India’s GST Compliance Changes from 2025: What Businesses Need to Know

Posted by Written by Melissa Cyrill Reading Time: 4 minutes

Compliance changes under India’s Goods and Services Tax (GST) regime in 2025 include mandatory multi-factory authentication (MFA) for GST portal access and restrictions on E-Way Bill (EWB) generation to curb fraudulent practices. GST registered businesses should note the key requirements and dates of implementation to stay compliant.

As the year 2025 approaches, businesses operating under India’s Goods and Services Tax (GST) regime must prepare for significant compliance updates. These changes, including mandatory multi-factor authentication (MFA) for portal access, tighter restrictions on E-Way Bill (EWB) generation, and limits on extensions, aim to enhance digital security, streamline processes, and promote greater transparency.

Key changes in GST compliance in India from 2025

Mandatory multi-factor authentication (MFA)

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Multi-factor authentication adds an additional layer of security for accessing GST portals. Currently, MFA is mandatory for taxpayers with an Annual Aggregate Turnover (AATO) exceeding INR 1 billion, while optional for those with an AATO above INR 200 million.

Starting 2025, MFA will become mandatory for all taxpayers:

  • From January 1, 2025: Taxpayers with AATO exceeding INR 200 million.
  • From February 1, 2025: Taxpayers with AATO exceeding INR 50 million.
  • From April 1, 2025: Mandatory for all taxpayers, regardless of turnover.

How businesses can prepare:

  • Update registered mobile numbers to ensure receipt of One-Time Passwords (OTPs).
  • Train employees to adopt MFA procedures.
  • Enable MFA ahead of deadlines to ease the transition.
  • Ensure IT systems are compatible with MFA.

Restrictions on E-Way Bill generation

Effective January 1, 2025, the generation of EWBs will be restricted to base documents not older than 180 days. This ensures timely and legitimate movement of goods and curbs fraudulent practices such as backdating invoices.

How businesses can prepare:

  • Streamline invoicing and logistics processes to align with the 180-day limit.
  • Automate reminders for EWB deadlines through compliance software.
  • Coordinate inventory and dispatch planning with supply chain teams.

What is an E-Way Bill?

The E-Way Bill (or EWB) is a digital document required for transporting goods valued at INR 50,000 or more. It is a unique 12-digit number generated online through the GST or E-Way Bill portal. Mandatory for the movement of goods via road, rail, air, or waterways, the absence of an EWB can result in the seizure of goods and vehicles, along with a penalty of 10 percent of the goods’ value or INR 10,000, whichever is higher. Additionally, the lack of an EWB may lead to delays in the logistics and delivery process.

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 aims to prevent indefinite transit periods and ensure efficient logistics.

How businesses can prepare:

  • Optimize supply chain operations to minimize delays.
  • Track EWB validity and ensure extensions are requested only when necessary.
  • Communicate new restrictions to logistics providers and stakeholders.

These updates represent a step toward a more mature GST ecosystem. By enhancing security and enforcing stricter timelines, the government aims to reduce fake billing, improve tax collection, and foster a fairer business environment. While the adjustments may seem daunting, they offer long-term benefits such as improved operational efficiency, transparency, and trust in India’s indirect tax framework. For businesses, early preparation and proactive adjustments will be key to avoiding disruptions. By embracing technology, revising processes, and staying informed, stakeholders can navigate the evolving GST landscape effectively and position themselves for sustainable growth. – Dezan Shira & Associates

Other developments

GST Council meeting

In other related news, the GST Council is set to convene on December 21, 2024, to deliberate on GST rate rationalization and review the recommendations proposed by the Group of Ministers (GoM) regarding GST rate adjustments.

Ongoing GST amnesty scheme

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The GST Council has announced an amnesty scheme offering conditional waivers of interest and penalties, provided applications are submitted by June 30, 2025. Businesses must carefully assess their specific circumstances to determine whether it is more advantageous to pursue waivers under the scheme or to litigate.

ALSO READ: New GST Amnesty Scheme from November 1, 2024: Key Compliance Details

Invoice Management System

During its September 2024 meeting, the GST Council also recommended pilot testing B2C e-invoicing and implementing the Invoice Management System (IMS).

Implementation of the IMS System:

Effective October 1, 2024, the IMS system, introduced on the GST portal, requires supply recipients to either accept, reject, or keep pending invoices and credit notes. If no action is taken, the document will be deemed accepted. Notably, if a recipient rejects a credit note, the corresponding tax amount is added to the supplier’s tax liability.

The IMS system generates Form GSTR 2B based on recipient actions, providing taxpayers with key data to reconcile input tax credits, calculate final tax payable, and file GST returns.

Suppliers should streamline their credit note issuance processes to minimize rejections, as the system directly impacts their tax liability. While IMS aims to simplify input tax credit reconciliation and reduce discrepancies in GST filings, its legal position remains subject to scrutiny. Notably, prior provisions for invoice and credit note acceptance or rejection—removed in October 2022—have yet to be reinstated explicitly in GST law.

Integrating IMS with existing ERP systems has proven challenging for businesses. Despite the system’s launch, functionality limitations persist, posing additional hurdles. As IMS evolves, taxpayers and professionals must remain vigilant, adapting to its developments and addressing emerging challenges through 2025.

Conclusion

To ensure smooth transition and compliance with the updated regulations, businesses should take several proactive steps. First, they should adopt the changes early by implementing processes ahead of deadlines to identify and address potential challenges. Next, businesses must update their internal Standard Operating Procedures (SOPs) to reflect the revised timelines and compliance measures. Leveraging technology is also crucial, with the use of GST-compliant software to automate tasks such as OTP integration, invoice tracking, and EWB monitoring. Additionally, engaging external stakeholders, including suppliers, logistics partners, and customers, is essential to ensure alignment across the supply chain. Lastly, seeking professional advice from GST practitioners or tax professionals can help clarify complex requirements and streamline workflows effectively.

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