Summary
The Indian government has introduced simplified income tax and GST reforms aimed at easing compliance for small taxpayers. Key updates include higher threshold limits, relaxed return filing norms, and amnesty schemes. Here’s a complete breakdown with rules, expert tips, and official references.
Simplified Income Tax and GST Reforms for Small Taxpayers
The simplified income tax and GST reforms announced by the government in 2025 aim to reduce compliance burden and improve ease of doing business for small taxpayers. From threshold increases to easier return filing and streamlined processes, these reforms target small businesses, professionals, and MSMEs struggling with routine tax formalities.
Let’s decode the key changes and how they impact you.
Key Income Tax Reforms for FY 2024–25
| Provision | Earlier Limit | New Limit / Change (2025) |
|---|---|---|
| Presumptive income under Sec 44ADA | ₹50 lakh turnover | Increased to ₹75 lakh (non-cash receipts ≤5%) |
| ITR Filing Due Date (Extended) | 31st July 2025 | Now 15th September 2025 (CBDT Circular 06/2025) |
| TDS Exemption on Rent (194-I) | ₹2.4 lakh/year | ₹3 lakh/year |
| Audit Limit under Sec 44AB | ₹1 crore (non-cash ≥95%) | ₹10 crore (unchanged but clarified further) |
| Form ITR-4 coverage | Up to ₹50 lakh income | Now covers up to ₹75 lakh under presumptive |
✅ CBDT Notification No. 40–42/2025 and Circular No. 06/2025 are key sources
GST Reforms for Small Taxpayers – 2025 Updates
| Area | Previous Rule | New Simplified Rule (2025) |
|---|---|---|
| GST Amnesty Scheme | Limited to select years | Now extended to FY 2017–18 to 2019–20 (Sec 128A) |
| Composition Scheme Turnover Limit | ₹1.5 crore | No change, but clarity on restaurant/hotel services |
| GSTR-4 for Composition Dealers | Annually | Filing process simplified via pre-filled forms |
| Late Fee Amnesty (DRC-07/03) | Not available previously | Now eligible under conditional payment clause |
| Revocation of Cancelled GSTIN | One-time window closed | Window reopened till 30.09.2025 (CBIC Notification) |
🔎 CBIC Circular No. 248/05/2025-GST and Notification No. 05/2025-CT provide detailed guidance
Why These Reforms Matter
- Lower cost of compliance for small businesses
- Wider coverage under presumptive tax schemes
- Reduces need for professional audit under Section 44AB
- Gives a second chance to defaulting GST payers via amnesty
- Encourages formalization of income and return filing
Expert View: One Practical Tip
If your turnover is below ₹75 lakh and more than 95% of your receipts are digital, opt for presumptive taxation under Section 44ADA/44AD and avoid tax audits. Combine this with GST Composition Scheme (6% rate) for a stress-free compliance year.
Legal References
- CBDT Circular No. 06/2025 – Extension of ITR due date
- Notification No. 40–42/2025-Income Tax – ITR-1/4, 3, 5 changes
- CBIC Circular No. 248/05/2025-GST – Clarifications on restaurant services
- GST Notification 05/2025-CT(Rate) – Effective from 01.04.2025
- Section 128A of CGST Act – Amnesty for non-filers
(Include external link: https://www.cbic.gov.in and https://incometaxindia.gov.in)
FAQs on Simplified Income Tax and GST
Q1. Can I opt for 44AD and Composition Scheme together?
Yes, if you meet the turnover limits and deal in eligible goods/services.
Q2. Is GST Amnesty available for FY 2020–21?
No. The 2025 scheme is limited to FY 2017–18 to 2019–20.
Q3. Is it compulsory to have 95% digital receipts to claim 44ADA at ₹75 lakh?
Yes. That’s the key condition to avail the increased limit.
Q4. Is the ITR filing due date extended for all taxpayers?
No. Only for those under Section 139(1), not for tax audit cases.
Conclusion:
The government’s move to roll out simplified income tax and GST reforms for small taxpayers is a clear step towards trust-based compliance. It offers much-needed relief and predictability to small business owners, professionals, and MSMEs.
➡️ Need help filing under the new schemes?
Use Efiletax to file your Income Tax Return or GST with expert support, audit guidance, and amnesty assistance.