The Indian GST framework is undergoing significant changes, with new mandates impacting Input Tax Credit (ITC), authentication, E-Way bills, tax filings, and invoice management. Businesses must adapt their financial and operational processes to ensure compliance and avoid penalties. Here’s a detailed breakdown of the key updates:

1. Mandatory Use of Input Service Distributor (ISD) for ITC (Effective 1 April 2025)

Starting 1 April 2025, businesses will be required to use the Input Service Distributor (ISD) mechanism for claiming Input Tax Credit (ITC). Previously, businesses had the flexibility to choose between the ISD system and the cross-charge method for ITC claims. This change aims to streamline ITC distribution and reduce misuse.

What businesses should do:

• If you are currently using the cross-charge method, transition to the ISD system before April 2025.
• Educate your finance and accounting teams on ISD processes.
• Update your ERP or accounting software to align with ISD-based ITC claims.

2. Mandatory Multi-Factor Authentication (MFA) for All GST Payers (Effective 1 April 2025)

GST taxpayers must enable Multi-Factor Authentication (MFA) for secure access to the GST portal. While businesses with an annual aggregate turnover (AATO) above ₹5 crore were required to implement MFA from 1 February 2025, this mandate will extend to all taxpayers starting 1 April 2025.

Steps to implement MFA:

• Update your registered mobile number and email in the GST portal.
• Enable MFA as soon as possible to avoid last-minute disruptions.
• Train employees and ensure all authorized users are aware of the new login procedures.

3. Restriction on E-Way Bill (EWB) Generation (Effective 1 January 2025)

E-Way Bill (EWB) generation will be restricted to documents within 180 days from the challan date of the base document. This means businesses must generate EWB within this time limit, ensuring that older invoices are not used beyond the prescribed period.

Action points:

• Streamline invoicing and logistics workflows to comply with the 180-day restriction.
• Automate reminders to generate EWBs within the timeframe.
• Avoid supply chain delays by pre-planning shipments.

4. Restriction on EWB Extension Period (Effective 1 January 2025)

The extension period for an EWB will be limited to 360 days from the original generation date. This aims to prevent excessive extensions and improve the tracking of goods movement.

What businesses need to do:

• Optimize supply chain and logistics operations to prevent delays.
• Ensure proper scheduling of long-distance shipments to meet deadlines.
• Update transportation partners on the new rules to avoid compliance issues.

5. Sequential Filing of GSTR-7 for TDS Reporting (Effective 1 November 2024)

From 1 November 2024, sequential filing of GSTR-7 is mandatory for Tax Deducted at Source (TDS) reporting under GST. Businesses must file the previous month’s GSTR-7 before proceeding with the current month’s filing. If there is no TDS in a given month, a Nil return must be filed by the 10th of every month.

Compliance measures:

• Ensure GSTR-7 filings are completed in sequential order.
• Even if there is no TDS, file a Nil return on time to avoid penalties.
• Automate filing reminders within your GST compliance systems.

6. Mandatory New Invoice Series for Each Financial Year (Effective 1 April 2025)

From 1 April 2025, all GST taxpayers must start a new invoice series for each financial year. The invoice numbering should be unique and cannot exceed 16 characters.

Actionable steps:

• Implement a financial-year-specific invoice numbering system.
• Update billing and ERP systems to auto-generate compliant invoice numbers.
• Train accounting teams on the new requirement to prevent errors in invoicing.

Conclusion

These upcoming GST changes will have a significant impact on businesses across India. Proactively updating systems, training teams, and refining processes will help ensure smooth compliance and avoid disruptions. Businesses should start preparations well in advance to stay ahead of these regulatory changes.