GST Updates – February 2025, Key Changes You Must Know
Mandatory Multi-Factor Authentication (MFA)
SMS & Phone Call OR fingerprint, biometric, or facial recognition.
To enhance security on 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 ₹20 Cr
- From February 1, 2025: Applicable to taxpayers with an AATO exceeding ₹5 Cr.
- From April 1, 2025: Mandatory for all taxpayers, regardless of turnover.
Businesses should ensure their registered mobile numbers are up to date for OTP verification and train staff on the new authentication process. Early adoption of MFA will ensure a seamless transition.
E-Way Bill (EWB) Generation Restrictions
Effective January 1, 2025, EWB generation will be restricted to base documents not older than 180 days. This aims to ensure timely and legitimate goods movement, curbing fraudulent practices like backdated invoices. Businesses should optimize invoicing and logistics processes accordingly. Implementing automated reminders via compliance software can help maintain adherence.
Limit on E-Way Bill Extensions
From January 1, 2025, the total extension period for EWBs will be capped at 360 days from the original generation date. This ensures efficient logistics and prevents indefinite transit delays. Businesses should monitor EWB validity and request extensions only when necessary.
Update of Harmonized System of Nomenclature (HSN) Codes
GSTN has issued an advisory on HSN reporting changes in Table 12 of GSTR-1 and GSTR-1A, effective from the February 2025 return period. Part of the Phase 3 rollout, these updates aim to improve GST filing accuracy and reduce manual errors.
Revised Time Limit for E-Invoice Reporting
From April 1, 2025, businesses with an AATO of ₹10 crores & above must report e-invoices within 30 days from the invoice date. Previously applicable to businesses with an AATO of ₹100 crores & above, this requirement now covers a broader taxpayer base.
For example, 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 critical for compliance.
Invoice Management System (IMS) – Live from October 1, 2024
The IMS on the GST portal enables recipient taxpayers to validate invoices issued by suppliers, ensuring that only verified invoices are included in GSTR-2B.
With IMS, businesses can accept, reject, or defer invoices, improving Input Tax Credit (ITC) accuracy and reducing errors. This is a significant step toward streamlining GST compliance.
RCM Time of Supply Rule Changes – Effective November 1, 2024
CBIC has revised Reverse Charge Mechanism (RCM) Time of Supply rules, affecting how businesses account for RCM transactions and claim ITC. These updates ensure stricter compliance and improve self-invoicing practices.
ISD Mandatory Registration for Multi-State Companies
From April 1, 2025, companies operating in multiple states must register as an Input Service Distributor (ISD). This ensures fair ITC distribution and improves transparency. Under GST law, common ITC is generally allocated based on the turnover ratio of branches under the same PAN.
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