supplies from the date of breach

• Immediately: stop issuing bills of supply, start issuing tax invoices with GST charged

• Within 7 days: file intimation of withdrawal in FORM GST CMP-04

• Within 30 days: file FORM GST ITC-01 with details of stock of inputs, inputs contained in semi-finished and finished goods, and capital goods held on the day immediately preceding withdrawal

• From the applicable period: switch to GSTR-1 and GSTR-3B instead of CMP-08 and GSTR-4

• Immediately: remove the "composition taxable person" signboard, update invoice stationery and billing software

• Immediately: withdraw for every registration under the same PAN, in every State

The relief on exit is the ITC-01 credit. You may claim input tax credit on inputs in stock, inputs contained in semi-finished and finished goods, and capital goods — the last reduced pro rata at 5% per quarter or part thereof from the date of invoice — as on the day preceding withdrawal. But the thirty days is absolute. Miss it and the credit is gone permanently.

A worked case. Mr. Ghosh, a trader in Barasat, is under composition. His running aggregate turnover reaches ₹1.5 crore on 10 November 2026, and a sale on 12 November takes him to ₹1.53 crore.

Composition lapses on 12 November — the day of the breach. Supplies up to 11 November are taxed at 1%. Supplies from 12 November attract normal rates, with tax invoices and GST collected from customers. CMP-04 is due by 19 November. ITC-01 is due by 12 December, for stock held as on 11 November. GSTR-1 and GSTR-3B begin from the relevant tax period, with a final CMP-08 covering the composition portion of the quarter.

Now suppose he ignores all this and keeps billing at 1% until his accountant spots it in March. He must pay the differential tax from his own funds, with 18% interest under Section 50 and penalty on top. He cannot go back to customers who paid and left. The tax becomes a straight loss on the year.

And if the department gets there first: where the proper officer believes a person was ineligible or contravened conditions, a notice is issued in CMP-05, the reply is filed in CMP-06, and the order follows in CMP-07. Denial can operate retrospectively from the date the person became ineligible, with the full differential tax, interest and penalty.

Part B: When an unregistered person crosses the exemption limit

This is a different situation and a different set of forms.

• Apply for registration in FORM GST REG-01 on the common portal within 30 days of becoming liable

• Complete Aadhaar authentication or biometric verification as applicable

• Keep ready: PAN, Aadhaar, proof of business premises, bank details, constitution documents, photographs, authorisation letter

• Once registration is granted, issue a revised invoice for every supply made between the effective date of registration and the date of grant of the certificate, within one month of grant, under Section 31(3)(a)

• File FORM GST ITC-01 within 30 days to claim credit on inputs in stock and inputs in semi-finished and finished goods held on the day immediately preceding the date you became liable, under Section 18(1)(a)

• Choose regular or composition at the time of applying

• Begin tax invoicing with GSTIN, HSN or SAC, place of supply and applicable rate

• Determine HSN or SAC codes and rates for every item, and check reverse charge exposure

• Set up books, e-invoicing where applicable, and monthly return discipline

• Revisit pricing, because GST now has to be built in or added on

The thirty days decides everything

Apply within 30 days and registration is effective from the date you became liable. That backdating is what allows the revised invoices, which is what allows you to recover the tax from customers — and it is what preserves the input credit on your opening stock.

Apply late and registration is effective only from the date of grant. The consequences are severe. Tax remains payable on supplies made in the interim. That tax cannot be collected from customers through a valid tax invoice. And input credit on opening stock is lost.

Ms. Basu runs a bakery-cum-catering business in Kolkata. Because she supplies goods and services both, her limit is ₹20 lakh, and she crosses it on 5 August 2026. She applies on 28 August and receives her certificate on 6 September.

Registration is effective from 5 August. She issues revised invoices for supplies from 5 August to 6 September, by 6 October. She files ITC-01 by 4 September for stock as on 4 August. Regular returns start from the August tax period. Everything is recoverable.

Had she applied only in December, registration would run from the December grant date. She would still owe tax on every supply from 5 August, with no way to bill it to customers, and the credit on her opening stock would be gone.

The penalty is separate. Section 122(1)(xi) prescribes ₹10,000 or the tax evaded, whichever is higher, for failure to register when liable. Interest runs at 18% per annum under Section 50. And where the officer proceeds under Section 63, tax can be determined on a best judgment basis for the whole period of default.

The series in one page

Registration limits: ₹40 lakh for goods only in normal States; ₹20 lakh in the specified special States. ₹20 lakh for services in normal States; ₹10 lakh in Manipur, Mizoram, Nagaland and Tripura. Goods and services both, normal State: ₹20 lakh, because exclusivity fails.

Composition limits: ₹1.5 crore for goods and restaurants in normal States; ₹75 lakh in the eight specified States; ₹50 lakh for service providers.

Bundling: composite supply takes the rate of the principal supply. Mixed supply takes the highest rate among the items.

Deadlines: REG-01 within 30 days of liability. ITC-01 within 30 days, at registration and again on composition exit. Revised invoices within one month of grant. CMP-04 within 7 days of crossing the composition limit.

The one habit worth building

Every one of the problems in this series is a monitoring failure rather than a legal one. Nobody sets out to breach a threshold. They simply do not know they have, until several months have passed and the tax has become unrecoverable.

Run a rolling monthly turnover figure. PAN-wise, all branches, including exempt sales. Compare it against the limit that applies to you — not the limit you assume applies. If you are within striking distance of a line, act before you cross it, not after.

Registering three months early costs almost nothing. Registering three months late can cost you the entire margin on those three months.

This series states the general legal position as at August 2026 and is intended as a guide, not as advice on any specific transaction. GST thresholds, rates and notifications are revised by the GST Council from time to time, and several limits vary by State. Before acting, verify the current position against the latest CBIC notification and consult a qualified tax professional on your own facts.