Relief for Small Taxpayers: GST Annual Return Exemption and Its Impact

The government has announced a major relief for small businesses and professionals under the Goods and Services Tax (GST) framework. From the financial year 2024–25 onwards, taxpayers with an annual turnover of up to ₹2 crore will be exempt from filing GST annual returns. This decision, notified on September 17, 2025, is expected to ease compliance burdens, cut costs, and simplify the process for small taxpayers.

What the Notification Says
The Central Board of Indirect Taxes and Customs (CBIC), exercising its powers under Section 44 of the CGST Act, 2017, declared that registered persons with turnover up to ₹2 crore are not required to file annual returns for FY 2024–25 and subsequent years. Normally, taxpayers with turnover above ₹5 crore are required to file annual returns by December 31 of the following year.

Benefits for Small Businesses
Tax experts note that this exemption will reduce compliance pressures and professional costs for small businesses. Preparing and filing annual returns often requires engaging tax professionals, which adds financial strain on smaller entities. By removing this requirement, the government has provided direct relief to such taxpayers.

According to Parag Mehta, Indirect Tax Partner at N. A. Shah Associates LLP, this move will “definitely help small taxpayers from the rigours of additional compliances which also involve additional cost.”

The Flip Side
While the exemption is positive, experts also point to certain drawbacks. The annual return filing process allowed taxpayers to review their records, identify errors, and make corrections or payments for mistakes in monthly or quarterly returns. Without this opportunity, taxpayers will have fewer chances to self-correct before scrutiny by the authorities.

A New Addition: Table 6A1 in GSTR-9
Alongside the exemption, the government has introduced a key change in the annual return format. A new section, Table 6A1, has been added to GSTR-9 for FY 2024–25.

According to Bhogavalli Mallikarjuna Gupta, Associate Director – GST, RSM India, this table is designed to bring more clarity and transparency in input tax credit (ITC) claims. It allows taxpayers to provide reconciled details of ITC for past financial years, addressing a major gap that often led to notices from tax authorities.

Gupta highlights that this reform will reduce the chances of disputes, scrutiny, and litigation, provided businesses maintain proper records. The department is expected to compare past ITC reversals and availments with the new disclosures under Table 6A1 to verify consistency.

What This Means Going Forward
For small taxpayers, the exemption signals a welcome cut in compliance and costs. However, it also places more responsibility on maintaining accurate books throughout the year, since the self-correction window through annual return filing will no longer be available. For larger taxpayers, the new GSTR-9 changes aim to streamline reporting and reduce unnecessary disputes over ITC.

In short, the GST Council’s latest move balances relief for small businesses with stronger mechanisms for transparency in ITC reporting, signalling a gradual shift towards simplifying compliance while tightening data reconciliation.