India’s GST regime continues to evolve rapidly from digitisation of tax filing and e-invoicing to major structural changes in slabs, returns and compliance rules. The introduction of GST 2.0 and reforms in return filing, invoice reporting, annual returns and GST portal security are transforming how businesses manage tax compliance. Whether you’re a small entrepreneur or a seasoned finance leader, understanding these updates is crucial to stay compliant and optimize your tax processes.
If your business is growing or undergoing digital transformation, this updated guide reflecting the latest GST rules effective up to FY 2025-26 will help you stay ahead of the curve.

Also Read: https://irisgst.com/automated-gst-registration-from-1st-november-2025-what-businesses-need-to-know/

1. GST Compliance

After your GST Registration, the first and foremost requirement is that you get well-versed with GST Compliance. The applicability of GST registration is dependent on your Aggregate Annual Turnover (AATO) and there are several forms (or returns) that need to be filed at varying frequency to reveal your sales and purchase data to the Government.

Following are the points to be taken care of:

● Mandatory Aadhaar-based and MFA Security Enhancements: All taxpayers accessing the GST portal must now use Multi-Factor Authentication (MFA) from April 1, 2025, to bolster security.
● Biometric Verification for GST Registration is now introduced: It requires authentication of directors at any GST Seva Kendra in their home state to prevent fraudulent registrations.
● Turnover: Whether or not to opt for GST Registration, and which GST returns to be filed are determined based on the AATO.

1. 1.  Turnover <40 Lacs: Not necessary to get GSTIN, is called an unregistered taxperson and cannot collect tax. However, there are specific cases wherein GST registration could be needed, irrespective of turnover. Ensure to check the Registration rules under GST.
      However, mandatory registration still applies for inter-state suppliers, e-commerce sellers, OIDAR providers, and persons liable under reverse charge; this has been strictly enforced through portal validations.
   2. Turnover 40 Lacs – 1.5 Cr: Option to register as Composite Taxpayer, Get GSTIN and file just a single return CMP 08. At the same time, enjoy the perks of paying tax at a lower rate.
      Composition taxpayers now face stricter restrictions on inter-state supplies and e-commerce participation.
   3. Turnover >Rs. 1.5 Cr: Registered Taxpayer, need to file monthly GST Returns to report sales data and pay tax liabilities.
      i. For turnover up to Rs. 5 Cr, you may opt to file QRMP (Quarterly Returns with Monthly Payments). Under the QRMP scheme registered persons are allowed to furnish their GST returns on a quarterly basis along with monthly payment of tax, with effect from January 01, 2021.
      Note: QRMP continues to be widely used, but delayed IFF/GSTR-1 filings increasingly impact buyers’ ITC visibility in GSTR-2B.

● Forms to be filed: For businesses registered as regular taxpayers, returns are to be filed on either monthly or quarterly basis (if opted for QRMP)

1. GSTR-1 A GST return to provide details of all their outward supplies/sales records.
2. GSTR-3B A return, consists of summarized details of supplies made during the month along with the details of paid taxes, ITC claimed, purchases under reverse charge mechanism, etc.NOTE: GSTR-3B becomes non-editable once filed from July 1, 2025. This means errors cannot be corrected after submission; underscoring the need for reconciliation before filing.
   Three-year time bar for past returns now applies across key returns including GSTR-1, GSTR-3B, GSTR-4, etc. It means no late filing beyond this period.
3. Invoice Furnishing Facility (IFF) – An additional but optional return for businesses who have opted for QRMP. IFF to be filed monthly to include B2B sales invoices which can help the customer to claim ITC monthly, instead of waiting for quarterly GSTR 1
4. GSTR-1A (NEW & IMPORTANT)
   Introduced under the Invoice Management System (IMS), GSTR-1A allows suppliers to amend or confirm invoices that are rejected or flagged by recipients in IMS.
   This form acts as a supplier-side correction window after filing GSTR1 and before filing GSTR3B.
5. Invoice Management System (IMS)
   IMS is not a return but a mandatory invoice-level compliance mechanism introduced to strengthen ITC controls. Under IMS, recipients must accept, reject or keep invoices pending, and only accepted invoices will flow into GSTR-2B for ITC claim. IMS works in close integration with GSTR-1, GSTR-1A, GSTR-2B and GSTR-3B, making invoice-level reconciliation compulsory.Apart from these recurrent forms, there are several other forms that need to be filed on cases to case basis depending on the transactions to be reported such as 2X to claim TDS and TCS credit, GSTR 5 for non-residents, GSTR 5A for OIDAR service providers, 6 for ISD, 7 for TDS, 8 for TCS and GSTR 10 in case of GSTIN cancellation.Refer GST Forms and Functionalities available on the GST Portal for further details.

2. Purchase /ITC Reconciliation.

GST Reconciliation is a crucial step that you, as a taxpayer, need to undertake to avail ITC. For every month’s GST filing, you need to reconcile your purchase data with all your suppliers’ sales data that they have uploaded on GSTN. Upon reconciliation, if the data on both ends match, claiming ITC can be very easy. However, as your business grows, there can be several mismatches and that can put you on a difficult road, exploring through huge piles of invoices for one simple error.

GSTR-2A vs GSTR-2B: What Still Applies and What Has Changed

Since the beginning, the government has provided an auto-drafted dynamic purchase statement in the form of GSTR-2A. While GSTR-2A continues to exist for reference and trend analysis, it no longer forms the legal basis for ITC claims.
GSTR-2B has now firmly emerged as the statutory document for ITC eligibility.
GSTR-2B is a static, auto-generated statement, populated monthly based on supplier filings made up to the cut-off date notified for the tax period. Only invoices reflected in GSTR-2B are eligible to be considered for ITC in GSTR-3B.
● ITC cannot be claimed on the basis of books or GSTR-2A alone
● GSTR-2B is the final and binding reference for ITC reporting

Introduction of Invoice Management System (IMS)

From 2025 onwards, GST reconciliation has fundamentally changed with the introduction of the Invoice Management System (IMS).
IMS introduces recipient-level control over invoices reported by suppliers.

Under IMS:

• Recipients must actively Accept, Reject or Keep invoices Pending
• Only “Accepted” invoices flow into GSTR-2B
• Rejected or pending invoices do not qualify for ITC
• Supplier corrections now happen via GSTR-1A, based on recipient feedback

This marks a structural shift. ITC is no longer auto-available; it is recipient-validated.

Impact on Cash Flow & Working Capital

As businesses scale, working capital optimization becomes critical, and ITC plays a central role. With IMS and stricter validations, delays in reconciliation now directly translate into cash flow blockages.
In 2025–26:

• ITC delays = higher cash outflows
• Vendor non-compliance = permanent ITC loss risk
• Late reconciliations = blocked GSTR-3B reporting

Maximising ITC is no longer just about reconciliation accuracy. It requires proactive vendor follow-ups, real-time invoice tracking, and system-driven controls.

Vendor Compliance: Now a Direct ITC Risk (Strengthened Rules)

Vendor compliance has always impacted ITC, but its importance has multiplied post-IMS.

If a vendor:

• Delays filing GSTR-1
• Uploads incorrect invoice details
• Does not respond to IMS-based rejections

Your ITC gets blocked regardless of payment or possession of invoice

ITC has effectively become a shared responsibility between buyer and supplier.

As the company grows, it is important to have enough cash flow in the business. Maximizing your ITC claim can help you have that extra cash flow and the freedom to re-invest it into your business.

The goal of achieving maximum and accurate ITC is challenging, yet manageable by using the right strategies and solutions. Taxpayers should carefully weigh the pros and cons and go ahead with a solution or rather a GST Compliance partner who can help them to meet the objective, effectively and efficiently. Availability of ITC has a direct impact on cash outflow for the taxpayer. Hence, more the ITC available the better. Well defined internal processes and solutions to help you reconcile purchase data can assist you in narrowing down the discrepancies and help you to maximize your ITC claim.

Vendor’s compliance impacts your ITC

All the above-mentioned returns are related to your personal GST compliance however, it is also important to keep a tab on your vendor compliance as it directly impacts your Input Tax Credit. We understand that as a small business owner, it is difficult for you to deal with all the vendors and check if they have filed their GST returns on time. This is when Taxpayer APIs can help!

With Taxpayer APIs, we provide a high-level view of your ITC as per GSTR 2A and how it reconciles with your GSTR 2B. You can drill down to know the vendors who are yet to file their returns affecting your ITC and which are the invoices where ITC is not eligible and so on.

3. Annual Return and self-certification

Annual GST Return (GSTR 9) has to be filed by every taxpayer (except few specified categories of persons). After filing monthly/quarterly returns for an entire year, annual return offers to give summarized details of outward supply and taxes paid thereon, input tax credits claimed, taxes paid, and refund claimed in the financial year. This can be another challenge for business owners as reconciliation can again be tedious citing innumerable transactions and invoices.

GSTR 9C: GSTR 9C is an annual audit form for all the taxpayers having a turnover above 2 crores in a particular financial year.
GSTR 9 Self-Certification: As per GST Notification 29/2021, GSTR 9C can now be furnished through self-certification instead of audit report from CA or Cost Accountants w.e.f 1st August 2021. This change will apply for Annual Return for FY 2020-21.

GSTR-4 is an annual GST return to be filed by the taxpayers who have opted for the composition scheme under GST.

4. E-invoice Applicability

The e-invoice mandate went live on October 1, 2020 for businesses with Rs. 500 Crore turnover and later, the mandate got extended for businesses with a turnover of Rs. 100 Crore annually. Now, the current e-invoicing mandate has opened up for companies with Rs. 50 Crore turnover from April 1, 2021; and it is said to be soon extending for smaller taxpayers as there are multiple advantages of e-invoicing for small businesses. Even if you have received an e-invoice or are anticipating coming under the threshold, understanding the basics can take you a long way.

E-invoicing is an electronic authentication mechanism under GST. Under the mechanism, all the B2B transactions and Export invoices generated by a business need to be registered with the Government system i.e. the Invoice Registration Portal (IRP) and businesses need to obtain a unique identification number for every invoice called Invoice Reference Number (IRN).

Along with IRN, the IRP will also create a digitally signed QR code with select details from the invoice and digitally sign the uploaded invoice data.

Thus, an e-invoice is a document that has an IRN associated with it and the digitally signed QR code printed on it. You can read all about e-invoicing in detail here: E-invoicing under GST

Updates:

• Mandatory E-Invoicing for Turnovers ≥ ₹5 crore.
• E-invoice reporting must occur within 30 days of issue to remain valid; late submissions are rejected by the IRP.
• Future expansions are anticipated, with reports suggesting the net may be lowered further to ₹2 crore.

E-invoice automation into GSTR-1 continues, but proactive MIS and checks are essential.

5. E-way Bill Applicability

If your business requires the movement of goods, you must be aware of the need to generate an E-way Bill. An E-way Bill needs to be generated when there is a movement of goods of consignment value more than Rs. 50,000. One of the main reasons for generating an E-way Bill for inter-state and intra-state transportation of Goods is to eliminate the chances of tax evasion. The E-way bill lowers the chances of bribery and corruption and ensures a smooth and efficient transition of goods across the nation.

Read here to know more about Who can generate E-way Bill, Components of E-way Bill, E-way Bill Validity, Extending the validity of E-way Bill, Modification and Cancellation of E-way Bill.

The Government has streamlined the generation of the E-way Bill with E-Invoicing. IRP can be used to generate not only IRN but also E-way bills, for the documents which qualify. Thus, depending on the data sent, the IRP system will return IRN or E-way Bill Number or both.

Latest Updates:

• E-Way Bills can only be generated for invoices dated within the preceding 180 days, with maximum extensions capped at 360 days.
• Two-Factor Authentication (2FA) is also mandatory for e-way bills alongside e-invoice generation to prevent misuse.

Lastly, a few more reconciliations

Auto-population of details from e-invoices into GSTR-1 is only a facility for the taxpayers and not final numbers from a legal point of view. After viewing the auto-populated data, the taxpayers need to verify the propriety and accuracy of the amounts and other data in each field, especially from the perspective of GSTR-1 and file the same, in the light of relevant legal provisions.

E-invoice details are being auto-populated by GSTN but still, it becomes very important to reconcile it with your final GSTR 1 data as per books. It will help you ensure that all invoices which you want to report in GSTR 1 which should have IRN indeed have got proper IRN or not and the data auto-populated by GSTN is also proper or not. It will be a double check on your own data sent for IRN generation vs. what you are finally filing in GSTR 1 with GSTN. Read more about Auto-population of e-invoice details into GSTR 1.

Major GST Rate & Structure Reforms (GST 2.0)

This is one of the biggest updates after GST rollout:

• GST slabs rationalised to primarily 5% and 18% from September 22, 2025, with zero rates on many essentials and a new 40% “sin/luxury” slab for items such as tobacco and pan masala.
• Most items previously taxed at 12% and 28% now shifted to the lower slabs, making essentials cheaper and simplifying compliance.
• Several life-saving medicines and devices have been moved to 0%/5%.
  Read more about GST 2.0 and Rate Rationalization here.

Conclusion: GST Compliance in 2026 and Beyond

GST in India has matured into a digitally empowered, disciplined and streamlined tax system. With major compliance tightening, integration of IMS, expanded E-invoicing, stricter portal security (MFA/2FA), a rationalised rate structure, and stronger filing discipline (3-year rule + non-editable returns), the focus clearly is on accuracy, transparency and efficiency.

To ensure you stay compliant and harness the full ITC benefits, early adoption of technology, reconciliations at the transaction level, timely filings and proactive monitoring via tools like IMS and GST dashboards are non-negotiable.

Staying updated and compliant isn’t just about avoiding penalties, it helps improve cash flows, reduce disputes, and strengthen your business’s financial health.

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IRIS GST’s Integrated Solution:

IRIS GST’s Integrated Solution is a cloud-based software that brings all the tasks on a single platform. It is trusted by hundreds of companies across the country for their GST Filing, E-invoicing and E-way Bill management. This integrated solution is made available on a unified platform with a single log-in for ease of use i.e. get all our offerings – IRIS Sapphire, IRIS Topaz and, IRIS Onyx from a single log-in and shared business hierarchy. Our Integrated Solution with all in one ‘GST Suite’ will not just streamline the GST Filing, E-way Bill Management and E-invoice processes but also will reduce the time involved with 100% accuracy!

Our integrated solution includes:

IRIS Sapphire, our GST Solution can help you reconcile your purchase data with government records, with no-hassles guaranteed. It indeed is a GST Solution of top organizations across the country.

IRIS Onyx – is a complete e-invoicing software solution that can help you make your e-invoicing journey a smooth ride. It is a cloud-based advanced e-invoicing solution that can integrate with your billing systems in multiple ways and help you generate IRN seamlessly without disrupting your current business processes.

IRIS Topaz, our smart E-way Bill management solution caters to the needs of suppliers, and consignors alike. It enables the users to replicate the company’s business hierarchy and E-way bill assignment roles to mimic sales and dispatch processes. You can easily generate bulk E-way Bill, Mass Update/Modify and/or Cancel when required, Extend Validity of E-Way bill on the go and create consolidated E-way Bill as well as multi-vehicle E-way Bills.