The GST department issued Show Cause Notices under Section 63 to individuals for failing to comply with GST registration.
What’s in the Notice?
You being an individual, have received the amount through Phonepe or Paytm towards the supply of service or goods to the extent of FY 2020-21 to 2024-25 without having enrolled under GST Act.
What is Section 22 of the GST Act?
Section 22 of the GST Act mandates registration if service supply annually exceeds ₹20 lakh or goods supply annually exceeds ₹40 lakh. Failure to register or pay due GST leads to notices and legal liabilities.
Compliance Requirements and Risks
Individuals receiving large amounts through UPI without GST registration are liable for tax and he/she must justify transactions if summoned by authorities.
Unnecessary or unclear transactions on the credit side of accounts often trigger scrutiny.
Loans, gifts or third-party transactions must be well documented to avoid confusion.
Maintaining detailed transaction records and filing accurate Income Tax Returns is critical to defend against notices and comply with tax laws.
Income Tax Return Filing and Thresholds
Filing ITR is mandatory when income exceeds ₹3 lakh, increased to ₹4 lakh from the financial year 2025-26 onwards.
Tax exemption limits will incease from ₹7 lakh to ₹12 lakh in FY 2025-26, affecting tax liability calculations.
GST registration thresholds is ₹20 lakh for service providers and ₹40 lakh for traders; exceeding these requires GST compliance regardless of ITR
Avoid unnecessary UPI transactions to prevent triggering GST or Income Tax department scrutiny.
Keep up-to-date and accurate records of all financial transactions, including gifts, loans, and third-party payments, to provide evidence if questioned.
Regularly check Annual Information Statement (AIS) and Taxpayer Information Summary (TIS) to monitor reported transactions.
Seek professional assistance when needed to ensure compliance with evolving tax rules and avoid penalties.
conclusion
Unnecessary or undocumented UPI credits may attract GST and Income Tax scrutiny. Whether you’re a freelancer, trader, or salaried person, ensure all financial transactions are well recorded and justified. Regularly review your AIS and TIS reports, stay within GST and ITR thresholds, and consult tax professionals like IndTax Filings to stay compliant and avoid penalties.
Frequently Asked Questions (FAQs)
Yes. Repeated or large UPI credits, especially without GST registration or proper ITR filing, can trigger scrutiny or notices from tax departments.
Under Section 22 of the GST Act, ₹20 lakh is the limit for service providers and ₹40 lakh for goods traders. Exceeding this requires mandatory registration.
Undocumented third-party deposits, large gifts, or loan repayments without agreements can raise red flags. Keep all such records and report correctly in ITR.
