New GST Updates 2025: GST Compliance Changes You Must Know

India’s GST framework is set to witness significant GST updates in 2025 and compliance changes impacting businesses across sectors. With the government’s push toward digital security, streamlined reporting, and improved tax transparency, these changes will require businesses to reassess their tax strategies and operational workflows. This article provides a comprehensive overview of the key GST updates and compliance changes in 2025, and actionable steps businesses must take to remain compliant in the new financial year.

Mandatory Multi-Factor Authentication (MFA):

To increase the security of the GST portal, the government is introducing MFA in a phased manner:

From January 1, 2025: Mandatory for taxpayers with an Annual Aggregate Turnover (AATO) exceeding ₹200 million.
From February 1, 2025: Applicable to taxpayers with an AATO exceeding ₹50 million.
From April 1, 2025: Enforced for all taxpayers, regardless of turnover.

Businesses should ensure that their registered mobile numbers are up to date to receive One-Time Passwords (OTPs) and train their staff on the new authentication procedures. Early adoption of MFA can facilitate a smoother transition.

E-Way Bill (EWB) Generation Restrictions:

Effective January 1, 2025, the generation of EWBs will be restricted to base documents not older than 180 days. This measure aims to ensure timely and legitimate movement of goods, thereby curbing fraudulent practices such as backdating invoices. Businesses are advised to streamline their invoicing and logistics processes to comply with this 180-day limit. Implementing automated reminders through compliance software can aid in adhering to these timelines.

Limit on E-way Bill Extensions:

Starting January 1, 2025, the total extension period for EWBs will be capped at 360 days from the original generation date. This initiative seeks to prevent indefinite transit periods and promote efficient logistics. Companies should optimize their supply chain operations to minimize delays and monitor EWB validity to request extensions only when absolutely necessary.

Update of Harmonized System of Nomenclature (HSN) Codes:

In a significant step towards streamlining GST compliance, GSTN has issued a new advisory detailing changes to the HSN reporting process in Table 12 of GSTR-1 and GSTR-1A. These changes, effective from the February 2025 return period, are part of the Phase 3 rollout for HSN reporting. They aim to enhance the accuracy of GST filings while reducing manual errors and discrepancies.

Read the full article here: HSN Reporting Changes in GSTR 1 and GSTR 1A

These compliance updates represent a significant step toward a more secure and efficient GST ecosystem in India. By proactively adapting to these changes, businesses can not only ensure compliance but also contribute to a more transparent and robust tax framework. Early preparation and proactive adjustments will be key to avoiding disruptions and leveraging the benefits of these reforms.

Revised Time Limit for E-Invoice Reporting for Businesses with AATO of ₹10 Crores & Above:

Effective April 1, 2025, businesses with an annual aggregate turnover (AATO) of ₹10 crores or more must report their e-invoices within 30 days from the invoice date. Previously, this requirement applied only to businesses with an AATO of ₹100 crores and above, but it has now been extended to a wider taxpayer base. For instance, an invoice issued on April 1, 2025, must be reported by April 30, 2025. The Invoice Registration Portal (IRP) will reject invoices older than 30 days, making timely reporting crucial for compliance.

Invoice Management System (IMS)

Starting from October 1st, 2024, taxpayers have access to a new functionality on the GST portal – the Invoice Management System (IMS). The IMS is designed to simplify the Input Tax Credit (ITC) process by allowing recipient taxpayers to validate invoices issued by their suppliers, ensuring that only verified invoices become part of their form GSTR-2B.

This new system will greatly enhance the accuracy of ITC claims by enabling taxpayers to accept, reject, or defer invoices. The IMS is poised to significantly reduce errors and improve the overall efficiency of GST compliance for businesses of all sizes. Here’s a detailed look at how the IMS will benefit taxpayers and transform the ITC landscape.

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

The CBIC has made significant changes to the Reverse Charge Mechanism (RCM) rules under the GST in India, effective from November 1, 2024. These RCM Time of Supply Rule changes impact how businesses account for RCM transactions and claim input tax credit (ITC). These updates aim to ensure stricter compliance and streamline the taxation process under RCM, especially concerning self-invoicing practices.

Read the full update here: RCM Time of Supply Rule Changes from 1st Nov 2025

ISD Mandatory Registration for Companies having Presence in Multiple States

Starting April 1, 2025, companies with branches across multiple states must register as Input Service Distributors (ISD) under GST law. This requirement, introduced in the Finance Bill 2024, ensures efficient distribution of input tax credit (ITC) and enhances transparency in operations.

Under GST rules, the mechanism for ITC distribution is defined, with common ITC generally allocated based on the turnover ratio of branches under the same PAN.

****

Streamline Your GST Compliance with IRIS GST Software

IRIS has been helping over 1000 businesses maximize their ITC Claim with a smooth GST return filing, and advanced reconciliation models.

Along with offering basic features like GST Compliance Tracker, Bulk Operations, Vendor Management and so on, IRIS GST Software also offers value added services like: