In a significant move to ease the tax compliance burden on India’s micro, small, and medium enterprises (MSMEs), the Central Board of Indirect Taxes and Customs (CBIC) has announced a series of reforms under the Goods and Services Tax (GST) regime. These include simplified registration norms, enhanced exemption thresholds, and streamlined filing procedures under the Quarterly Return Filing and Monthly Payment (QRMP) scheme.
Here’s a comprehensive breakdown of the reforms and their implications for small businesses.
Key Compliance Relaxations for MSMEs
- MSMEs registered under the QRMP scheme are now required to file GST returns only once every quarter, reducing the frequency and cost of compliance
- Taxpayers can choose between a Fixed Sum method or Self-Assessment for monthly tax payments, offering greater flexibility in managing cash flows
- Late fee rationalization has been introduced, capping penalties and easing pressure on smaller taxpayers who often struggle with deadlines
Expanded Exemption Thresholds
- Service providers with an annual turnover of up to Rs 20 lakh (Rs 10 lakh for northeastern and hill states) are now exempt from GST registration
- For suppliers of goods, the exemption threshold has been raised to Rs 40 lakh for intra-state supply, with a reduced limit of Rs 20 lakh in select states
- Advance payments received for the supply of goods are now exempt from GST, easing working capital constraints and reducing upfront tax liabilities
Policy Impact and Outreach
- According to CBIC estimates, over 78 percent of GST-registered taxpayers stand to benefit from these reforms
- The Ministry of Finance has emphasized that these changes are part of a broader effort to position itself as a compliance partner rather than an enforcer
- CBIC has launched digital campaigns and help desks to raise awareness among traders, shopkeepers, and small enterprises
Broader Context and Future Outlook
- These reforms come as India marks eight years of GST implementation, with a renewed focus on simplifying tax administration
- The government has reiterated its commitment to supporting MSMEs, which contribute over 30 percent to India’s GDP and employ more than 110 million people
- Experts believe that these measures will not only reduce compliance fatigue but also improve voluntary tax participation and formalization of the economy
As the QRMP scheme gains traction and registration norms become more inclusive, India’s small businesses are poised to benefit from a more predictable, transparent, and growth-oriented tax environment.
Sources: JurisHour, TaxGuru, Press Information Bureau, Ministry of Finance June 2025
