Goods and Services Tax (GST) framework

• In 2025, India’s Goods and Services Tax (GST) framework is undergoing significant changes to enhance security, streamline processes, and improve transparency. Here’s a comprehensive overview of the key compliance updates:
• 1. Mandatory Multi-Factor Authentication (MFA)
• To bolster the security of the GST portal, the government is implementing MFA in phases:
• 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 their registered mobile numbers are current to receive One-Time Passwords (OTPs) and train 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.
• 3. 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.
• 4. Revised Time Limit for E-Invoice Reporting
• Effective April 1, 2025, businesses with an 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.
• 5. Invoice Management System (IMS)
• Starting from October 1, 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 system enhances the accuracy of ITC claims by enabling taxpayers to accept, reject, or defer invoices, thereby reducing errors and improving overall GST compliance efficiency.
• 6. Reverse Charge Mechanism (RCM) Time of Supply Rule Changes
• Effective from November 1, 2024, the Central Board of Indirect Taxes and Customs (CBIC) has made significant changes to the Reverse Charge Mechanism (RCM) rules under GST in India. These changes impact how businesses account for RCM transactions and claim Input Tax Credit (ITC), aiming to ensure stricter compliance and streamline the taxation process under RCM, especially concerning self-invoicing practices.
• 7. Input Service Distributor (ISD) Mandatory Registration
• 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 Permanent Account Number (PAN).