"GSTR-9 is optional if my turnover is small": what Section 44 actually says

Walk into any trade association WhatsApp group in December and you will find the same confident line: "GSTR-9 is only for big companies, we don't need to file." The claim gets repeated because it is half true, and the half that is false costs businesses money every single year. The exemption people are relying on is a conditional relaxation notified year by year — not a permanent carve-out written into the Act — and it does not apply to the reconciliation statement, the three-year time bar, or the consequences of filing a return that quietly contradicts your own monthly filings.

For FY 2025-26, the annual return is due on 31 December 2026. Here is what the law actually requires.

What the law actually says

Section 44 of the CGST Act, 2017 is the operative provision. It requires every registered person to furnish an annual return for every financial year, electronically, in the form and manner prescribed. Rule 80 of the CGST Rules, 2017 prescribes that form as GSTR-9, and fixes the due date as 31 December following the end of the financial year.

Section 44 itself excludes only five categories from the annual return obligation:

• Input Service Distributors
• Persons deducting tax at source under Section 51
• Persons collecting tax at source under Section 52 (e-commerce operators)
• Casual taxable persons
• Non-resident taxable persons

Notice what is not on that list: small taxpayers. There is no turnover threshold inside Section 44. The Rs.2 crore figure everybody quotes comes from a notification issued under the proviso to Section 44, which empowers the Government to exempt any class of registered persons from filing the annual return. The Government has issued such a notification for each financial year since FY 2017-18, exempting registered persons whose aggregate turnover in the financial year is up to Rs.2 crore from filing GSTR-9.

Three consequences follow, and they are the part the WhatsApp version never mentions.

First, the exemption is optional, not prohibitory. A person below Rs.2 crore may still file GSTR-9, and once filed, it is a return furnished under Section 44 with all the legal consequences that attach to it — including the fact that it cannot be revised.

Second, the exemption is notified annually. It is not a standing entitlement. Every year the relaxation has to be re-issued, and a business that assumes it will always exist is planning on an administrative habit rather than a statutory right.

Third, "aggregate turnover" is not your GST-taxable turnover. Under Section 2(6), aggregate turnover means the all-India, PAN-level total of taxable supplies, exempt supplies, exports, and inter-state supplies of persons having the same PAN, excluding GST itself and excluding inward supplies on which tax is paid under reverse charge. A trader with Rs.1.4 crore of taxable sales and Rs.80 lakh of exempt supplies is at Rs.2.2 crore aggregate turnover and is squarely inside the filing obligation.

GSTR-9C is a separate obligation

Section 44 as amended also requires a self-certified reconciliation statement in Form GSTR-9C from registered persons whose aggregate turnover exceeds Rs.5 crore in the financial year. Since FY 2020-21 this no longer requires a chartered accountant's audit certificate — it is self-certified by the taxpayer — but the obligation itself survived. GSTR-9C reconciles the turnover declared in the audited annual financial statements against the turnover declared in GSTR-9, and requires the taxpayer to explain every difference line by line.

GSTR-9C is filed along with GSTR-9, not instead of it. Businesses above Rs.5 crore have two filings, not one.

The late fee, and why the numbers people quote are outdated

Section 47(2) prescribes the late fee for failure to furnish the annual return: Rs.100 per day under CGST plus Rs.100 per day under SGST — Rs.200 per day — subject to a cap of 0.25% of turnover in the State or Union Territory under each Act.

That is the statutory ceiling. For FY 2022-23 onwards, the Government rationalised the late fee into turnover-linked slabs by notification, and those reduced rates are what actually applies to most taxpayers today:

The cap is computed on turnover in the State, not national turnover — so a multi-state business is exposed to a separate late fee, and a separate cap, for each GSTIN that misses the date.

The three-year time bar

This is the change most businesses have not absorbed. Section 44 now carries a proviso barring the furnishing of an annual return after the expiry of three years from the due date. A GSTR-9 for FY 2025-26, due 31 December 2026, cannot be filed after 31 December 2029.

That sounds generous until you consider what a permanently unfiled annual return does to a business: it is an open compliance defect that shows up in every due diligence, every bank credit appraisal, and every departmental audit under Section 65 — and after the bar kicks in, it is a defect you can no longer cure by paying a late fee.

Practical implications

GSTR-9 is a reconciliation exercise disguised as a return. It does not compute fresh liability. It pulls your GSTR-1 and GSTR-3B data for the year, sets it against your books, and forces you to state where they diverge. The department reads it exactly that way.

The tables that generate the most notices:

Table 8 reconciles the ITC you availed in GSTR-3B against the ITC auto-populated in GSTR-2A/2B. A negative figure in Table 8D — ITC available in 2A but never availed — is not a demand, but a large unexplained gap invites scrutiny. This is where suppliers who never filed their GSTR-1 surface.

Tables 10 to 13 capture amendments and ITC relating to the previous financial year that were declared or availed in the current year's returns. Businesses routinely leave these blank, then cannot explain a turnover mismatch that exists purely because of timing.

Table 17 requires an HSN-wise summary of outward supplies. It is mandatory, and the HSN digit requirement is turnover-linked — six digits for aggregate turnover above Rs.5 crore, four digits at or below Rs.5 crore for B2B supplies.

GSTR-9 cannot be revised. Once submitted, it is final. Every year businesses file in the last week of December to beat the deadline, discover an error in January, and have no mechanism to correct it. The only remaining route is a voluntary payment in Form DRC-03 — which fixes the tax but leaves the wrong figure sitting in the annual return permanently.

A worked example. A Karnataka trading company has aggregate turnover of Rs.8.4 crore for FY 2025-26. It must file GSTR-9 and GSTR-9C by 31 December 2026. It files on 20 February 2027 — 51 days late. Late fee at Rs.100 per day is Rs.5,100, against a cap of 0.04% of Rs.8.4 crore = Rs.3,360. The cap applies, so the payable late fee is Rs.3,360. Modest. But the same company, at Rs.24 crore turnover, would pay Rs.200 per day = Rs.10,200 against a cap of 0.5% of Rs.24 crore = Rs.12,00,000 — the cap is irrelevant and the daily fee runs unchecked.

Step-by-step: what to do

• Compute your aggregate turnover under Section 2(6) at PAN level, including exempt supplies and exports, across all GSTINs. Do this before you decide whether the Rs.2 crore relaxation applies to you.
• If you cross Rs.5 crore, plan for GSTR-9C from October. It requires audited or finalised financial statements. Businesses that wait for the statutory auditor to sign in December have no time left to reconcile.
• Download and reconcile the GSTR-9 system-generated summary against your books — outward supplies, tax paid, ITC availed and reversed. Do this before touching the form. The portal auto-populates from your filed returns; your job is to identify and explain every difference against the ledger.
• Pull the full-year GSTR-2B and match it against ITC availed. Isolate the ITC that appears in 2B but was never claimed, and the ITC claimed that never appeared. Both need an explanation you can defend later.
• Complete Tables 10 to 13 honestly. Prior-year amendments and ITC availed in the current year belong there. Leaving them blank does not make the mismatch disappear — it removes your explanation for it.
• Prepare the HSN summary at the correct digit level before you open the form. Table 17 is the most common reason a filing stalls at the last minute.
• File by 31 December 2026, and file GSTR-9 and GSTR-9C together where both apply. If you find an error after filing, pay through DRC-03 rather than leaving it open.

FAQ

Is GSTR-9 mandatory if my turnover is Rs.1.5 crore?
No — the annual notification exempts registered persons with aggregate turnover up to Rs.2 crore for that financial year. But filing remains open to you, and if you have taken ITC positions during the year that you want on record, filing is often the better choice. Confirm the exemption notification is in force for FY 2025-26 before relying on it.

Can I revise GSTR-9 after filing?
No. There is no revision facility for the annual return. Correct any tax shortfall through Form DRC-03; the annual return figure itself stays as filed.

What if I have multiple GSTINs under one PAN?
Aggregate turnover is computed at PAN level across all GSTINs, but GSTR-9 is filed separately for each GSTIN. So a business with Rs.3 crore total turnover spread across three states files three annual returns, even though no single state crosses Rs.2 crore.

What is the actual late fee if I file GSTR-9 for FY 2025-26 in March 2027?
For a business with turnover up to Rs.5 crore, Rs.50 per day from 1 January 2027, capped at 0.04% of turnover in that State. For turnover above Rs.20 crore, Rs.200 per day capped at 0.5% of State turnover — a cap high enough that it rarely binds, so the daily fee is your real exposure.

For your specific situation

Aggregate turnover computation, the Rs.5 crore GSTR-9C trigger, and multi-state late fee exposure all turn on facts that differ business to business. For your specific situation, book a consultation at harunraaj.com.

Need help with this?

Our team handles the paperwork. You focus on your business.