GST Compliance for Traders: Registration, E-Way Bill, and GSTR-1/3B Filing

Trading in goods sits under different GST thresholds and compliance triggers than providing services — a distinction that catches traders off guard when they assume the same ₹20 lakh threshold and simple monthly filing that service-based businesses often work with.

GST Registration Threshold for Goods Traders

For a supplier of goods (as opposed to services), the standard registration threshold is ₹40 lakh aggregate turnover (₹20 lakh in special category states) — higher than the ₹20 lakh threshold for services. However, several states haven't adopted the ₹40 lakh threshold and stayed at ₹20 lakh for goods, so the applicable limit depends on the state where the principal place of business is registered. A trader operating in multiple states must check the threshold state by state where relevant, or register on the lower threshold to be safe if operating across state lines.

Mandatory registration also applies regardless of turnover for:

• Any trader making inter-state supply of taxable goods (the goods-specific exemption for small inter-state suppliers is narrow and doesn't cover most B2B trading)
• Traders required to pay tax under reverse charge on specified inward supplies
• Casual taxable persons and non-resident taxable persons trading in India

E-Way Bill Requirements

Movement of goods worth more than ₹50,000 (single invoice or aggregate, depending on state rules for intra-state movement) requires an e-way bill generated on the e-way bill portal before the goods start moving. This applies to inter-state movement uniformly above ₹50,000, and to intra-state movement per each state's specific threshold (some states have set higher intra-state limits, e.g. ₹1 lakh). Key details:

Distance	Validity from generation
Up to 200 km	1 day
Each additional 200 km (or part thereof)	+1 day

An expired or missing e-way bill during transit is one of the most common grounds for goods detention at a check post or during transit inspection — traders moving high-value stock regularly should have this built into dispatch procedure, not treated as optional paperwork.

GSTR-1 and GSTR-3B Filing for Traders

Filing frequency depends on turnover and the QRMP (Quarterly Return Monthly Payment) scheme election:

• Turnover above ₹5 crore: mandatory monthly filing of both GSTR-1 (11th of the following month) and GSTR-3B (20th of the following month)
• Turnover up to ₹5 crore, opted for QRMP: quarterly GSTR-1 and GSTR-3B, with monthly estimated tax payment via PMT-06 in the first two months of the quarter

Traders with high invoice volume (retail especially) benefit from disciplined day-to-day invoicing software rather than reconstructing a quarter's sales at filing time — reconciliation errors between GSTR-1 (what you reported as sales) and GSTR-3B (what you paid tax on) are flagged automatically by the GST portal and are a common source of notices.

Input Tax Credit: The Trader-Specific Risk

Traders typically have significant input tax credit riding on purchases from suppliers — and ITC is only available if the supplier has actually filed their own GSTR-1 reporting that sale, reflected in your GSTR-2B. A trader can lose input tax credit entirely if a supplier fails to file, even though the trader paid GST on the purchase in good faith. Practical steps to manage this risk:

• Reconcile GSTR-2B against your purchase register every filing period, not just at year-end
• Follow up promptly with suppliers whose invoices haven't appeared in GSTR-2B
• Avoid over-reliance on a small number of suppliers with inconsistent filing history for high-value purchases

Composition Scheme: An Alternative for Small Traders

Traders with turnover up to ₹1.5 crore (₹75 lakh in some special category states) can opt for the composition scheme instead — paying a flat 1% of turnover as tax, filing a simpler quarterly statement (CMP-08) and one annual return, but forgoing input tax credit entirely and unable to make inter-state supplies. This suits small traders with mostly local, intra-state sales and limited GST paid on purchases; it's usually the wrong choice for a trader who is B2B-heavy or purchase-cost-heavy.

Whether you're registering for the first time or need help staying current with GSTR-1/3B and e-way bill compliance, our GST registration and GST return filing services handle both the setup and the ongoing filing cycle for trading businesses.