Can unregistered small businesses receive GST notices?
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. Supreme Kothari, Partner at Economic Laws Practice, 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.
