Navigating GST Compliance in India: A Complete Guide

GST compliance is not just a legal necessity—it’s a strategic advantage. With evolving digital frameworks, stricter timelines, and increased scrutiny, businesses must align with the latest GST rules to remain audit-ready and financially efficient. This guide outlines 10 essential areas you must master in 2025.

1. Registration Thresholds & Composition Scheme

• GST registration is mandatory for:

  • Goods suppliers with turnover over ₹40 lakh

  • Service providers exceeding ₹20 lakh

  • Special category states have a lower threshold of ₹10 lakh

• Inter-state suppliers and e-commerce operators must register regardless of turnover.

• Businesses with turnover up to ₹1.5 crore can opt for the Composition Scheme, which simplifies tax rates but restricts Input Tax Credit (ITC) eligibility.

2. Return Filing & Deadlines

• Common GST returns include:
  • GSTR-1: Details of outward supplies
  • GSTR-3B: Summary of liabilities and ITC
  • GSTR-9/9C: Annual returns and reconciliation for higher turnover
• Under the QRMP (Quarterly Return Monthly Payment) scheme:
  • Taxpayers with turnover up to ₹5 crore can file returns quarterly while paying taxes monthly.
• Important updates from July 2025:
  • Returns older than three years can no longer be filed.
  • Table 3 of GSTR-3B (tax liability) becomes non-editable once submitted—making accuracy critical.

3. E-Invoicing Requirements

• E-invoicing is now mandatory for businesses with turnover of ₹1 crore or more (lowered from ₹5 crore).

• E-invoices must be uploaded to the Invoice Registration Portal (IRP) within 30 days of issuance.

• Businesses must ensure all invoices are compliant with IRP rules and proper invoice series is maintained from FY 2025–26 onward.

4. Mandatory Multi-Factor Authentication (MFA)

• From April 2025, MFA is mandatory for all users accessing the GST portal.

• This includes filing returns, generating e-way bills, and uploading e-invoices.

• MFA helps safeguard taxpayer data and reduce login-related fraud.

5. E-Way Bill Updates

• E-way bills can now only be generated using invoices issued within 180 days.

• After 360 days, expired invoice documents cannot be used for any e-way bill generation.

• A second portal (E-Way Bill 2.0) was launched in July 2025, offering better uptime and faster API response times for transporters and businesses.

6. Invoice Management System (IMS) & ITC Reconciliation

• IMS was introduced in October 2024 to improve invoice tracking.

• Suppliers upload invoices to the IRP, and buyers can accept, reject, or take no action within a ~14-day window.

• If no action is taken, the invoice is considered accepted and reflected in the auto-generated GSTR-2B.

• Businesses must reconcile their purchase registers monthly with GSTR-2B to ensure full and accurate ITC claims.

7. ISD Registration & Credit Distribution

• From April 2025, businesses with multiple GST registrations under the same PAN must register as an Input Service Distributor (ISD).

• ISDs must allocate eligible ITC to the respective GSTINs via Form GSTR-6 each month.

• Failure to comply may result in ITC denial and potential penalties.

8. Reverse Charge Mechanism (RCM)

• Under RCM, the recipient (rather than the supplier) is responsible for paying GST on certain supplies.

• Common examples include services from unregistered suppliers or import of services.

• Payments under RCM must be made through the cash ledger and are eligible for ITC once paid and reported in GSTR-3B.

9. Audits, Appeals & Annual Returns

• Businesses are subject to three audit types:
  1. Statutory Audit: For companies as per Companies Act
  2. Departmental Audit: Conducted by GST authorities
  3. Special Audit: Mandated in special circumstances by GST officers

• GSTR-9 is mandatory for all regular taxpayers.

• GSTR-9C is required for those with turnover exceeding ₹5 crore.

• Legacy returns that are more than 3 years overdue cannot be filed from July 2025 onwards.

10. Year-End Compliance Checklist 

• To ensure smooth closure of the financial year:
  • File all pending GSTR-1, GSTR-3B, and annual returns before the July 2025 cutoff.
  • Ensure GSTR-3B Table 3 values match GSTR-1 and correct discrepancies before final submission.
  • Verify that e-invoices have been generated within 30 days of issue and accepted via IMS.
  • Reconcile GSTR-2B with your purchase register to avoid ITC rejections.
  • Register as ISD (if applicable) and allocate ITC using GSTR-6.
  • Maintain accurate HSN code reporting: 4-digit for turnover above ₹5 crore, 2-digit for others.
  • Review and report RCM liabilities and ensure timely payment.
  • File LUTs for zero-rated exports before the start of the new financial year.
  • Prepare for audits by keeping organized records and reviewing reconciliation statements.

Why Strong GST Compliance Matters in 2025