Recent GST Updates: Rates, Refunds, Compliance & IMS Advisory Highlights

The Central Board of Indirect Taxes and Customs (CBIC) has released a series of GST 2.0 notifications on September 17, 2025, following the key decisions made during the 56th GST Council Meeting. These notifications mark an important step in India’s ongoing tax reform journey.
The goal of these changes is to simplify GST structures, expand exemptions for essential goods and services, and make compliance easier and more transparent for businesses. With GST 2.0, the government aims to build a more efficient and fair system that supports both economic growth and taxpayer convenience.

Background: GST 2.0 and the 56th GST Council Meeting

The 56th GST Council meeting marked a major milestone in India’s tax journey. With the introduction of GST 2.0, the government is setting the stage for a simpler, fairer, and more transparent tax system.
At its core, GST 2.0 is designed to simplify compliance for taxpayers while ensuring greater consistency in the taxation of goods and services nationwide. The goal is not just reform, but transformation to align India’s GST framework with modern business needs.
The 56th GST Council focused on implementing GST 2.0, a reform initiative designed to:
 - Simplify tax structures and schedules
- Introduce concessional rates for essential and artisan goods
- Clarify exemptions for individuals and small businesses
- Enhance compliance, Input Tax Credit (ITC) rules, and enforcement measures
As part of GST 2.0, the Council recommended changes in CGST rates, service tax rates, and exemptions across goods and services, forming the basis of the notifications issued by CBIC.
The outcome of the meeting was a series of notifications by the Central Board of Indirect Taxes and Customs (CBIC) ~ covering changes in GST rates, service categories, exemptions, and compliance rules. 
Together, these updates form the foundation of GST 2.0, which aims to bring structure, clarity, and consistency to India’s indirect tax ecosystem.

1. Rate-Related Notifications (Goods & Services) – Effective from 22nd September 2025
Here’s a consolidated view of notifications 9/2025 to 17/2025 with key goods/services and rates:

2. Non-Rate Notifications (Compliance & Procedural): 
GST Notification 13/2025 – CGST (Third Amendment) Rules, 2025. This notification amends certain CGST Rules, 2017, under the Third Amendment Rules, 2025. Most changes are effective from 22nd September 2025, while some are retrospective from 1st April 2025 or come into effect on 1st October 2025.
Key changes include:
Rule 31A(2) – The valuation multiplier for lottery, betting, and gambling has been revised from 128 to 140, increasing the taxable value and corresponding GST liability for these activities.
Rule 39(1A) – Input Service Distributors (ISDs) can now distribute ITC on IGST paid under reverse charge, effective from 1st April 2025, enabling proper allocation of credit across multiple branches or units.
Rule 91(2) – Refund orders in Form GST RFD-04 are required to be issued within 7 days of acknowledgment, ensuring faster processing and improved liquidity for taxpayers.
GSTR-9 Annual Return Updates – Taxpayers must now report prior-year ITC, net ITC for the current year, reversals, deferred ITC, and reconcile tax paid vs. tax liability, enhancing transparency and compliance.
Appeals Before GSTAT – Procedural streamlining for the GST Appellate Tribunal. Rules 110 and 111 streamline GST Appellate Tribunal filings using Form GST APL-02A with provisional (Part A) and final (Part B) acknowledgments. Rule 110A allows single-member benches to decide factual appeals up to ₹50 lakh, while legal or complex cases go to multi-member benches. Rule 111 accepts self-attested copies, reducing procedural burdens. Rule 113(2) requires a summary in Form GST APL-04A with each order, showing final tax, interest, or penalty, enhancing clarity and transparency.

3. GST Notification 14/2025 – Refund Restrictions
This notification restricts provisional GST refunds for certain categories, effective 1st Oct 2025:
Aadhaar Authentication: Refunds are not allowed if the taxpayer has not completed Aadhaar authentication (Rule 10B).
Specific Goods: Refunds prohibited for suppliers of Areca nuts (0802 80), Pan masala (2106 90 20), Tobacco & manufactured tobacco substitutes (Chapter 24), Essential oils (3301)
Authorities will process refunds only after completing the necessary verifications, ensuring compliance before any provisional amounts are released.

4. GST Notification 15/2025 – Annual Return Exemption
Registered persons with aggregate turnover up to ₹2 crore are exempt from filing annual returns for FY 2024-25 onwards.

5. GST Notification 16/2025 – Compliance & Enforcement (Finance Act Sections) Effective 1st October 2025
Appoints the date for provisions under Finance Act, 2025, sections: 121, 122–124, 126–134. Focus areas:
 - Stricter ITC timelines, documentation rules, and possible reversals for unmatched/disputed invoices
 - Enhanced compliance, anti-evasion, and penalty provisions

6. IMS Advisory (Oct 2025)
Key Updates in Invoice Management System (IMS)
A). Pending Action for Certain Records
Taxpayers can now keep some records “pending” for one tax period only: (Frequency will be on behalf of their return filing)

  • Monthly taxpayers → 1 month
  • Quarterly taxpayers → 1 quarter

Records that can be kept pending
Credit Notes (CN) or upward amendment of CN (only if original CN rejected) (For eg. Someone Amend the Invoice amount by 120 rupees, where the Original Value was 100 rupees)
 - Downward amendment of CN (only if original CN rejected) (For eg. Someone Amend the Invoice amount by 90 rupees, where the Original Value was 100 rupees)
 - Downward amendment of Invoice / Debit Note (if original invoice already accepted & GSTR-3B filed)
 - ECO document downward amendment (if original accepted & GSTR-3B filed)

B). Declaring ITC Reduction Amount
 - If ITC is not availed → No reversal needed.
 - If ITC availed partially → Reverse only that portion.
 - IMS now allows you to declare ITC actually availed & reversed (full or part).
This option can also be used if:
 • ITC already reversed earlier, OR
 • ITC never availed for that invoice/document.

C). Option to Save Remarks (Coming Soon)
 - While rejecting or keeping records pending, you can add remarks.
 - These remarks will:
  • Appear in GSTR-2B for your records.
  • Be visible to suppliers in their dashboard → helps them take corrective action.
D). Important Points
 - Changes apply from October 2025 tax period.
 - Pending records → Due date depends on the period in which the supplier shared the document.
E). Explanation & Comparison
Why does this advisory need to be implemented?
 - To reduce confusion in ITC reversal cases.
 - To simplify compliance for taxpayers.
 - To allow flexibility by keeping certain records pending.
 - To improve supplier–recipient communication with remarks.

What was the structure before this advisory?
 - No option to keep invoices/CNs pending; had to accept or reject immediately.
 - ITC reversal was rigid – assumed full reversal even if ITC not availed/partly availed.
 - No option to record remarks, causing mismatch/confusion with suppliers.

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