Who Are Exempted to File GST Annual Return?

The Goods and Services Tax (GST) regime has simplified India’s indirect tax structure, bringing multiple taxes under a single umbrella. One of the key compliance requirements under GST is the annual return filing, which provides a consolidated summary of all monthly or quarterly returns filed during the financial year. Businesses registered under GST are generally expected to file GSTR-9 (annual return) and, in some cases, GSTR-9C (reconciliation statement).

However, not every taxpayer is obligated to go through this compliance process. The law provides certain exemptions to ease the compliance burden for small businesses and specific categories of taxpayers. If you are wondering whether you fall under the exemption category, this guide will help you understand who is exempted from filing GST annual return and what the rules around GSTR-9C applicability and GSTR-9C turnover limit are.

Understanding GST Annual Return

The GST annual return is essentially a summary return that consolidates the data of all GST returns filed during the year. It provides:

• Details of outward and inward supplies.
• Input tax credit (ITC) availed and reversed.
• Tax paid and payable.
• Reconciliations with audited financials (in some cases).

Different forms of GST annual returns apply to different categories of taxpayers:

• GSTR-9 - For regular taxpayers.
• GSTR-9A- For composition scheme taxpayers (withdrawn from FY 2020–21 onwards).
• GSTR-9B - For e-commerce operators (in specific cases).
• GSTR-9C - Reconciliation statement and certification for taxpayers above a prescribed turnover.

Who Is Exempted from Filing GST Annual Return?

Not every taxpayer under GST is required to file GSTR-9. The following categories are exempted:

1. Casual Taxable Persons (CTPs)

Casual taxable persons are those individuals or businesses that occasionally undertake transactions in a taxable territory where they do not have a fixed place of business. Since their registration is temporary and linked to specific transactions, they are not required to file an annual return.

2. Non-Resident Taxable Persons (NRTPs)

Foreign businesses those who supply goods or services in India without a fixed place of business are considered non-resident taxable persons. Their registration is usually valid for a limited period and they are exempted from filing annual returns.

3. Input Service Distributors (ISDs)

ISDs distribute input tax credit of GST paid on input services to their branches or units. They do not undertake outward supply of goods or services and therefore, they are not required to file GSTR-9.

4. OIDAR Service Providers

Online Information Database Access or Retrieval (OIDAR) service providers, generally non-resident entities offering online services in India, are also exempted from filing GSTR-9.

5. Taxpayers Liable to Deduct TDS under GST

Entities such as government departments or notified persons who deduct tax at source viz., (TDS) under GST provisions are exempted from annual return filing. Their compliance is limited to TDS return filing.

6. Taxpayers Liable to Collect TCS under GST

E-commerce are the operators who are required to collect tax at source (TCS) under GST are also exempted from filing GSTR-9. They are, however, required to file GSTR-8, and in certain cases, GSTR-9B.

7. Composition Scheme Taxpayers (from FY 2020–21 onwards)

Earlier, composition taxpayers had to file GSTR-9A. However, this requirement was removed from FY 2020–21 onwards. Now, their compliance is limited to filing CMP-08 and GSTR-4, and no annual return is required.

Important Points About GSTR-9 Filing

• Every regular taxpayer (not falling in the above exemption categories) with an active GST registration during the financial year must file GSTR-9.
• Exemption: For FY 2023–24, taxpayers with aggregate turnover up to ₹2 crore are exempted from filing GSTR-9, as per CBIC Notification No. 14/2024-Central Tax.
• The due date for filing GSTR-9 is usually 31st December following the end of the financial year, though extensions are often announced.
• Late filing attracts penalties, including a late fee of ₹100 per day under CGST and SGST (i.e., ₹200 per day in total), subject to a maximum cap.

GSTR-9C Applicability

Apart from filing GSTR-9, certain taxpayers are also required to file GSTR-9C, which is a reconciliation statement. This statement reconciles the figures declared in GSTR-9 with the audited annual financial statements of the taxpayer.

Who needs to file GSTR-9C?

Any registered person whose aggregate turnover exceeds ₹5 crore during a financial year.

Why is it required?

GSTR-9C ensures accuracy of self-declared returns vis-à-vis audited books of accounts, providing a higher level of compliance and transparency.

GSTR-9C Turnover Limit

The turnover threshold for GSTR-9C applicability has been a matter of frequent change by the government to reduce compliance burden:

• Initially, GSTR-9C was required if aggregate turnover exceeded ₹2 crore.
• Later, the limit was revised to ₹5 crore.
• At present, taxpayers with aggregate turnover up to ₹5 crore are exempted from filing GSTR-9C.

In simple words:

• If your turnover is more than ₹5 crore, filing GSTR-9C is mandatory.
• If your turnover is ₹5 crore or below, you are exempted from filing GSTR-9C.

Why These Exemptions Exist?

The government’s primary intention behind these exemptions is to maintain a balance between ensuring tax compliance and reducing compliance burden, particularly for small businesses and specific categories of taxpayers. Filing annual returns and reconciliation statements involves time, effort and cost, especially when statutory audit is involved. By exempting certain classes, the GST framework remains business-friendly while still ensuring transparency for larger taxpayers.

Practical Scenarios

• A small trader under composition scheme (turnover ₹1.5 crore) → Exempted from GSTR-9 and GSTR-9C. Only needs to file CMP-08 and GSTR-4.
• An e-commerce operator collecting TCS → Exempted from GSTR-9. Only files GSTR-8 (and in some cases GSTR-9B).
• A manufacturing company with turnover of ₹3 crore → Required to file GSTR-9, but exempted from GSTR-9C.
• A service provider with turnover of ₹10 crore → Required to file both GSTR-9 and GSTR-9C…!

Conclusion

The GST annual return is an essential compliance tool for reconciling yearly business transactions. While GSTR-9 is mandatory for most regular taxpayers, several categories such as non-resident taxpayers, ISDs, OIDAR service providers, TDS/TCS deductors and composition taxpayers are exempted. 

Similarly, GSTR-9C applicability is turnover-based, and only taxpayers crossing the GSTR-9C turnover limit of ₹5 crore need to file it. If you need professional assistance in any GST return or refund case, feel free to contact CRSPL Business Consultants.

For businesses, staying updated on these exemptions is crucial. Over-compliance wastes resources, while under-compliance risks penalties and notices. To understand whether you fall under the exemption list can save time, effort and cost, while ensuring smooth GST compliance.