New GST compliance landscape will alter in a number of ways beginning on April 1, 2025. This includes limiting the generation of E-Way Bills (EWBs) to prevent fraudulent activities and mandating multi-factor authentication (MFA) for access to the GST portal. To be compliant, firms that are registered for GST should take notice of the important requirements and implementation dates.
A number of significant modifications to Goods and Services Tax (GST) compliance regulations will take effect on April 1, 2025.
Stricter e-way bill (EWB) restrictions, required input service distributor (ISD) registration, mandatory multi-factor authentication (MFA) for all taxpayers, and a lowered e-invoicing barrier to INR 1 million are some of the major revisions.
Read also: GST Invoice Furnishing Facility (IFF): Features, Updates & Filing Guide
Upcoming GST compliance updates
Companies operating in India will have to adjust their business practices in order to meet the most recent reconciliation and reverse charge mechanism (RCM) laws, adopt a new invoice series, and reevaluate their total turnover. We give an in-depth overview of these impending modifications, detailing the actions that companies must take to stay in compliance and stay out of trouble.
- Mandatory Multi-Factor Authentication (MFA)
- Relaxed e-invoicing threshold
- Implementation of new invoice series
- Reassessment of aggregate turnover
- Quarterly Return Monthly Payment (QRMP) scheme selection
- E-Way Bill Two-Factor authentication
- Stricter E-Way Bill (EWB) regulations
- Reconciliation of Input Tax Credit (ITC)
- Mandatory ISD registration under GST framework
- Letter of Undertaking (LUT) submission
- Credit Note: E-invoicing requirement effective
Read also: GST on Electronics & Electrical Items: Classification, Rates & Impact
Mandatory Multi-Factor Authentication (MFA)
Accessing GST websites is made even more secure with multi-factor authentication. For all taxpayers to access the GST portal, MFA must be enabled, regardless of Annual Aggregate Turnover (AATO). Here’s how to configure it.
Step 1: Visit the GST portal, then input your login credentials.
Step 2: Go to the “Profile” or “My Profile”, which is usually located on the main menu, after logging in.
Step 3: Click the “2-Factor Authentication” or “security settings” option in the “Profile” section.
Step 4: There are several ways to obtain the One-Time Password (OTP) through the GST Portal.
- OTP via SMS: Your registered mobile phone will receive the OTP.
- Sandes App: An OTP-receiving messaging app offered by the central government. Installing the Sandes app on your registered mobile device is necessary to use this.
- A specialised program called NIC-GST-Shield creates OTPs without the need for an internet connection. Use the GST Portal to download and install this software.
Step 6: Complete the 2-factor authentication setup using the method of your choice by following the on-screen directions.
Once activated, in addition to your standard username and password, you will be required to input an OTP delivered to you by the method of your choice each time you log in.
Read also: GST and the Indian Entertainment Industry: Impact, Challenges, and Future Prospects
Relaxed e-invoicing threshold
More small and medium businesses would be able to use the e-invoicing system after the threshold is lowered to INR 10 crore. To stay in compliance, businesses with more than this turnover must upload invoices to the GST system within 30 days of issuance.
Implementation of new invoice series
Starting on April 1, 2025, businesses are encouraged to start a new series of invoices for all transactional documents, such as bills of supply, credit notes, debit notes, and tax invoices.
Reassessment of aggregate turnover
In order to determine applicable compliance requirements for FY 2025–26, businesses should reevaluate their total turnover for FY 2024–25. This will have an impact on decisions regarding GST registration and eligibility for various programs, such as e-invoicing and the Quarterly Return Monthly Payment (QRMP).
Read also: India may raise GST on cigarettes and other tobacco products
QRMP scheme selection
The QRMP scheme enables quarterly return filing with monthly tax payments for taxpayers having an aggregate turnover up to INR 5 crore . By April 30, 2025, the FY 2025–26 selection should be finished.
E-way bill two-factor authentication
Beginning April 1, 2025, all registered taxpayers must use two-factor authentication for the e-Way bill/e-Invoice system in order to improve security.
Read also: GST on Hotels & Food: Rates, Impact & Analysis
Restrictions on E-Way Bill generation
The E-Way Bill (EWB) generation document age restriction indicates that the base document used for the transportation of goods (such as an invoice, bill of supply, delivery challan or credit note) cannot be more than 180 days old from the EWB generation date.
It should be mentioned that unlimited transit durations are avoided by limiting the EWBs’ total extension period at 360 days from the date of original generation.
Reconciliation of ITC
To find and fix contradictions, a comprehensive reconciliation of the company’s financial records—including the credit and purchase register, Form GSTR-2B, and GSTR-3B—is necessary. Maintaining compliance and correctness in tax filings requires making sure that all applicable ITC for FY 2024–2025 is claimed, ineligible credits are reversed, and mismatches are fixed.
Read also: Biometric-Based Aadhaar Authentication for GST Registration
ITC distribution formula
Formula for ITC Distribution Under ISD (CGST Rules, 2017, Rule 39)
| C1= (t1/T) x C9 |
Definition of terms:
C1 = ITC allotted to a specific branch/unit.
t1 = The particular branch’s or unit’s turnover.
T = the total turnover of all the branches and units that receive ITC.
C9 = the total amount of ITC that can be distributed.
ISD registration mandatory under GST
Starting on April 1, 2025, companies that receive bills for common input services for several branches must register with ISD.
- It is applicable to all industries, especially the service industry.
- Capital products and goods are exempt from it.
- To make sure ITC is distributed correctly, businesses with several locations must determine whether ISD registration is necessary.
Read also: GST Revisional Authority: Powers, Limitations, and Timeframes
Credit note: e-invoicing requirement
According to the most recent regulatory update, starting on April 1, 2025, credit notes issued by registered firms under the GST would need to be e-invoiced. This requirement is in line with the government’s continuous digitisation initiatives to guarantee smooth tax compliance and lessen tax reporting inconsistencies. Important points of the credit note e-invoicing requirement:
- Applicability:
- Companies subject to the e-invoicing requirement are required to use the Invoice Registration Portal (IRP) to create an Invoice Reference Number (IRN) for credit notes.
- pertains to export and business-to-business transactions where electronic invoicing is already in use.
- Process for issuing a credit note
- It is necessary to report the credit note on the IRP.
- The credit note needs to have the created unique IRN and QR code on it.
- The original invoice listed under e-invoicing must correspond with the information on the e-credit note.
Impact on businesses
To prevent penalties for non-compliance, businesses must make sure that credit notes comply to e-invoicing regulations. The e-invoicing system must be integrated with the accounting and billing systems to enable effective reporting.
Invoices and credit notes that don’t match up can make it difficult to reconcile GST returns (GSTR-1 & GSTR-3B).
Businesses must make the required adjustments to their accounting and invoicing systems prior to April 1, 2025, as this rule will take effect on that date.
Read also: CBIC Clarifies Late Fee Rules for GSTR-9C Filing
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