New Delhi, Oct 2026 : More than 16 lakh small businesses that sell directly to consumers could soon be allowed to file just one GST return a year, after the GST Council on Thursday approved in principle a simplified compliance framework for taxpayers with an annual turnover of up to Rs 5 crore.
The proposed scheme is aimed at reducing the compliance burden on small, consumer-facing businesses such as neighbourhood retail shops, salons, restaurants and small eateries. Under the framework, eligible taxpayers would continue to pay Goods and Services Tax (GST) every quarter but would be required to file only one return annually.
The proposal was cleared at the 57th meeting of the GST Council, chaired by Union Finance Minister Nirmala Sitharaman. The scheme will be optional and available to taxpayers meeting the prescribed eligibility conditions, including the Rs 5-crore annual turnover threshold.
Officials said the detailed operational framework and the legislative amendments required to implement the new system will be presented before the Council at its next meeting. The proposed changes are scheduled to come into effect from April 1, 2027.
According to government estimates, India currently has around 1.05 crore active GST taxpayers. Of these, approximately 16.85 lakh report supplies exclusively to consumers. Nearly 16.66 lakh of these taxpayers, or about 99 per cent, have an annual turnover of less than Rs 5 crore.
Despite their large numbers, these businesses account for less than one per cent of the overall GST liability. Officials said their limited contribution to the wider input tax credit chain makes them suitable candidates for a simplified compliance mechanism.
Businesses selling directly to individual consumers generally have a different compliance profile from companies supplying other GST-registered businesses. Since their customers typically do not claim input tax credit, the returns filed by such businesses have relatively limited implications for the broader GST credit system.
The proposed framework seeks to recognise this distinction while reducing the administrative workload for small entrepreneurs. Under the new arrangement, eligible businesses would retain the requirement to make GST payments on a quarterly basis, while annual return filing would replace more frequent return submissions.
At present, GST taxpayers are generally required to file monthly returns, subject to various schemes and exemptions. Since 2021, businesses with turnover of up to Rs 5 crore have been permitted to opt for quarterly return filing under the Quarterly Returns Monthly Payment scheme, although they continue to make tax payments every month.
The latest proposal would simplify the process further by allowing eligible consumer-facing businesses to file a single return annually while maintaining quarterly tax payments.
The government expects the measure to reduce paperwork, save compliance time and make GST administration easier for small businesses without significantly affecting tax collection or the input tax credit chain.
The final rules, eligibility conditions and necessary legal changes are expected to be considered by the GST Council before the scheme is implemented from April 2027.
