GST in Transition: A look back at 2024 and what’s ahead in 2025

In 2024, India’s Goods and Services Tax (GST) landscape has seen a transformative year, with several key amendments and policy changes that have shaped the economy and businesses alike. From smoother compliance processes to the introduction of new provisions aimed at enhancing tax revenue, the year has witnessed both challenges and significant milestones. 

As we step into 2025, businesses and tax professionals are eager to understand how the GST framework will evolve further. What changes should we brace for, and how will the government's ongoing push for digitisation and transparency affect the tax ecosystem? 

With new regulations and potential adjustments on the horizon, 2025 promises to be another year of growth, reform, and modernization in India’s GST journey. Here’s a look at the changes introduced in 2024 and what they will mean for 2025:

1. Implementation of GST e-invoicing for Small Businesses

It was decided in GST council meeting held in 2024 which recommended that starting April 1, 2025, a new rule could be introduced to mandate that e-invoices must be uploaded to the Invoice Registration Portal (IRP) within 30 days from the date of invoice generation. This move aims to improve transparency, reduce tax evasion, and increase compliance across the country.

2. New GST Return Filing System (GST Returns 2.0) – Invoice Management System

The GST Network introduced new features to simplify compliance and auditing for taxpayers. The latest is the Invoice Management System (IMS), which went live on 14th October 2024. It aims to help significantly manage the process of claiming Input tax credits (ITC). This is a more user-friendly system that is aimed at enhancing ease of filing, reducing errors, and improving the reconciliation process.

3. Focus on Anti-Evasion Measures using AI tools, GST audits and inspections

In 2024, the Indian government has been strengthening its anti-tax evasion measures under GST. This includes more robust monitoring of fraudulent Input Tax Credit (ITC) claims and the introduction of new AI tools and technologies to prevent tax evasion. The government has also ramped up efforts to monitor fake GST registrations and tackle fake invoicing. The scope and frequency of GST audits have been discussed for a possible revision in 2024. The introduction of regular audits and enhanced data analysis using artificial intelligence (AI) could be seen to bolster compliance and transparency, especially with large companies. 

4. Revised GST Rates on Key Sectors

In response to ongoing economic changes and to support certain sectors, the GST Council has made periodic adjustments to tax rates. In 2024, there were lot of changes in rates for sectors like real estate, ecommerce, hospitality, and certain consumer goods, as well as additional clarifications regarding scope of certain exemptions and tax slabs.

5. Ease of Doing Business Initiatives

The government continues to simplify the GST compliance process for businesses, especially MSMEs (Micro, Small, and Medium Enterprises). GST council in its 55th meeting at Rajasthan on December 21, 2024, discussed that a concept note would be released on simplification of GST registration process for small businesses and suitable amendments would be made in the law in due course .

6. GST on Online Gaming and Casinos

In 2024, discussions around GST on online gaming and casinos have gained attention. Finance Minister Nirmala Sitharaman announced a significant increase in revenue from online gaming, with a 412% jump to ₹6,909 crore in six months. This follows the implementation of a 28% GST on both skill-based and chance-based online games starting October 1, 2023. Casinos also saw a 30% revenue increase. 

7. Integrated GST (IGST) for Exports

The government has been working to improve the refund process for exporters, who often face delays in receiving GST refunds for exported goods. In 2024, several measures were introduced to streamline the IGST refund process in 2024 to reduce backlog claims and make it more transparent. 

8. GST on Digital Services

In 2024, there were updates concerning the GST treatment of services provided by digital platforms like OTT, e-learning, and online subscriptions, ensuring consistency and clear guidelines.

Major Changes expected in Year 2025

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.

Multi-factor authentication 

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 ₹1 billion, while optional for those with an AATO above ₹200 million.

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.

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 extensions, transit periods and ensure efficient logistics.

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.

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.

Summary

To ensure smooth transition and compliance with the updated regulations, businesses should take several proactive steps. Businesses should identify potential challenges, update their SOPs, engage the relevant internal stake holders and external professionals and leverage latest technology to manage compliances.