GST Changes from April 2025: New Rules and Updates

Mandatory Multi-Factor Authentication (MFA)

The National Informatics Centre (NIC) has implemented two-factor/multi-factor authentication for logging into the e-way bill and e-invoice systems. This requires users to verify their identity using two or more methods, making the login process more secure and reducing the risk of unauthorised access.

When will it be implemented?

• January 1, 2025: Mandatory for taxpayers with Annual Aggregate Turnover (AATO) over ₹20 crore.
• February 1, 2025: Extended to those with AATO above ₹5 crore.
• April 1, 2025: Applicable to all taxpayers, regardless of turnover.

Mandatory Input Service Distribution Registration

Previously, businesses with multiple GST registrations under a single PAN could choose between the Input Service Distributor (ISD) mechanism and the cross-charge method to distribute common input services like rent, audit fees, or software licenses. Many preferred cross-charging for its simplicity, despite its challenges in ITC allocation and tax reconciliation.

From April 1, 2025, ISD registration becomes mandatory for such businesses. They must issue ISD invoices and file GSTR-6 returns to distribute Input Tax Credit (ITC) among units. This change ensures better traceability and consistent reporting.

Revised GSTR-7 and GSTR-8 Formats

The government has updated the formats of GSTR-7 and GSTR-8 to capture more detailed transaction data.

• GSTR-7: Now requires invoice-wise details of tax deducted, including GSTIN of the deductee, invoice number, payment amount, and TDS information.
• GSTR-8: Updated to reflect detailed information on supplies made via e-commerce platforms, improving compliance and accuracy in reporting.

New Rules for e-Way Bill Generation and Extension

To improve tracking of goods movement, the government has introduced the following restrictions on the generation and extension of e-way bills:

• Generation Restriction: From January 1, 2025, e-Way Bills can only be generated for documents dated within the last 180 days. For example, from April 1, 2025, documents dated before October 3, 2024, will no longer be valid for e-way bill generation.
• Extension Limitation: e-Way Bills can only be extended up to 360 days from the original date of generation. A bill generated on April 1, 2025, can be extended only until March 27, 2026.

30-Day e-Invoice Reporting Window Expanded

To strengthen reporting compliance and curb tax evasion, the government has extended the 30-day e-invoice reporting limit to businesses with AATO above ₹10 crore, effective April 1, 2025. Earlier, this applied only to businesses with AATO over ₹100 crore.

These taxpayers must report B2B invoices on the Invoice Registration Portal (IRP) within 30 days from the date of issuing the invoice. Failing to do so will lead to rejection for IRN generation, which may affect input credit claims and disrupt compliance processes.

GST Rate Changes for Hotels and Used Cars (Effective April 1, 2025)

A. Hospitality Sector (Hotels)

• The Declared Tariff system is removed.
• GST will now apply to the actual price charged at the time of supply.
• Accommodation above ₹7,500 per night will attract 18% GST.
• Hotels can now claim full ITC on accommodation and related restaurant services.

Benefits:

• Simplifies tax compliance by removing the need to maintain tariff declarations.
• Ensures GST reflects the actual amount paid by customers.
• Increases ITC availability for premium hotels, improving cash flow and reducing effective tax costs.

B. Sale of Used Cars

• A uniform 18% GST rate will apply to all used cars, regardless of size, type, or fuel variant.
• The earlier differential rates (12% for small cars/EVs, 18% for others) are scrapped.

Valuation Rule (Rule 32(5), CGST Rules):

• GST is payable on the Margin = Selling Price – Purchase Price
• No GST if the result is negative or there is a loss.

Applicability:

• Applies to registered second-hand car dealers as per GST law.

New Invoice Series and Compliance Rules from April 1, 2025

From FY 2025-26, all registered taxpayers must start a fresh invoice series and comply with updated invoicing rules.

Key Requirements:

• New Series Each Financial Year: Start a unique invoice series on April 1 each financial year.
• Sequential, Non-Repetitive Numbers: Avoid gaps or duplicates in numbering.
• Separate Series for Each Document Type: Maintain distinct series for invoices, credit notes, debit notes, etc.
• Multiple Series Allowed: Use separate series for branches or business verticals if needed.
• For e-Invoicing: Taxpayers with AATO over ₹5 crore in any previous year must continue e-invoicing.

With so many changes happening in the GST framework, GST compliance can be difficult to handle. You can consider getting help from tax professionals. Tax2win experts can not only help you with GST registration but also ensure proper compliance with it and help you file a GST return. Book a Tax Expert Now!

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