Introduction

The implementation of GST since July 2017 marked a shift towards unified indirect taxation. Over the years, reforms have continued, with a new wave of substantial changes taking effect from April 1, 2025. These aim to tighten compliance, improve data accuracy, and align with digital governance.

1. MANDATORY MULTI-FACTOR AUTHENTICATION (MFA)

CHANGES:

From April 1, 2025, all GST taxpayers, regardless of turnover, must log in using MFA. This includes accessing the GST portal, e-invoicing system, and e-way bill platform. Authentication will involve a password plus OTP or authenticator-based verification.

TIMELINE:

MFA has been introduced in phases:

1. Jan 1, 2025 – >₹20 crore turnover
2. Feb 1, 2025 – >₹5 crore turnover
3. Apr 1, 2025 – All taxpayers

PAST v PRESENT:

Earlier, MFA was limited to large or high-risk taxpayers. Now, it applies to all, ensuring enhanced protection of taxpayer data and GST filings.

PURPOSE:

This move fortifies cybersecurity, standardizes access protocols, and brings accountability to each login. It also supports India’s Digital India vision by compelling digital readiness across taxpayer classes.

2. MANDATORY ISD (INPUT SERVICE DISTRIBUTOR REGISTRATION)

CHANGES:

Entities with multiple GST registrations under one PAN must register as ISDs if they receive centralized services used across branches—like software, rent, or advertising.

ISD registration now necessitates monthly GSTR-6 filing to distribute ITC proportionately.

PAST v PRESENT:

Previously, businesses could choose between cross-charging or ISD. Cross-charging was often preferred to avoid compliance burdens. Now, for third-party services, ISD is compulsory.

EXAMPLE:

A company with Delhi, Mumbai, and Bangalore offices receiving centralized services billed to Delhi must use ISD to allocate credits—not cross-charge.

PURPOSE:

The change promotes transparent and accurate ITC distribution, curbs misuse, and simplifies audits. It standardizes credit allocation across all units and minimizes litigation.

3. ENHANCED GSTR-7 AND GSTR-8 FORMATS

CHANGES:

GSTR-7 and GSTR-8 must now report invoice-level data. Deductors (like government bodies) and e-commerce platforms must furnish detailed transaction-wise entries.

PAST v PRESENT:

Earlier, only summary-level data was required. Now, each deduction or collection is tied to a specific invoice, improving traceability.

PURPOSE:

This granular reporting reduces reconciliation issues, enables precise ITC claims, and curtails mismatches and fraudulent claims. It also strengthens the digital trail and simplifies dispute resolution.

4. E-WAY BILL: 180-DAY GENERATION LIMIT

CHANGES:

From Jan 1, 2025, invoices older than 180 days cannot be used to generate e-Way Bills.

PAST v PRESENT:

Previously, backdated e-Way Bills were allowed, enabling invoice manipulation. This loophole has now been closed.

PURPOSE:

The move ensures that goods movement reflects actual timelines and strengthens supply chain integrity. It discourages tax evasion through fabricated transactions.

5. EXTENSION LIMITS FOR E-WAY BILLS

CHANGES:

An e-Way Bill’s total validity (including extensions) is now capped at 360 days.

PAST v PRESENT:

Earlier, there was no outer limit on extensions. Bills could be prolonged indefinitely, opening doors for misuse.

PURPOSE:

The 360-day cap introduces a finality that aligns with fiscal years and audit cycles. It eliminates fake or recycled e-Way Bills and enforces timely goods movement.

6. AUTO-POPULATED GSTR-3B

CHANGES:

From July 2025 returns, values in Table 3.1(a) of GSTR-3B (taxable outward supplies) will be auto-filled from GSTR-1 or IFF and locked from editing.

PAST v PRESENT:

Manual changes to GSTR-3B often led to mismatches. Now, corrections must be made in GSTR-1 amendments.

PURPOSE:

This ensures return data integrity, aligns invoice-level and summary data, and reduces manipulation. It promotes discipline in GSTR-1 filing and reduces mismatches triggering notices.

7. GSTR-1 TABLE 12 HSN BIFURCATION & HSN DROPDOWN

CHANGES:

HSN-wise data (Table 12) will now be split into B2B and B2C sections. Also, HSN codes must be selected from a dropdown, not entered manually.

PAST v PRESENT:

Manual HSN entries often led to errors. The new format improves data classification and accuracy.

PURPOSE:

These changes clean up GST reporting, reduce misclassification, and support reliable ITC matching. It aids in data-backed policymaking and future automation.

8. TIME BAR ON RETURN FILING

CHANGES:

Starting from July 2025, a 3-year limit is imposed on filing all GST returns. After this, the portal will restrict return filing unless permitted by the government.

PAST v PRESENT:

No time limit existed before, leading to prolonged backdated filings and confusion during audits.

PURPOSE:

This change brings procedural discipline, finality in compliance, and certainty for taxpayers and officers alike. It also aligns with global practices in taxation.

9. GST APPEAL TIMELINES AND PRE-DEPOSIT LIMITS

CHANGES:

1. Appeals must now be filed within 3 months.
2. Pre-deposit for Tribunal appeals reduced from 20% to 10%, with a ₹20 crore cap.
3. Monetary limits introduced: ₹20 lakh for Tribunal, ₹1 crore for HCs, ₹2 crore for SC.

PAST v PRESENT:

Timelines were loosely enforced, and high pre-deposits deterred appeals. There were no limits to filter minor cases from higher judiciary.

PURPOSE:

These reforms make litigation more accessible, particularly for SMEs. They ensure timely filing, reduce court burden, and promote justice over procedure.

10. IGST REFUND ON UPWARD PRICE REVISION POST-EXPORT

CHANGES:

Exporters can now claim IGST refund on any increased export value (due to renegotiation or currency fluctuation) post-shipment by issuing a supplementary invoice.

PAST v PRESENT:

Earlier, only the original invoice value was considered for refund—even if the final export value increased later.

PURPOSE:

This rectifies a longstanding grievance, improves cash flow, and aligns GST with real-world trade dynamics. It encourages transparency and maintains India’s export competitiveness.

11. NON-REFUND OF IGST WHERE EXPORT DUTY EXISTS

CHANGES:

If a product attracts export duty, no IGST refund will be granted—even for SEZ supplies.

PAST v PRESENT:

Exporters could previously claim IGST refunds despite paying export duty—resulting in double tax benefits.

PURPOSE:

This change enforces policy consistency, eliminates loopholes, and restores fiscal neutrality. It discourages over-invoicing and brings clarity in zero-rating rules.

DETAILED COMPARISON (PRE v POST APRIL 1, 2025)

IMPORTANT NOTIFICATIONS

1. Notification 09/2025 – CT: Enhanced GSTR-7/8
2. Notification 16/2024 – CT: Mandatory ISD
3. GSTN Advisories: e-Way Bills, MFA, return filing, Table 12
4. Council Recommendations: Antiprofiteering closure, IGST refund, appeal reforms

CONCLUSION

The April 1, 2025 GST reforms mark a significant evolution towards a system that emphasizes accountability, digital reliability, and procedural clarity. By tightening compliance (through MFA, time limits, and validations) and enhancing ease of doing business (via reduced litigation costs and clearer refund mechanisms), India moves closer to a globally benchmarked indirect tax regime.

These changes reflect a strategic blend of enforcement and facilitation—paving the way for a GST structure that is robust, transparent, and digitally future-ready.