Free invoice generator and tax tools for India

A small business in India meets two main tax systems. Income tax is run by the Central Board of Direct Taxes through the Income Tax Department. The Income-tax Act, 2025 (Act 30 of 2025) took effect on 1 April 2026 and governs tax year 2026-27 onward. Returns for assessment year 2026-27, which cover income earned in 2025-26, are still filed under the Income-tax Act, 1961, and the e-filing portal supports both Acts side by side. The default regime for individuals, HUFs and firms owned by individuals is the new regime in section 202 of the 2025 Act, with a 4% health and education cess on top.

GST is the second system. It is collected by the Centre (CGST and IGST) and by each State (SGST), with returns filed on the GST portal and invoices governed by the CGST Act, 2017 and CGST Rules, 2017.

For employees, the Employees' Provident Fund Organisation collects provident fund contributions. On 16 September 2026 the Union Cabinet approved raising the EPF wage ceiling from 15,000 to 25,000 a month with effect from 17 September 2026, bringing employees earning between those figures into mandatory coverage once the statutory and administrative steps are completed. Wage payment and wage slips fall under the Code on Wages, 2019, in force since 21 November 2025.

GST has a composition scheme in section 10 of the CGST Act, 2017. A registered person whose turnover in the preceding financial year did not exceed 50 lakh rupees may opt to pay a fixed percentage of turnover instead of the normal tax calculation, and the Act allows the Government to raise that limit by notification to as much as 1.5 crore. The Act caps the percentage at 1% of turnover for manufacturers, 2.5% for supplies of food and drink by restaurants and similar services, and 0.5% for other suppliers. Rule 7 of the CGST Rules, 2017 sets the rates actually charged. A composition taxpayer has conditions to meet under rule 5 and is limited in the services it may supply alongside goods, so the choice should be checked against the conditions on the GST portal before opting.