There are a number of changes in GST compliance that India will be set to face once it reaches 2025, and the areas of focus include security, process simplification, and total compliance by businesses. Understanding these changes would prove very important for businesses, thereby enabling them to adjust themselves effectively and maintain GST Compliance with the changing regulatory landscape.
Major Changes in GST Compliance
Mandatory Multi-Factor Authentication (MFA)
Starting January 1, 2025, the use of Multi-Factor Authentication (MFA) will be mandatory for taxpayers who access the GST portal. The move is aimed at improving security and safeguarding confidential financial information. Earlier, MFA was only applicable to those businesses whose Annual Aggregate Turnover (AATO) exceeded INR 1 billion. The phased implementation shall have the following:
- From January 1, 2025: Mandatory for taxpayers whose AATO exceeds INR 200 million.
- From February 1, 2025: This will be applicable to individuals whose AATO exceeds Rs. 50 million.
- From April 1, 2025: All the taxpayers have to comply irrespective of turnover.
Preparation:
- Update registered mobile numbers so as to receive One-Time Passwords (OTPs).
- Train employees on MFA processes.
- Ensure IT systems are capable of handling the new MFA process.
E-Way Bill Restrictions
Another critical shift is the generation of E-Way Bills. As of January 1, 2025, EWBs for base documents not older than 180 days will be raised. This change has been envisaged to avoid fraudulent attempts and timely logistics management.
Preparatory Steps:
- Set the invoicing and logistic processes in line with the revised EWB requirements.
- Automate reminders for EWB generation based on the new timeline.
- Communicate these changes with logistics partners to keep operations running smoothly.
Invoice Matching System (IMS)
Introducing an Invoice Matching System will help increase transparency on GST filings through automation. The system will ensure fewer fraudulent claims of Input Tax Credit and improve overall accuracy of compliance.
To get ready for the change, business houses need to prepare to:
- Understand the new processes of IMS after implementation
- Train staff to properly use the IMS.
Simplification of GST Registration Procedure The GST Council also agreed to simplify the registration procedure for businesses. This would involve simplifying and reducing the complications in acquiring GST registration, which has always been a big pain for most businesses. Therefore, companies need to know about these changes and promptly comply with new requirements.
Effects on Other Compliance Areas
These changes in GST compliance would also overlap with other statutory areas like Income Tax, Trademark, and Company Registration:
Income Tax Filing: With a more vigorous GST compliance system, the procedure for income tax filing on the part of businesses will need to be integrated as well. The exchange of increased data between GST and income tax authorities could imply greater scrutiny of financial records.
Trademark Registration: Even the need for proper documentation and compliance applies to trademark registration. Businesses should ensure that they register their trademarks properly to avoid any kind of complication when it comes to GST audits or legal disputes.
Company Registration: Company registration may also be affected due to the new compliance requirements. Businesses must ensure that their registrations are up-to-date and comply with the regulatory framework of GST and other similar regulations.
Preparation for the Changes
To successfully deal with these upcoming changes, businesses should take proactive measures as follows:
- Train the Employees: Provide training on new compliance requirements of GST, income tax filing, trademark, and company registration.
- Upgrade IT Systems: Make sure that the IT systems are upgraded to handle MFA and IMS requirements effectively.
- Consult Professionals: Engage tax consultants or legal advisors who specialize in GST compliance to understand these changes fully.
Conclusion
GST compliance changes effective from January 1, 2025: A great leap for India’s businesses within its tax system The introduction of compulsory MFA, restriction of timelines to generate E-Way Bill, the advent of an Invoice Matching System, and ease of registration would all make a tax environment more secure and efficient.
Businesses should update systems, train employees, and ensure compliance with GST, income tax, and company registration to meet new regulations, avoid penalties, and achieve sustainable growth.