The Goods and Services Tax (GST) regime in India continues to evolve, with significant changes set to be implemented from 1st April 2025. These updates, announced by the GSTN, aim to improve compliance, security, and efficiency across various sectors. Below is a detailed breakdown of the major updates and their implications.
1. Updated E-Way Bill and E-Invoice Systems: Enhancements in Security
From 1st January 2025, the National Informatics Centre (NIC) will roll out updated versions of the E-Way Bill and E-Invoice systems. These updates are designed to enhance the security of these portals, in line with government guidelines and best practices.
- The updates aim to prevent unauthorized access and ensure secure data transmission across all platforms.
- Taxpayers and businesses using these systems are encouraged to stay updated with the latest security features and compliance measures, which can be accessed via the E-Invoice and E-Way Bill portals.
2. Multi-Factor Authentication (MFA): Mandatory from 1st April 2025
Starting 1st April 2025, the Multi-Factor Authentication (MFA) will become mandatory for all taxpayers, including those with an Annual Aggregate Turnover (AATO) above ₹5 Crores. MFA is already a requirement for businesses with AATO exceeding ₹100 Crores (since 20th August 2023) and ₹20 Crores (since 11th September 2023), and the threshold for other taxpayers will gradually reduce over time.
- MFA Requirement Timeline:
- From 1st January 2025, MFA becomes mandatory for taxpayers with AATO exceeding ₹20 Crores.
- From 1st February 2025, it applies to businesses with AATO exceeding ₹5 Crores.
- From 1st April 2025, it will be applicable to all taxpayers, regardless of their turnover.
- Taxpayers are urged to enable MFA as soon as possible by updating their registered mobile numbers and following the instructions provided on the E-Way Bill and E-Invoice portals.
3. Restricting the Period of E-Way Bill Generation
Effective from 1st January 2025, the generation of E-Way Bills will be restricted to documents dated within 180 days from the date of the base document.
- For example, any documents dated before 5th July 2024 will not be eligible for E-Way Bill generation from 1st January 2025.
- This change aims to reduce the generation of E-Way Bills for stale or outdated transactions and ensure a more streamlined logistics process.
4. Restricting the Extension of E-Way Bills
From 1st January 2025, the extension period for E-Way Bills will be limited to 360 days from their original date of generation.
- For instance, an E-Way Bill generated on 1st January 2025 can only be extended up to 25th December 2025.
- This rule ensures that the validity of E-Way Bills is consistent and minimizes potential misuse of extensions.
5. Mandatory Sequential Filing of GSTR-7
Another major change coming from 1st April 2025 is the mandatory sequential filing of GSTR-7, which relates to tax deduction at source (TDS) under GST.
- Taxpayers must now file GSTR-7 in a sequential manner to ensure accurate reporting and reconciliation of TDS.
- This change will improve the efficiency of TDS collections and facilitate timely input tax credit (ITC) claims for taxpayers.
Changes in Forms of GSTR-7 & GSTR-8 are also coming
6. Enhancements in Biometric Functionality for Directors
Starting 1st March 2025, GSTN will introduce a new facility for Promoters/Directors of companies to complete biometric authentication at any GST Suvidha Kendra (GSK) within their Home State.
- This facility is available to Directors/Promoters of businesses like Public Limited Companies, Private Limited Companies, Unlimited Companies, and Foreign Companies.
- It will simplify the biometric authentication process for Promoters/Directors by allowing them to complete it at any available GSK in their home state, rather than the jurisdictional GSK.
7. Changes in GST Registration Process (Rule 8 of CGST Rules, 2017)
As per recent updates, applicants must follow the GST registration process as defined under Rule 8 of CGST Rules, 2017. Key changes include:
Non-Aadhaar Applicants:
- If an applicant opts not to authenticate via Aadhaar, they must visit the GST Suvidha Kendra (GSK) for photo capturing and document verification.
Aadhaar Applicants:
Applicants opting for Aadhaar authentication must undergo biometric authentication and photo capturing at the GSK, followed by document verification for the Primary Authorized Signatory (PAS).
Non-Generation of ARN:
If the biometric authentication or document verification fails to be completed within 15 days, the Application Reference Number (ARN) will not be generated, and the registration process will be delayed.
8. Introduction of Input Service Distributor (ISD) System
From 1st April 2025, the Input Service Distributor (ISD) mechanism will be mandatory for businesses. This mechanism allows businesses to distribute Input Tax Credit (ITC) on common services (like rent, advertisement, or professional fees) across their GST registrations under the same PAN.
- Key Compliances:
- Issue ISD Invoices for ITC distribution.
- File GSTR-6 monthly, with returns due by the 13th of each month.
- The ITC distributed will be reflected in GSTR-2B of the receiving branches, which they will use to avail ITC during their GSTR-3B filing.
- Consequences of Non-Compliance:
- Denial of ITC for recipients not complying with the ISD framework.
- Penalties ranging from ₹10,000 to the amount of ITC availed in contravention of the rules.
9. GST Rate Changes for the Hotel Industry (Effective 1 April 2025)
The GST rate for the hotel industry will undergo significant revisions starting 1st April 2025. Some of the key changes include:
- Omission of “Declared Tariff”:
- GST will now be based on the actual value charged to the customer, not the published tariff.
- This change is aimed at creating a fairer tax structure for hotel operators.
- GST Rate Based on Accommodation Value:
- Hotels offering high-value accommodation (above ₹7,500 per unit/day) will fall under the category of “specified premises” and will have a GST rate of 18% for restaurant services with ITC.
- New hotels can opt for this rate within 15 days of their GST registration acknowledgment.
10. GST on Sale of Old Cars
The GST rate on the sale of old cars will be revised to 18% from 12% starting 1st April 2025.
- This change will impact the sale of pre-owned cars and may result in higher tax liabilities for businesses dealing in used cars.
11. Start New Invoice Series
As part of the GST system updates, businesses will be required to start a new invoice series from 1st April 2025. This will help in keeping accurate records and ensure the smooth transition into the new financial year with updated compliance requirements.
12. Calculation of Aggregate Turnover
Businesses should calculate their aggregate turnover to assess whether they are liable to take GST registration or issue e-invoices in the new financial year. This calculation will determine their compliance obligations for GST registration, QRMP Scheme, GST filing, and e-invoicing.
13. GST Waiver Scheme 2025:
File Application in SPL01 or SPL 02 if you already paid tax till 31st March 2025 within 3 months of payment
14. Credit note under GST:
If your supplier issued credit note then it is mandatory for recipient to accept or reject it through IMS
15 Last Date to claim ITC of Past FY:
Section 16(5): 5) Notwithstanding anything contained in sub-section (4), in respect of an invoice or debit note for supply of goods or services or both pertaining to the Financial Years 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in any return under section 39 which is filed up to the thirtieth day of November, 2021.
The Central Board of Indirect Taxes and Customs, through Notification No. 22/2024–Central Tax, dated 8th October 2024, provides a special procedure for the rectification of orders related to the wrong availment of input tax credit under sections 73, 74, 107, or 108 of the Central Goods and Services Tax Act, 2017. This applies to registered persons where the input tax credit was denied due to contravention of section 16(4), but is now available under sections 16(5) or 16(6) of the Act. The concerned persons must file an application electronically on the common portal within six months from the date of the notification, by 8th April 2025.
Visit www.cagurujiclasses.com for practical courses
