GST Reforms 2025: Part II

Introduction

2025 has truly been a turning point for GST in India. A host of reforms were introduced to make the system simpler, more equitable, and easier to navigate. From rationalising tax rates on essential goods to fixing inverted duty structures and easing compliance for businesses, these changes have touched households, MSMEs, and professionals alike.

At the start of the year, the GST Council focused on targeted reliefs bringing down rates on education supplies, healthcare products, and farming equipment to ease the burden on families and farmers. Midway through the year, attention shifted to compliance, with measures like quicker refunds for exporters and a simplified registration process for small businesses. The most significant reform came later, during the Council’s 56th meeting on 4th September 2025, chaired by Union Finance Minister Smt. Nirmala Sitharaman, where a streamlined two-slab structure of 5% and 18% was approved, effective from 22nd September 2025.

Part I covered the GST rate changes of 2025. To read Part I, click here. In this section, we turn to the equally important compliance updates introduced during the year.

Key Changes You Should Be Aware Of

1. Waiver Scheme under Section 128A

Taxpayers now have access to Forms GST SPL-01 and SPL-02 on the portal to apply under the waiver scheme. A crucial condition is withdrawing any pending appeals related to the demand order before filing the waiver application. For older appeals (filed before March 2023), manual withdrawal through the Appellate Authority is required.

2. E-Way Bill Updates

• Gold Movement in Kerala: For intrastate movement of gold (Chapter 71, excluding imitation jewellery), generating an E-Way Bill is now mandatory.
• Form ENR-03 for Unregistered Dealers: Unregistered dealers can enrol themselves on the EWB portal and generate bills using a unique Enrolment ID.

3. Return Filing Enhancements

• Non-editable GSTR-3B Liability: From July 2025 onwards, auto-populated liabilities in GSTR-3B cannot be edited. Any corrections must be routed through GSTR-1A.
• HSN Code Reporting: Dropdown-based HSN selection has replaced manual entry, with validations introduced (currently in warning mode).
• Restriction on Late Filing: Returns cannot be filed after three years from the original due date, effective November 2025.

4. Refund Process Improvements

Refund filing has shifted to an invoice-based system for categories like exports, SEZ supplies, and deemed exports. QRMP taxpayers faced initial issues with IFF invoices, but system validations have now been updated to resolve this. Refund applications are strictly linked to filing of relevant returns, ensuring better compliance.

5. Invoice Management System (IMS) Enhancements

• Taxpayers can now keep credit notes pending for one tax period.
• Flexibility to declare ITC reversal amounts has been added, reducing disputes.
• Import of Goods details are integrated into IMS from October 2025.
• ITC reversal adjustments can be made when accepting credit notes.

6. Bank Account Furnishing (Rule 10A)

Taxpayers must furnish bank account details within 30 days of registration or before filing GSTR-1/IFF. Non-compliance could lead to suspension of GST registration, so updating details promptly is critical.

7. Simplified GST Registration Scheme (Rule 14A)

Small taxpayers with monthly output tax liability below ₹2.5 lakh can opt for simplified registration. Aadhaar authentication is mandatory, and approval is granted electronically within three working days. Withdrawal conditions are clearly defined to prevent misuse.

8. Electronic Credit Reversal & RCM Ledger Validations

The Reclaim Ledger and RCM Liability/ITC Statement have been strengthened with new validations. Negative balances will block GSTR-3B filing unless corrected, ensuring accurate ITC reporting and reducing errors.

Conclusion

GST compliance in 2025 is all about streamlining processes while tightening accountability. From invoice-based refunds to stricter return filing timelines, these changes are designed to make compliance more predictable and transparent. Businesses should act early—update records, reconcile returns, and adopt new portal features to stay ahead of deadlines and avoid disruptions.

The bottom line: GST is evolving into a smarter, more digital system. Staying proactive today will save you from compliance headaches tomorrow.