GST compliance updates 2025
Major GST Changes Effective from April 1, 2025: What Taxpayers Must Know
As India enters the new financial
year, the Goods and Services Tax (GST) system is set to undergo several
important changes starting April 1, 2025. These reforms, driven by the GST
Network (GSTN), are intended to enhance compliance, security, and transparency
in the GST ecosystem. Here's a comprehensive overview of the key updates and
their implications.
1.
Revamped E-Way Bill & E-Invoice Systems for Enhanced Security
Beginning January 1, 2025,
upgraded versions of the E-Way Bill and E-Invoice portals have been introduced
by the National Informatics Centre (NIC). These enhancements focus on boosting
portal security and safeguarding taxpayer data.
- Key Update:
Stronger protection against unauthorized access.
- Action Required:
Businesses must familiarize themselves with the updated portals and ensure
proper configuration to meet new security protocols.
2.
Multi-Factor Authentication (MFA) for All Taxpayers
Multi-Factor Authentication will become
mandatory from April 1, 2025, for every taxpayer, regardless of their
turnover.
- Rollout Schedule:
- From Jan 1, 2025: Required for those with AATO above
₹20 Cr.
- From Feb 1, 2025: Extended to AATO above ₹5 Cr.
- From Apr 1, 2025: Applies to all registered taxpayers.
- Next Steps:
Update registered mobile numbers and activate MFA on the E-Invoice and
E-Way Bill platforms promptly.
3.
Time Limit on E-Way Bill Generation
A restriction has been placed on
generating E-Way Bills for documents older than 180 days from January 1,
2025.
- Implication:
Documents dated before July 5, 2024, will no longer be valid for E-Way
Bill generation from Jan 1, 2025.
- Objective:
Prevent misuse through outdated transaction records.
4.
Limitation on E-Way Bill Extensions
From Jan 1, 2025, an E-Way Bill can
be extended only within 360 days from its original generation date.
- Example:
A bill generated on Jan 1, 2025, can be extended only until Dec 25, 2025.
- Purpose:
Curtails misuse of prolonged validity periods.
5.
Sequential Filing Mandate for GSTR-7
Starting April 1, 2025, businesses
must file GSTR-7 in sequence.
- Why it matters:
Ensures accurate TDS reporting and supports timely input tax credit
claims.
- Note:
GSTR-7 and GSTR-8 forms are also being updated to align with this change.
6.
Biometric Facility for Directors at State-Level GSKs
Effective March 1, 2025, a new
option allows Directors and Promoters to complete biometric verification
at any GST Suvidha Kendra (GSK) within their home state.
- Applies to:
Private Limited, Public Limited, Unlimited, and Foreign Companies.
- Benefit:
Simplifies the verification process without being bound to jurisdiction-specific
centers.
7.
Changes in GST Registration Under Rule 8
Revisions in the GST registration
process under Rule 8 of the CGST Rules, 2017 include:
- Non-Aadhaar Authentication: Applicants must visit a GSK for photograph and
document verification.
- Aadhaar Authentication: Requires biometric verification at GSK, along with
document checks for the Primary Authorized Signatory (PAS).
- Important:
If verification is not completed within 15 days, the Application Reference
Number (ARN) will not be generated.
8.
Input Service Distributor (ISD) Mechanism Becomes Mandatory
From April 1, 2025, businesses will
be required to use the ISD system to distribute Input Tax Credit (ITC)
for shared services.
- Compliance Requirements:
- Issue ISD invoices for internal ITC distribution.
- File monthly GSTR-6 returns (due by 13th of
each month).
- Ensure ITC appears in the receiving entity’s GSTR-2B
for further claim.
- Penalties for Non-Compliance: Could be ₹10,000 or the wrongly availed ITC
amount—whichever is higher.
9.
Hotel Industry GST Rate Update
The hotel sector sees major GST
adjustments from April 1, 2025:
- Removal of “Declared Tariff”: GST will be charged on the actual transaction
value, not listed prices.
- GST Rate Change:
- High-value accommodation (above ₹7,500/day) = 18% GST
on restaurant services (with ITC).
- New hotels can opt for this rate within 15 days of GST
registration acknowledgment.
10.
GST Rate Hike on Sale of Used Cars
The GST rate on pre-owned vehicles
will be revised to 18% (from the current 12%) starting April 1, 2025.
- Effect:
May increase costs for businesses engaged in resale of old vehicles.
11.
Mandatory New Invoice Series
Businesses must initiate a fresh
invoice numbering series from April 1, 2025.
- Reason:
Ensures systematic record-keeping and a seamless transition to the new
fiscal year.
12.
Recalculate Aggregate Turnover
Ahead of FY 2025-26, all businesses
must reassess their aggregate turnover to determine eligibility for:
- GST Registration
- QRMP Scheme
- E-Invoicing applicability
- Relevant return filing frequency
13.
GST Amnesty Scheme 2025
A new waiver scheme under GST allows
businesses to file for relief if tax was paid up to March 31, 2025.
- Forms to Use:
SPL01 or SPL02 within 3 months of payment.
14.
Mandatory Response to Credit Notes
As per new provisions, when a
supplier issues a credit note, the recipient must either accept or
reject it through the Invoice Matching System (IMS).
15.
Last Chance to Claim ITC for Older Financial Years
Under Section 16(5), ITC
related to FY 2017–18 through 2020–21 can still be claimed until November
30, 2021, provided the conditions are met.
- New Procedure:
As per Notification No. 22/2024 (dated 8th October 2024), affected
taxpayers can rectify earlier denied claims by filing on the common portal
within six months (i.e., by April 8, 2025).
Conclusion
The upcoming GST changes are
extensive, covering everything from portal security and return filing to
sector-specific rate changes and registration protocols. It’s crucial for
businesses, accountants, and consultants to stay proactive, review their current
processes, and ensure timely compliance to avoid penalties and disruptions.
DISCLAIMER
Airfinac.com, its author/writer and associates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.