Introduction

As a small business owner with total annual sales of 25 lakh rupees, you may be wondering about your GST registration and tax filing obligations. This article will help you understand the nuances of GST and Income Tax in India, including the conditions under which you need to register and file returns.

Understanding GST Registration in India

The Goods and Services Tax (GST) in India mandates registration for businesses based on their turnover. Generally, businesses that exceed specific turnover thresholds must register and file GST returns. However, if your total annual sales are 25 lakh rupees, you may not be required to file GST returns, depending on the state-specific limits and your business activities.

Turnover Thresholds for GST Registration

According to the Central Goods and Services Tax (CGST) Act 2017, businesses can become liable for GST registration based on the turnover threshold. The thresholds are as follows:

For goods: A turnover of 40 lakhs (4 million rupees) is the threshold. For services: A turnover of 20 lakhs (2 million rupees) is the threshold. For certain states: In some states, the threshold for goods is 20 lakhs and for services is 10 lakhs.

Note: These limits are subject to vary based on the individual state's provisions. Always check the specific limits for your state to ensure compliance.

Voluntary Registration

Even if you are not required to register for GST due to your turnover, you have the option to voluntarily register. Voluntary registration allows you to claim input tax credits (ITC) for your business expenses. This can be beneficial if you plan to conduct further expansion or trade in the future.

Income Tax Returns in India

Income Tax (IT) returns are required for all businesses registered under the Income Tax Act, 1961. Even if you do not need to register for GST, you must comply with Income Tax requirements to ensure the accurate reporting of your business income. This includes your business income and any other sources of income.

Income Tax Return Filing Process

To compute your income for tax purposes, you need to calculate the total income from all five heads:

Income from salary Income from house property Income from business or profession Income from capital gains Income from other sources

After computation, you must file your Income Tax Return (ITR) accordingly:

ITR-3 and ITR-4: These forms are specifically designed for individuals who are not required to undergo an audit. ITR-1 and ITR-6: These forms are for individuals who undergo an audit. ITR-7: This form is used by assesses who are under a transfer pricing audit.

You must file your ITR by the due dates, which are:

31st July for individuals and HUFs with non-audited accounts. 30th September for corporate assesses and those undergoing audit under section 44AB. 30th November for assesses under a transfer pricing audit.

Failure to file your returns by the due dates may result in penalties as per section 234E of up to 10,000 rupees.

Conclusion

Navigating the requirements for GST and Income Tax can be complex. However, by familiarizing yourself with the thresholds, optional registration, and the appropriate tax filing forms, you can ensure compliance with the relevant regulations. If you are unsure about your specific obligations, it is advisable to consult with a tax professional for personalized guidance.