Business Turnover Thresholds: GST, Tax and Company Compliance

Turnover growth can switch on compliance requirements long before a business realises that anything has changed. The difficulty is that “turnover” does not mean exactly the same thing under every law. Income tax may examine total sales, turnover or gross receipts for the tax year. GST generally works with aggregate turnover across all registrations under one PAN (Permanent Account Number).

The Companies Act may use figures from the company's audited financial statements. MSME classification uses both investment and turnover and excludes export turnover for its turnover test. So a business should not maintain one number called “turnover” and apply every statutory threshold to it.

₹1 crore: start with income-tax audit

From tax year 2026-27, tax audit is governed by Section 63 of the Income-tax Act, 2025. For a person carrying on business, the ordinary threshold is turnover or gross receipts exceeding ₹1 crore. However, that threshold increases to ₹10 crore where both of the following are satisfied:

• Cash receipts do not exceed 5% of total receipts.
• Cash payments do not exceed 5% of total payments.

A non-account-payee cheque or bank draft is treated as cash for this test.

Example

A business has turnover of ₹1.5 crore. Cash receipts are 3% of total receipts and cash payments are 4% of total payments. Both cash conditions are met, so the enhanced ₹10 crore threshold applies and turnover of ₹1.5 crore does not by itself require a tax audit. If cash payments instead rise to 7%, the relaxation fails even though cash receipts remain below 5%. The standard ₹1 crore test then applies.

Professionals have a separate threshold: gross receipts exceeding ₹50 lakh under Section 63. For tax year 2026-27, the Income Tax Department also confirms that the audit report under the new Act is the single Form 26, in place of Forms 3CA, 3CB and 3CD.

₹5 crore: two GST requirements use two different tests

₹5 crore is important under GST, but not for one single reason.

E-invoicing

E-invoicing applicability uses a historical turnover test. The notified threshold is based on aggregate turnover exceeding ₹5 crore in a relevant preceding financial year from financial year (FY) 2017-18 onwards, subject to the notified categories and exemptions. That means current turnover alone is not enough.

A business that crossed the threshold in an earlier relevant year can remain within the e-invoicing framework even if its turnover later falls.

Example

Suppose aggregate turnover was ₹6 crore in FY 2023-24 but has fallen to ₹3 crore. The earlier threshold crossing remains relevant because the e-invoicing test looks at qualifying historical turnover, not just the current year. For this reason, keep each earlier year's turnover on record instead of overwriting it with the latest figure.

GSTR-9C

GSTR-9C, the reconciliation statement filed with the GST annual return, also uses ₹5 crore, but differently. Rule 80 of the Central Goods and Services Tax (CGST) Rules requires the self-certified reconciliation statement where aggregate turnover during the financial year being reported exceeds ₹5 crore, subject to the annual-return provisions.

The Central Board of Indirect Taxes and Customs (CBIC) confirms that the current GSTR-9C framework is self-certified and uses the turnover of the relevant financial year. So:

E-invoicing: historical qualifying turnover matters.

GSTR-9C: turnover of the financial year being reported matters.

Using the same ₹5 crore figure without identifying the relevant period can produce the wrong result.

₹10 crore: three different compliance questions can arise

₹10 crore is another example of one amount appearing in unrelated statutory tests.

1. Tax audit

For a qualifying business where both cash tests stay within 5%, Section 63 uses the enhanced ₹10 crore threshold. The statutory wording is “exceeds ₹10 crore”.

2. 30-day e-invoice reporting restriction

From 1 April 2025, businesses with aggregate annual turnover (AATO) of ₹10 crore and above are restricted from reporting covered e-invoices more than 30 days after the invoice date. The Invoice Registration Portal (IRP) confirms that the restriction also applies to covered credit notes and debit notes. Notice the boundary difference:

The enhanced tax audit threshold says “exceeds ₹10 crore”. The IRP restriction says “₹10 crore and above”. The exact wording of each limit matters.

3. TDS on purchase of goods

Under the Income-tax Act, 2025, TDS on purchase of goods appears in Section 393. The buyer qualification uses preceding-year business turnover exceeding ₹10 crore. But that alone does not mean TDS applies to every purchase.

Purchases from the relevant resident seller must also exceed ₹50 lakh during the year. The standard rate is 0.1% on the amount exceeding ₹50 lakh, subject to the statutory provisions and exceptions.

₹35 crore: companies should start asking a different question

For companies engaged in activities covered by the Companies (Cost Records and Audit) Rules, ₹35 crore is relevant to maintenance of cost records. But turnover alone does not determine the result.

The company must also consider its entity status, whether it is a micro or small enterprise, whether its goods or services fall within Table A or Table B, and the relevant Rule 3 conditions.

Whether cost records and cost audit apply therefore needs a check of its own. The Cost Audit Applicability Checker works through it, and the cost audit and cost records page sets out who is covered, the limits, the forms and the dates.

The Institute of Cost Accountants of India (ICMAI) currently publishes both the consolidated 2025 rules and detailed FAQs for these assessments.

MSME turnover is another figure again

The MSME classification limits from 1 April 2025 are set out below.

Both limits must be met. A company may therefore have one turnover figure relevant to GST and a different figure relevant to MSME classification.

Build a turnover map, not just a sales report

A growing business should be able to identify at least:

Income-tax turnover for the relevant tax year.

GST aggregate turnover on the PAN-wide basis prescribed by GST law.

Historical GST turnover for e-invoicing.

Company-law turnover from the relevant audited financial statements.

MSME turnover after the applicable export adjustment.

Covered-product turnover where cost-record rules are relevant.

That distinction becomes increasingly important as the business moves through multiple statutory thresholds.

Use projections carefully

Expected turnover is valuable for planning. If a business is likely to cross ₹5 crore or ₹10 crore during the year, management can prepare systems, invoicing processes and controls before a compliance requirement becomes operational. But projected figures should never replace historical statutory data.

For example, an expected fall in turnover does not undo an earlier year in which the e-invoicing limit was crossed, and current-year GST turnover cannot simply be substituted for a preceding-year income-tax condition.

In practice

The useful question is not:

“What compliances apply at ₹5 crore?”

The better questions are:

Which law? Which definition of turnover? Which financial year? Does the limit say “exceeds” or “and above”? Are there secondary conditions or exemptions?

Once those questions are separated, turnover becomes a useful compliance-planning tool rather than just a year-end accounting number.

Before relying on this article: it follows Section 63 and Section 393 of the Income-tax Act, 2025; the GST e-invoicing notifications and IRP advisories; Section 44 of the CGST Act and Rule 80 of the CGST Rules; the Companies (Cost Records and Audit) Rules, 2014; and the current MSME classification. Limits and exemptions are changed by notification, so check the current text for your facts.

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