More than 16.85 lakh small businesses that sell exclusively to retail consumers could soon file just one GST return a year, after the GST Council on Thursday, 8 October 2026 approved in principle a simplified compliance scheme for taxpayers with annual turnover of up to ₹5 crore. The decision, taken at the 57th GST Council meeting chaired by Finance Minister Nirmala Sitharaman in New Delhi, is set to take effect from 1 April 2027.

What the Scheme Proposes

Under the proposed framework, eligible businesses — including neighbourhood retail shops, salons, small restaurants, and eateries — would pay GST every quarter but file a consolidated return only once a year. The scheme will be offered as an optional arrangement, giving qualifying taxpayers the choice to remain on their existing filing cycle if preferred.

At present, most GST taxpayers are required to file monthly returns. Businesses with turnover up to ₹5 crore have been permitted to file quarterly returns since 2021, but they still pay taxes monthly. The new proposal goes further by cutting annual return filings to one while retaining quarterly tax payments.

Who Stands to Benefit

According to government estimates, out of 1.05 crore active GST taxpayers, approximately 16.85 lakh report supplies only to end consumers. Of these, nearly 16.66 lakh — or 99 per cent — have annual turnover below ₹5 crore. Despite their large numbers, these businesses collectively account for less than 1 per cent of the overall GST tax liability.

Because their customers are individual consumers who do not claim input tax credit, the returns filed by such sellers have minimal bearing on the broader GST credit chain — a key rationale behind classifying them as suitable candidates for a simplified compliance regime.

Legislative Steps Ahead

Officials confirmed that the detailed operational framework and the legislative amendments required to implement the scheme will be placed before the Council at its next meeting. The reforms are formally slated to take effect from 1 April 2027, giving businesses and administrators time to prepare for the transition.

Broader Context

The move continues a pattern of incremental GST simplification since the tax's rollout in 2017. The quarterly return option introduced in 2021 already reduced the compliance burden for small filers; this latest proposal represents the most significant reduction in filing frequency yet for the B2C segment. Notably, the segment targeted — businesses selling only to consumers — was always the least integrated into the input tax credit ecosystem, making a compliance overhaul relatively low-risk for revenue authorities. The Council's step signals a broader recognition that compliance costs for micro and small enterprises can suppress formalisation, and that easing those costs may expand the taxpayer base over time.