The Department of Financial Services (DFS) is exploring whether the current GST registration threshold for shopkeepers should be increased.
According to sources, over the past few months, DFS has sought feedback from banks, the Reserve Bank of India (RBI), and the National Payments Corporation of India (NPCI) on the matter.

At present, businesses selling goods with an annual turnover above ₹40 lakh and those offering services above ₹20 lakh are required to register under GST and file annual returns.

Aim to Reduce Compliance Burden

A senior finance ministry official explained that GST registration for small businesses is mainly for compliance purposes and does not mean they have to pay taxes.
“Probably the idea is to reduce compliance. Registration itself is a form of compliance burden. Why bother small businesses unnecessarily?” the official said, highlighting that the move could be aimed at reducing the compliance burden for small merchants.

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Feedback Could Shape Other Policy Changes

The consultations between DFS, banks, RBI, and NPCI have been extensive and ongoing.
Sources also indicated that the collected data and feedback could help shape a possible merchant discount rate (MDR) policy for merchant UPI transactions in the future.

Key Highlight:

DFS reviewing current ₹40 lakh GST registration threshold for goods and ₹20 lakh for services.
Goal is to ease compliance for small businesses.
Feedback may also be used for UPI MDR policy decisions.

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