The Goods and Services Tax (GST) framework is set to undergo significant amendments starting April 1, 2025, introducing crucial changes aimed at improving compliance, enhancing security, and streamlining the tax process. These updates will affect businesses across various sectors, and it’s essential for tax professionals and business owners to understand the new regulations to stay compliant and avoid penalties. Here’s a breakdown of the key GST amendments for 2025:
1. Multi-Factor Authentication (MFA) for All Taxpayers
From April 1, 2025, all GST taxpayers will be required to implement Multi-Factor Authentication (MFA) when accessing GST portals. This move aims to secure sensitive financial data and prevent unauthorized access. Businesses must ensure their authorized personnel are equipped with the necessary tools and knowledge to comply with this requirement.
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2. E-Way Bill Restrictions
As of January 1, 2025, the generation of E-Way Bills will be restricted to invoices issued within the preceding 180 days, with extensions capped at 360 days. Additionally, updated versions of the E-Way Bill and E-Invoice systems will be rolled out by the National Informatics Centre (NIC) to improve security and compliance. Companies must adapt their logistics and invoicing processes accordingly to comply with these new timelines and system upgrades.
3. Mandatory Sequential Filing of GSTR-7
Taxpayers filing GSTR-7 (Tax Deducted at Source under GST) will now need to follow a sequential filing order without skipping any numbers. This change aims to streamline TDS collection, improve Input Tax Credit (ITC) reconciliation, and enhance the efficiency of the TDS system. Businesses need to adjust their filing processes accordingly.
4. Biometric Authentication for Company Directors
Starting March 1, 2025, all promoters and directors of companies—including private, public, and foreign entities—must complete biometric authentication at any GST Suvidha Kendra (GSK) in their home state. This change simplifies the authentication process, making it easier for businesses to comply without having to visit specific jurisdictional GSKs.
5. Mandatory Input Service Distributor (ISD) Mechanism
From April 1, 2025, businesses will be required to implement the ISD mechanism for distributing ITC on common services like rent, advertising, and professional fees across various GST registrations under the same PAN. Non-compliance with this mandate will lead to penalties and denial of ITC claims.
6. GST Rate Adjustments for Hotels and Used Cars
- Hotels: The “Declared Tariff” concept will be abolished, with GST now applied to the actual amount charged to customers. Hotels charging over ₹7,500 per unit per day for accommodation will attract an 18% GST rate on restaurant services, along with ITC benefits.
- Used Cars: The GST rate on the sale of used cars will rise from 12% to 18%. This increase is expected to impact the pre-owned car market and may lead to higher tax liabilities for businesses involved in used vehicle sales.
7. New Invoice Series and Turnover Calculation
Businesses will be required to use a new invoice series starting April 1, 2025, to maintain accurate records and ensure a smooth transition into the new financial year. Additionally, businesses must recalculate their aggregate turnover to determine GST registration eligibility, and whether they need to issue e-invoices.
8. GST Waiver Scheme 2025
Businesses that have cleared all tax dues up to March 31, 2025, may be eligible for a GST waiver under the schemes SPL01 or SPL02, provided they apply within three months of the new fiscal year. This initiative offers relief to compliant taxpayers, encouraging businesses to settle their dues promptly.
9. Enhanced Credit Note Compliance
Recipients of credit notes must now accept or reject them through the Integrated Management System (IMS) to prevent mismatches in ITC claims. This ensures transparency and accuracy, reducing discrepancies in tax filings and improving ITC management.
10. Changes in GST Registration Process
Rule 8 of the CGST Rules, 2017 has been updated. Applicants opting for Aadhaar authentication must undergo biometric verification and photo capturing at a GST Suvidha Kendra, followed by document verification for the Primary Authorized Signatory. Non-Aadhaar applicants must visit a GSK for verification as well. Delays in completing these processes will result in the non-generation of the Application Reference Number (ARN), causing registration delays.
