Crossing Rs 1.5 Cr / Rs 5 Cr / Rs 40 Cr Turnover: What Triggers What

Turnover is one of the most common triggers for new compliance obligations in India, and crossing Rs 1.5 crore, Rs 5 crore or Rs 40 crore each unlocks a different set of requirements you did not have before.

Key facts at a glance

• FSSAI Registration applies up to Rs 12 lakh turnover; a State Licence is needed from Rs 12 lakh up to Rs 50 crore (registration threshold raised to Rs 1.5 crore under 2026 amendments); a Central Licence applies above the State Licence threshold or for certain categories regardless of turnover.
• The GST composition scheme is generally available up to Rs 1.5 crore turnover for goods (Rs 75 lakh in some special category states).
• GST registration becomes mandatory once aggregate turnover crosses Rs 40 lakh for goods (Rs 20 lakh for services, lower again in some special category states).
• E-invoicing under GST has progressively lowered its trigger turnover over successive years; check the current threshold before assuming your business is exempt.
• A statutory audit under the Companies Act applies based on paid-up capital, turnover and borrowings criteria, not turnover alone, so check all three limbs.
• Tax audit under the Income Tax Act generally applies once business turnover crosses Rs 1 crore (higher limits apply where cash transactions are minimal), so this threshold arrives earlier than most others.

Rs 1.5 crore: the first real compliance step-up

For food businesses, Rs 1.5 crore is where FSSAI Registration is no longer enough and a full State Licence becomes mandatory under the 2026 amendments to the Licensing and Registration Regulations. This is a materially heavier process: it requires more documentation, a higher fee, and ongoing compliance with licence conditions rather than a simple registration certificate.

On the GST side, Rs 1.5 crore is also broadly the ceiling for opting into the composition scheme for goods businesses, which offers simplified quarterly filing and a flat tax rate instead of standard GST. Businesses that grow past this point typically need to move to regular GST registration with monthly returns and full input tax credit mechanics.

Rs 5 crore: scrutiny and system upgrades

Rs 5 crore is where many SMEs feel the shift from "small business" to "systems business" most acutely. Businesses at or above this turnover generally fall within the scope of mandatory e-invoicing under GST, which requires every B2B invoice to be registered on the government's Invoice Registration Portal before it is valid for input tax credit purposes.

This turnover band is also where tax authorities apply more scrutiny in assessments and audits, since Rs 5 crore-plus businesses are viewed as having outgrown purely informal bookkeeping. It is a sensible point to formalise accounting systems, invoicing software and reconciliation processes if you have not already.

Rs 40 crore: full statutory machinery

At Rs 40 crore, a business is well past every small-business safe harbour. This is comfortably above the FSSAI State Licence threshold in most cases (State Licence generally applies up to Rs 50 crore, so a Central Licence may still not be mandatory purely on turnover unless other criteria apply), and well past every GST registration and e-invoicing threshold.

Businesses at this scale typically need a full-fledged internal compliance function, statutory audit under the Companies Act (if incorporated as a company and other Companies Act criteria are also met), and formal board or management reporting on compliance status, since informal tracking becomes unreliable at this size.

Threshold comparison table

Why these thresholds are easy to miss

Turnover thresholds rarely come with an automatic notification. Unlike headcount-based triggers, where an HR system might flag a new hire crossing a number, turnover crosses these lines quietly during a good sales quarter, and the obligation to register, license or file differently can already be overdue by the time someone notices. Many SMEs only discover a missed threshold during a tax notice, a licence renewal, or a due diligence process ahead of fundraising.

Because several of these thresholds interact (a food business crossing Rs 1.5 crore needs both a new FSSAI licence and possibly a GST registration change), it is worth reviewing your full compliance posture whenever your turnover moves meaningfully, not just checking one law in isolation.

If you are not sure where your business stands as your turnover grows, ComplianceCheck's state-wise compliance assessment gives you a clear picture in a few minutes.

Sources

• FSSAI - fssai.gov.in
• GST portal - gst.gov.in
• Income Tax Department - incometax.gov.in
• Ministry of Corporate Affairs - mca.gov.in

This guide is general information, not legal advice. Requirements vary by state, sector and headcount - confirm specifics with a compliance professional or the relevant authority.