As we look back on 2024, it’s time to reflect on the transformative journey of GST in India. This year has not just been about policy updates but about shaping a more transparent and efficient tax ecosystem. Here’s a quick recap of the top GST updates 2024 and their impact on the business community.

1. Introduction of the Invoice Management System (IMS)

Effective October 1, 2024, the GST Network (GSTN) introduced the Invoice Management System (IMS), marking a significant step towards streamlining Input Tax Credit (ITC) claims for recipients. Building on the original concept of GSTR-2, IMS introduces a formal layer of invoice confirmation to ensure ITC accuracy. This system takes compliance a step further, aiming to minimize ITC mismatches and reduce notices issued due to such discrepancies.

Although IMS adoption is currently voluntary, its impact on ITC claims and supplier-side tax liability makes it essential for businesses to reconcile their purchase registers with IMS for informed decision-making.

While IMS may initially appear as an additional compliance burden, its long-term benefits, including enhanced accuracy and reduced disputes, far outweigh the short-term adjustments to business processes.

2. Introduction of GSTR 1A

The Government, through notification No. 12/2024 dated July 10, 2024, has introduced from GSTR-1A. This is an optional form provided to taxpayers to add or amend the particulars of a supply for the current tax period. It is particularly useful for correcting details missed or wrongly reported in from GSTR-1 before filing the GSTR-3B return for the said tax period.

While the Invoice Management System (IMS) focuses on improving Input Tax Credit (ITC) accuracy, Form GSTR-1A provides a mechanism for taxpayers to adjust and correct their tax liabilities. This dual approach ensures a comprehensive framework for maintaining precise and transparent GST records.

3. GSTR-2B Generation Linked to Previous GSTR-3B Filing

A significant compliance measure has been introduced wherein GSTR-2B will not be generated if the taxpayer has not filed their previous period’s GSTR-3B return. This move strengthens the sequential filing framework, complementing the already mandated order of GSTR-1 and GSTR-3B submissions.

This sequential filing was introduced along with IMS and makes it mandatory for businesses to settle their tax liabilities for previous periods before claiming ITC for the current month. For the government, this step enforces tighter control over ITC claims and enhances tax compliance discipline.

4. RCM Liability and ITC Statement

Under the reverse charge mechanism, the responsibility of paying GST shifts to the purchaser, requiring a cash payment of tax before the corresponding ITC can be claimed.

The newly introduced, RCM liability and ITC Statement help taxpayers track liabilities and ITC related to reverse charge transactions, reducing manual reconciliations and improving accuracy.

This statement is particularly beneficial for businesses involved in RCM transactions, such as importers and service recipients, enabling them to simplify compliance and mitigate risks of interest or penalties due to misreporting.

Businesses were required to report opening balances for RCM ITC, necessitating reconciliation and revisiting past transactions.

5. Time limit for self-invoicing under RCM

The Central Goods and Services Tax (Tenth Amendment) Rules, 2024, introduced Rule 47A requiring businesses under the Reverse Charge Mechanism (RCM) to issue self-invoices within 30 days of receiving goods or services from unregistered suppliers, effective November 1, 2024.

Additionally, updates to Sections 12(3) and 13(3) redefine the time of supply for RCM transactions, now determined by the earliest of payment date (in supplier’s books or recipient’s bank statement) or 60 days from the invoice date.

These changes ensure timely compliance, accurate tax reporting, and seamless ITC claims. However, failure to adhere may result in penalties and loss of ITC eligibility. Businesses must reassess their procurement workflows and implement automated systems to meet these compliance requirements efficiently.

Read: RCM Time of Supply Rule Changes Effective from 1st November 2024.

6. New E-Commerce Reporting in GSTR-1 and GSTR-3B

It is now mandatory to disclosure of e-commerce transactions under the new additions – Tables 14 and 15 in GSTR 1. Complementary updates in GSTR-3B require separate reporting of e-commerce supplies under Section 9(5).

The impact is – E-commerce operators and sellers are required to disclose transactions in greater detail, improving tax authorities’ oversight. This aids in plugging revenue leakages but increases reporting complexity for e-commerce platforms and sellers operating under Section 9(5).

7. Lower Threshold for B2C Large Transactions

The threshold limit for categorizing large B2C transactions was reduced from 2.5 Lakh to 1 Lakh, requiring businesses to disclose more granular transaction details. Businesses are required to report these details in Table 5 of Form GSTR-1 and Table 6 of GSTR-5.

With a reduced threshold, more transactions fall under reporting at transactional level. This improves GST authorities’ ability to track high-value retail transactions, ensuring better compliance while potentially increasing compliance burdens for businesses in retail and e-commerce.

8. GSTR-9 Updates

Annual return filing through GSTR-9 saw updates related to e-commerce transactions. Tables 4 and 5 of GSTR 9 now include new fields for reporting these activities, while Table 8A calculations are aligned with GSTR-2B data for enhanced accuracy.

The updated Tables 4, 5, and 8A in GSTR-9 enhance the accuracy of ITC reporting and reconciliation. Taxpayers benefit from alignment with GSTR-2B data, minimizing mismatches. However, annual compliance reporting becomes more detailed, requiring better record-keeping.

9. More validations in E-way Bill

The E-Way Bill system has introduced stricter validations to improve compliance accuracy. Key updates include:

• Integration with Indian Railways FOIS: Accurate entry of Railway Receipt (RR) numbers/eT-RRs is now mandatory to enable seamless tracking and verification of goods transported via railways.
• HSN Code Requirement: From February 1, 2024, taxpayers must provide at least a 6-digit HSN code for B2B and export transactions (for AATO above ₹5 crore) and 4-digit HSN code (for AATO below ₹5 crore).

These changes necessitate businesses to update their systems and processes to ensure compliance with the enhanced validations in the E-Way Bill system.

10. Introduction of form DRC-03A

In a major step toward simplifying tax compliance, the introduction of Form DRC-03A on July 10, 2024, via GST Notification No. 12/2024, has added a new layer of convenience to the GST regime.

Taxpayers often make voluntary payments or settle amounts in response to notices, and Form DRC-03A ensures that these payments are accurately allocated against the corresponding tax demands. This process is essential because it eliminates the risk of misallocated payments, which can create discrepancies in tax records.

More to expect in 2025

Several announcements were made in 2024, which will be effective in 2025. Key ones to mention are locking of GSTR 3B for edits, extension of 30-day time limit for e-invoice generation to more businesses, time limit for e-way bill generation and extension and many more.

In essence, Form DRC-03A streamlines the payment process by bridging voluntary payments with the formal demand procedure, ensuring greater transparency and reducing administrative errors.

Each GST update 2024 shows the GST framework’s movement towards automation, detailed compliance, and data transparency. While these changes reduce errors and boost tax collection efficiency, they necessitate robust accounting systems and consistent efforts from businesses to stay compliant.

GST evolves so does IRIS GST

The dynamic updates in GST regulations have a ripple effect on compliance and related activities. In response to the ever-evolving needs of businesses, we have elevated our platform to empower clients in efficiently managing their tasks with ease. Our enhanced features are designed to streamline processes and ensure seamless compliance in the face of changing regulatory landscapes.

As the sun sets on 2024, IRIS GST stands as a reliable partner, providing businesses with tools to navigate the intricacies of GST seamlessly. Our platform enhancements, driven by the spirit of innovation, reflect our dedication to empowering clients in the face of regulatory evolution.

Explore the comprehensive overview of the changes in the IRIS GST platform to align with GST updates throughout the year here.