Major GST Reforms for MSMEs: CBIC eases Registration and Filing Under QRMP Scheme
CBIC's new GST reforms simplify registration and quarterly filing for MSMEs, easing compliance and boosting business growth in India.
Micro, Small, and Medium Enterprises (MSMEs) are a crucial pillar of India’s economy, contributing nearly 30 percent to the GDP and employing over 7.5 crore people. They account for 36 percent of manufacturing output and 45 percent of exports, making them a critical driver of economic growth. However, GST compliance has often been a hurdle for small businesses due to complex...
Micro, Small, and Medium Enterprises (MSMEs) are a crucial pillar of India’s economy, contributing nearly 30 percent to the GDP and employing over 7.5 crore people. They account for 36 percent of manufacturing output and 45 percent of exports, making them a critical driver of economic growth. However, GST compliance has often been a hurdle for small businesses due to complex registration procedures and frequent filing requirements.
Aligned with the Union Budget 2025-26, which positions MSMEs as the “second engine of development,” the Central Board of Indirect Taxes and Customs (CBIC) has introduced a series of reforms to ease GST compliance, improve liquidity, and foster the growth of small enterprises. The reforms primarily focus on simplifying GST registration and refining the Quarterly Return Filing and Monthly Payment (QRMP) scheme.
Simplified GST Registration
On April 17, 2025, CBIC issued guidelines to streamline the GST registration process following consultations with the Ministry of MSME and industry stakeholders. Previously, MSMEs faced excessive scrutiny and delays, leading to inconsistent processes across states and deterring market entry.
Under the new framework:
- Physical verification for non-risky businesses is reduced, targeting completion within seven working days.
- Document requirements are minimal, needing only property tax receipts, municipal khata copies, or electricity bills for owned premises, and lease agreements for rented premises.
- Applicants are given seven days to respond to clarifications, with GST officers required to process approvals or rejections within the same timeframe.
These changes are particularly impactful for proprietorships and partnerships, which form the majority of MSMEs and contribute significantly to GST collections. Faster and transparent registration will enable small businesses to begin operations without unnecessary delays, supporting the government’s goal of formalizing the economy while fostering entrepreneurship.
QRMP Scheme for Compliance Relief
Introduced in January 2021, the QRMP scheme has been a significant compliance relief for businesses with an annual turnover of up to ₹5 crore, allowing them to file GSTR-3B quarterly while paying taxes monthly. This reduces the frequency of filings while maintaining tax discipline.
In 2025, CBIC and the Goods and Services Tax Network resolved technical issues that delayed refunds for invoices filed using the Invoice Furnishing Facility under QRMP, improving cash flow for small businesses. The scheme now includes structured deemed options:
- Businesses with turnover up to ₹1.5 crore filing GSTR-1 quarterly will file GSTR-3B quarterly.
- Those with the same turnover filing GSTR-1 monthly will continue with monthly GSTR-3B filing.
- Businesses with turnover between ₹1.5 crore and ₹5 crore can opt for quarterly GSTR-3B filing.
This flexibility allows MSMEs to align compliance with their operational capacity, reducing the stress of frequent filings and enabling a sharper focus on business growth.
Revised MSME Classification
Effective April 1, 2025, the government revised the investment and turnover thresholds for MSME classification:
- Micro: Investment up to ₹2.5 crore and turnover up to ₹10 crore
- Small: Investment up to ₹25 crore and turnover up to ₹100 crore
- Medium: Investment up to ₹125 crore and turnover up to ₹500 crore
| Type | Current Investment (₹ Cr) | Current Sales (₹ Cr) | New Investment (₹ Cr) | New Sales (₹ Cr) |
| Micro | 1 | 5 | 2.5 | 10 |
| Small | 10 | 50 | 25 | 100 |
| Medium | 50 | 250 | 125 | 500 |
These higher thresholds allow more businesses to access benefits such as priority sector lending, tax incentives, and government subsidies. Additionally, under Section 43B of the Income Tax Act, payments to MSMEs must now be made within 15 days to claim expenses, ensuring improved liquidity for small businesses and addressing the issue of delayed payments.
Additional Compliance and Financial Reforms
The Union Budget 2025-26 introduced further measures to ease compliance:
- The mandatory pre-deposit for appeals involving only penalties has been reduced from 25 percent to 10 percent.
- New provisions under the Invoice Matching System ensure that recipients accept credit notes, reducing disputes over input tax credits.
- The Track and Trace mechanism under Section 148A of the GST Act helps curb tax evasion, creating a level playing field for compliant MSMEs.
Complementing GST measures, the budget also announced enhanced credit availability, including increased credit guarantee cover for micro and small enterprises and customized credit cards with limits for micro enterprises registered on the Udyam portal.
Conclusion
These GST reforms signify the government’s commitment to simplifying compliance for MSMEs and ensuring they can operate efficiently without the burden of complex processes and frequent filings. By refining the QRMP scheme and easing registration, CBIC aims to empower MSMEs to focus on business growth and innovation while maintaining compliance with GST regulations.
With these changes, MSMEs are better positioned to strengthen their role in India’s economic growth, create employment, and contribute to exports, ensuring that the sector continues to be a cornerstone of India’s development strategy.
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