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GST registration is mandatory if: (1) annual turnover exceeds ₹40 lakh for goods businesses or ₹20 lakh for service businesses (₹10 lakh in special category states); (2) you make inter-state supplies regardless of turnover; (3) you sell on e-commerce platforms (Amazon, Flipkart, etc.); (4) you are a casual taxable person. Voluntary registration is allowed even below threshold to claim ITC on purchases.

Section 44AD allows small businesses (turnover up to ₹3 crore for cash businesses, ₹75 lakh for professionals) to declare 8% of gross turnover as net profit (6% for digital receipts) without maintaining detailed books. This simplifies ITR filing (use ITR-4). You cannot claim additional deductions, but you also don't need a tax audit if you declare the presumptive rate or higher.

MSME/Udyam registration benefits include: collateral-free loans up to ₹2 crore under CGTMSE scheme, priority sector lending from banks at lower rates, subsidies under various central and state schemes, access to government tenders (25% reserved for MSMEs), protection against delayed payments (buyers must pay within 45 days), and lower filing fees with MCA for registered companies.

Late fees for GSTR-3B: ₹50/day (₹25 CGST + ₹25 SGST) for returns with tax liability, and ₹20/day (₹10 + ₹10) for nil returns. Maximum late fee is ₹10,000 per return from FY 2022-23. Additionally, interest at 18% per annum is charged on the unpaid tax amount. For GSTR-1, late fee is ₹200/day (nil: ₹50/day) capped at ₹10,000. These amounts add up quickly — timely filing is critical.

Under the Income Tax Act: if business income exceeds ₹2.5 lakh OR business turnover exceeds ₹25 lakh, books must be maintained. Companies are always required to maintain books under the Companies Act. Under 44AD/44ADA presumptive schemes, books are not required if you declare the prescribed profit %. However, maintaining books helps with GST reconciliation, bank loan applications, and provides an accurate financial picture of your business.