India’s GST compliance landscape is undergoing a significant transformation. With two major changes taking effect from July 2025, the GSTN is moving toward a system-led, error-free return filing regime. Locking of GSTR-3B Outward Liability based on GSTR-1/IFF/GSTR 1 A, and a 3-year time limit on filing GST returns, these changes aim to eliminate manual overrides, tighten discipline, and align with long-term tax reform goals.

Here’s a detailed look at both advisories and what they mean for businesses and tax professionals.

Locking of auto-populated liability in GSTR 3B

The first change introduces a significant shift in the GSTR-3B filing process. Currently, GSTR-3B allows for some flexibility in manually entering outward supplies even if it differs from GSTR 3B auto-populated liability based on GSTR1/1A/IFF. This flexibility, however, will no longer exist from July 2025 onward.

Key changes:

• System-Generated GSTR-3B liability Data Will Be Non-Editable: For liability fields, especially those related to outward supplies, data will be auto-populated from GSTR-1/GSTR1A/IFF locked for editing.
• Corrections Must Happen via Source Returns: Any mismatches or corrections must be made by filing a new form, GSTR-1A, which will reflect revised outward supplies. The revised data will then flow into GSTR-3B accordingly.
• One-to-One Data Linkage: This move aims to ensure exact correlation between GSTR-1, GSTR-1A, and GSTR-3B, thereby reducing errors, fraud, and artificial ITC claims.

This change is part of a broader GSTN initiative to make GSTR-3B a summary return, strictly derived from source data. Taxpayers will no longer have the leeway to manually override system-generated liability figures.

Return Filing Barred After 3 Years

The second change brings in a regulatory limitation on the time available for filing any pending GST returns. As per the Finance Act, 2023 (8 of 2023), dt. 31-03-2023, implemented w.e.f 01-10-2023 vide Notification No. 28/2023 – Central Tax dated 31th July, 2023, the taxpayers shall not be allowed file their GST returns after the expiry of a period of three years from the due date of furnishing the said return under Section 37 ( Outward Supply), Section 39 (payment of liability), Section 44 ( Annual Return) and Section 52 (Tax Collected at Source), which is now being implemented via the portal:

“The GST Portal will not permit filing of GSTR-1, GSTR 3B, GSTR-4, GSTR-5, GSTR-5A, GSTR-6, GSTR 7, GSTR 8 and GSTR 9 after 3 years from their respective due dates” This change will be enforced from July 2025, and the GSTN will update the system to restrict return filing beyond the prescribed window.

Implications:

• No More Late Rectifications or Backdated Compliance:
  Taxpayers with long-pending returns will no longer be able to file them after 3 years. This creates urgency for regular, on-time compliance.
• Special Permission Route Still Open:
  In extraordinary cases, the Commissioner may permit filing beyond 3 years, but this will be a rare exception, not the rule.
• A Signal to Dormant and Delinquent Taxpayers:
  Businesses with old backlogs or entities that have ceased operations but not filed closure returns must act before the deadline hits.

This change aligns with the government’s ongoing effort to clean up the GST ledger, minimize reconciliation complications, and close compliance gaps that have existed since the early years of the regime.

Next Steps for Businesses and Tax Teams 

Reconcile GSTR-1/IFF/GSTR 1A Early
With GSTR-3B getting system-locked from July 2025, any mismatches could lead to incorrect tax reporting. Early and regular reconciliation will help avoid filing delays or errors.

File Old Returns Before July 2025
The GSTN will soon block return filing for periods older than 3 years. Businesses must clear backlogs for FY 2017–18 to 2021–22 before the cut-off to avoid permanent non-compliance.

Update Compliance SOPs and Software
Given the upcoming auto-locking and filing restrictions, it’s essential to evaluate whether your current GST software or ERP setup can handle:

• Auto-reconciliations between GSTR-1, and 3B
• Alerting for mismatches and exceptions
• Support for new workflows like GSTR-1A

IRIS GST Software, a trusted GST compliance platform by IRIS GST, is built to handle exactly these challenges. With advanced reconciliation engines, intuitive dashboards, audit trail tracking, and AI-powered anomaly detection, IRIS GST Software enables businesses to stay fully compliant in a system-driven GST regime.

Educate Teams on GSTR-1A and New Rules
The introduction of GSTR-1A as a correction mechanism and the strict locking of GSTR-3B demand process-level changes. Finance teams, GST preparers, and consultants need to be trained on how the new data flows and return filing logic will work post-July 2025.

Conclusion

The upcoming GST reforms – locking GSTR-3B and the 3-year limit on return filing, mark a major shift toward stricter, system-driven compliance. Businesses must adapt by streamlining their reconciliation processes, clearing legacy backlogs, and upgrading to robust GST software solutions. With timely preparation, taxpayers can avoid disruptions and ensure a smooth transition into the new compliance era starting July 2025.

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• Ready for Audits and Litigation
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