Looking for expert help with Income tax and GST for optical shop owners India? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.
Key Takeaways
- Spectacles, frames, spectacle lenses and contact lenses are all 5% GST from 22 September 2025 (Notification 9/2025-Central Tax (Rate), Schedule I, S. No. 480 to 482).
- Plain sunglasses and non-corrective goggles stay at 18% (Schedule II, S. No. 558). Prescription sunglasses are 5%.
- With 5% output tax and 18% GST on shop rent, your input tax credit can pile up. Plan for it before choosing a GST scheme.
- Composition at 1% only saves money if your GST on inputs is below about 3.76% of GST-inclusive sales.
- Section 44AD deems at least 6% profit on digital receipts. Most optical shops earn more, so compare with your books before filing.
What is the GST rate on spectacles, frames and lenses in India? From 22 September 2025, corrective spectacles (HSN 9004), spectacle frames (9003), spectacle lenses and contact lenses (9001) attract 5% GST under Schedule I of Notification 9/2025-Central Tax (Rate). Non-corrective sunglasses and goggles are 18% under Schedule II, S. No. 558.
An optical shop sells two very different things from the same counter. A pair of prescription glasses is a health product, and GST treats it that way at 5%. A pair of fashion sunglasses is a lifestyle product at 18%. Get the split wrong in your billing software and every GSTR-1 you file carries the error. This guide covers what an optical shop owner or optician needs for GST and the AY 2026-27 income tax return. If you're an ophthalmologist running an optical counter inside your clinic, read our income tax guide for doctors alongside this one.
What GST rate applies to what you sell?
The September 2025 rate changes put almost everything a prescription customer buys at 5%. That also means splitting a spectacle bill into frame and lenses no longer changes the tax: both sides are 5%.
Comparison
GST Rates for Optical Shop Items (from 22 September 2025)
| Item | HSN | GST rate |
|---|---|---|
| Spectacle lenses; contact lenses | 9001 | 5% |
| Frames and mountings for spectacles or goggles, and their parts | 9003 | 5% |
| Corrective spectacles, including prescription sunglasses and goggles | 9004 | 5% |
| Sunglasses and goggles, not corrective | 9004 | 18% |
| Sight-testing instruments (for your own clinic setup) | 9018 | 5% |
Source: Notification 9/2025-Central Tax (Rate), Schedule I S. No. 480, 481, 482, 483; Schedule II S. No. 558
So a customer who buys a Rs 2,000 frame, Rs 3,000 of progressive lenses and a Rs 2,500 pair of plain sunglasses gets one bill with two rates. The glasses carry 5% on Rs 5,000 (Rs 250). The sunglasses carry 18% on Rs 2,500 (Rs 450). If the same sunglasses were made to prescription, the whole bill would be at 5%.
Check supplier bills on older stock too. Stock invoiced before 22 September 2025 carries the rate in force then, and your input tax credit (ITC) on it stays at what the supplier charged. Your sale today is at the new rate.
Is the eye test taxable?
Health care services by a clinical establishment, an authorised medical practitioner or para-medics are exempt from GST (Notification 12/2017-Central Tax (Rate), S. No. 74). If a registered ophthalmologist does the eye test, the exemption covers it.
Many optical shops use an optometrist instead. Whether an optometrist counts as "para-medics" for this exemption isn't settled in any CBIC circular we could find. If you charge a separate fee for the test, get advice on this before you bill it as exempt. And if you offer the test free with a purchase, record it that way on the bill, so there's no separate fee to classify.
When do you need GST registration?
If you only sell goods, registration is required once aggregate turnover crosses Rs 40 lakh in most states. Telangana and several other states kept the Rs 20 lakh limit (Notification 10/2019-Central Tax). So a Hyderabad optical shop with Rs 25 lakh of sales must register. If you also supply taxable services, the Rs 20 lakh services limit applies instead.
Selling to a buyer in another state, including shipping glasses to an online customer outside your state, needs registration from the first rupee (Section 24(i), CGST Act). See our GST registration service if you haven't registered yet. If you run a franchise outlet, the franchise fee has its own GST treatment; see our franchise fee GST guide.
Regular scheme or composition: which leaves you more money?
Under the composition scheme, a trader pays 1% of turnover (0.5% CGST plus 0.5% SGST, Rule 7, CGST Rules), up to Rs 1.5 crore turnover. In return you can't charge GST on your bill, you can't claim ITC, and you can't sell to other states (Section 10(2)(c), CGST Act).
Most of your customers are households, so their loss of ITC doesn't matter. The question is only which scheme costs you less. At a 5% output rate, rent matters as much as stock, because commercial rent from a GST-registered landlord carries 18%. Here's one month at Rs 4,20,000 of GST-inclusive sales (Rs 4,00,000 plus Rs 20,000 GST under the regular scheme), with Rs 40,000 rent plus Rs 7,200 GST:
Comparison
One Month, Rs 4.2 Lakh of Sales: Regular vs Composition
| Item | Regular scheme | Composition (trader) |
|---|---|---|
| Tax on sales | Rs 4,20,000 x 5/105 = Rs 20,000 | 1% x Rs 4,20,000 = Rs 4,200 |
| Shop A: stock Rs 2,00,000 + 5% GST, plus rent GST | ITC Rs 10,000 + Rs 7,200 = Rs 17,200; pays Rs 2,800 in cash | Rs 17,200 becomes cost |
| Shop A: total GST borne | Rs 20,000 | Rs 21,400 |
| Shop B: stock Rs 1,40,000 + 5% GST, plus rent GST | ITC Rs 7,000 + Rs 7,200 = Rs 14,200; pays Rs 5,800 in cash | Rs 14,200 becomes cost |
| Shop B: total GST borne | Rs 20,000 | Rs 18,400 |
Source: Rule 7, CGST Rules 2017; Notification 9/2025-Central Tax (Rate). Figures are illustrative.
Under the regular scheme the total stays at Rs 20,000 as long as your ITC is below your output tax, because ITC just offsets part of it. Under composition it's 1% of sales plus all the GST you paid on inputs. The two meet when your input GST is about 3.76% of GST-inclusive sales (5/105 minus 1%). Shop A, buying stock at about 48% of sales, is Rs 1,400 a month better off on the regular scheme. Shop B, a higher-margin shop buying at about 33%, saves Rs 1,600 a month under composition.
Now push Shop A's rent to Rs 60,000. Rent GST becomes Rs 10,800, total ITC Rs 20,800, and ITC is more than your Rs 20,000 output tax. You pay nothing in cash and Rs 800 of credit is left in your electronic credit ledger. Month after month, that balance grows. The inverted duty refund under Section 54(3) of the CGST Act is worked out on ITC on inputs (goods), per the Rule 89(5) formula, so the 18% GST on rent won't come back as a refund. If your credit ledger keeps growing, talk to us before the year closes. Our composition scheme guide covers the other eligibility conditions.
TDS on your shop rent
If you pay more than Rs 50,000 a month in shop rent, you may have to deduct TDS from it. Which section applies for FY 2025-26 (Income-tax Act 1961) depends on who you are and, for an individual or HUF, whether your turnover crossed the Section 44AB audit limit in the previous year:
- Firm, or individual/HUF whose turnover crossed the audit limit last year (Section 194-I): deduct 10% of the rent on land or building, every month the rent exceeds Rs 50,000, and file quarterly TDS returns.
- Other individuals and HUFs (Section 194-IB): deduct 2% once in the year, with no TAN needed.
From 1 April 2026 these provisions sit in Section 393 of the Income-tax Act 2025. Our TDS on rent guide covers the forms and due dates, and our TDS filing service can handle it for you.
How is your income taxed for AY 2026-27?
Step-by-Step Guide
Choosing How to Report Your Shop Income
Check Section 44AD eligibility
Resident individual, HUF or partnership firm (not LLP). Turnover up to Rs 2 crore, or up to Rs 3 crore if cash receipts are within 5% of total receipts.
Split receipts by mode
Receipts by UPI, card, cheque or bank transfer count at 6%. Cash receipts count at 8%.
Compare with your real margin
The deemed figure is a minimum. If your books show more, you can declare the higher profit under Section 44AD.
Check the audit limit
If you declare under Section 44AD within its turnover limit, no Section 44AB audit is needed. If you file on books instead, audit applies above Rs 1 crore turnover, or Rs 10 crore if cash receipts and cash payments are each within 5%.
File the right form
ITR-4 for Section 44AD if total income is within Rs 50 lakh and other conditions are met; ITR-3 if you keep full books (a partnership firm files ITR-5 instead).
Source: Sections 44AD, 44AB and 87A, Income-tax Act 1961; Finance Act 2025
Example 1 (neighbourhood optical shop, new regime): Turnover Rs 90 lakh, of which Rs 72 lakh by UPI, card and bank and Rs 18 lakh in cash. Turnover is within Rs 2 crore, so Section 44AD applies.
- Deemed profit: 6% of Rs 72 lakh (Rs 4,32,000) plus 8% of Rs 18 lakh (Rs 1,44,000), so Rs 5,76,000.
- Tax: 5% on the Rs 1,76,000 above Rs 4 lakh is Rs 8,800.
- The Section 87A rebate (income up to Rs 12 lakh) wipes it out. Tax payable: nil.
But a 6.4% margin is unusual for an optical shop. Frames and lenses often carry far more. Say this shop's books show a real profit of Rs 18,00,000 (20% of turnover) and the owner declares that:
- Tax: nil up to Rs 4 lakh, Rs 20,000 on Rs 4-8 lakh, Rs 40,000 on Rs 8-12 lakh, Rs 60,000 on Rs 12-16 lakh, and 20% of Rs 2,00,000 = Rs 40,000. Total Rs 1,60,000.
- No 87A rebate, as income is above Rs 12 lakh. Add 4% cess of Rs 6,400. Tax payable: Rs 1,66,400.
That's why you should compare before filing. Section 44AD(1) sets the deemed profit as a floor and lets you declare a higher sum. Your bank statements show your UPI and card receipts, and your GST returns show your sales, so a declared profit that sits far below what your purchases and sales imply is hard to explain. See our Section 44AD guide and old vs new regime guide.
Common mistakes optical shops make
- Billing plain sunglasses at 5%. Non-corrective sunglasses are 18%. Give them their own item code, separate from prescription eyewear.
- Billing prescription sunglasses at 18%. Powered sunglasses are corrective spectacles under the 5% entry. You'd be overcharging your customer.
- Choosing composition without counting rent. At a 5% output rate, 18% GST on rent can decide the answer. Run the numbers for your own shop.
- Declaring only 6% profit on a 20% margin business. Section 44AD sets a floor, not a target.
- Taking Rs 2 lakh or more in cash from one customer for one bill. That breaks Section 269ST. See our cash transaction limits guide.
How Tax Garden helps optical shops
We file GSTR-1 and GSTR-3B for optical shops, with prescription eyewear and sunglasses billed at the right rates and your ITC tracked month by month. See our GST return filing service. We also prepare your ITR and check whether Section 44AD or actual books fits your real margin; see our ITR filing service and pricing.
