A recent report highlighted that the Gujarat State GST department has intensified its focus on business-to-consumer (B2C) sectors, aiming to close tax compliance gaps. Industries such as ice-cream parlours, salons, coaching classes, and mobile phone dealers are under the scanner for potential tax evasion and non-compliance.
Recent raids across Gujarat exposed tax evasion worth Rs 20 crore, reported The Times of India. Officials revealed that while many registered traders underreport income, a large number of unregistered businesses exceed the GST registration threshold without complying.
This raises an important question: can unregistered small businesses receive GST notices?
Under the Central Goods and Services Tax (CGST) Act, 2017, GST authorities are empowered to scrutinise, audit, and assess businesses regardless of their registration status. An tax expert states: “GST laws allow authorities to issue notices to unregistered businesses whose turnover exceeds the prescribed threshold. Sections 65 and 67 enable audits, inspections, and searches.”
GST REGISTRATION RULES FOR SMALL BUSINESSES
The GST registration thresholds in India are designed to balance tax compliance with the administrative capacities of small businesses. As of April 1, 2019, businesses involved in the supply of goods are required to register for GST if their annual turnover exceeds Rs 40 lakh, while service providers have a lower threshold of Rs 20 lakh.
These thresholds aim to ease the compliance burden on small enterprises, allowing them to operate without the complexities of GST registration and filing. However, once a business surpasses these turnover limits, registration becomes mandatory to ensure tax compliance and proper accounting within the GST framework.
The Goods and Services Tax (GST) registration thresholds in India are designed to balance tax compliance with the administrative capacities of small businesses. As of April 1, 2019, businesses involved in the supply of goods are required to register for GST if their annual turnover exceeds Rs 40 lakh, while service providers have a lower threshold of Rs 20 lakh.
WHAT ABOUT UNREGISTERED SMALL BUSINESSES?
The department employs several methods to monitor unregistered dealers, including analysing e-way bills, tracking transactions in personal accounts, and identifying income discrepancies. Another tax expert explains: “While issuing notices to small businesses is legally valid, enforcement may depend on socio-economic and political factors.”
GST compliance can be challenging for small businesses that lack organised operations. Record-keeping, filing returns, and hiring professionals can be resource-intensive. However, registered businesses gain access to input tax credits, reducing overall costs over time.
Another tax expert, suggests: “Small businesses can leverage schemes like the composition scheme, which simplifies compliance processes.”
Experts recommend that small businesses monitor their turnover, maintain accurate records, and register promptly once thresholds are crossed. Proactive compliance is essential, as the GST department can cross-reference bank transactions and other data sources to detect non-compliance.
As the tax net expands, awareness and adherence to GST regulations are critical for small businesses. With proper guidance and compliance, businesses can benefit from a structured tax framework while avoiding penalties and scrutiny.
