As businesses prepare for the Financial Year 2025-26, adhering to GST compliance remains crucial for smooth operations. With the introduction of new features on the GST portal, it’s essential to stay updated with the latest changes to avoid penalties and ensure accurate tax filings.
Part 1: Key Compliance Actions for FY 2025-26
Filing of Letter of Undertaking (LUT) for Zero-rated supplies
If your business participates in zero-rated supplies, such as exporting goods or services or providing to SEZ units/developers without IGST payment, you need to file a Letter of Undertaking (LUT) for the financial year 2025-26. Make sure this is submitted by March 31, 2025. The option is now accessible on the GST Portal.
Opt-In for GST Composition Scheme
Eligible businesses that want to opt for the GST Composition Scheme for the fiscal year 2025-26 need to file Form CMP-02 by March 31, 2025. While opting for the composition scheme from the regular scheme, do not forget to reverse the Input Tax Credit (ITC) available on inputs, work-in-progress, finished goods inventory as of March 31, 2025, and capital goods at a lower percentage by filing Form ITC-03 by May 30, 2025.
Opt-In or Out of QRMP Scheme
The Quarterly Return Monthly Payment (QRMP) system enables registered individuals with a total turnover of up to ₹5 crores to submit GST returns on a quarterly basis while paying taxes monthly. To choose to opt in or out of the QRMP scheme for FY 2025-26, make sure your decision is made by April 30, 2025.
Obtain Declarations from Goods Transport Agencies (GTA)
For FY 2025-26, collect declarations from Goods Transport Agencies (GTA) that opt to pay GST under the forward charge mechanism. This documentation is crucial to justify the non-payment of GST under the reverse charge mechanism (RCM).
Resetting Invoice Number Series
According to GST regulations, companies are required to restart their invoice number series at the beginning of every financial year. This stipulation is relevant to every kind of invoice, such as tax invoices, credit notes, debit notes, and supply bills. A new series needs to be initiated starting April 1, 2025, to ensure consistency and adherence.
Recalculate Aggregate Turnover
Evaluate your total revenue for FY 2024-25 to establish eligibility and compliance obligations for FY 2025-26. This assessment influences choices regarding GST registration, the Composition Scheme, the QRMP scheme, e-invoicing requirements, and Rule 86B pertaining to 1% cash transactions.
Reconcile Input Tax Credit (ITC)
Take a close look at your accounting books GSTR-2B, and GSTR-3B to find any differences. Be sure to claim all eligible ITC for FY 2024-25, reverse any ITC you can’t claim, and fix any issues you find right away.
Settle Reverse Charge Mechanism (RCM) Liabilities
Examine all purchases and expenditures to pinpoint transactions that fall under RCM. Make certain that RCM obligations are settled, included in GSTR-3B, and related ITC is claimed when applicable. Keep self-invoices for all transactions relevant to RCM.
Also Read: Types of GST Returns
Part 2: New GST Portal Updates & Changes for FY 2025-26
Mandatory HSN Code Selection in GSTR-1 & GSTR-1A
Starting February 2025, taxpayers will not be permitted to manually enter HSN codes in GSTR-1 and GSTR-1A. Rather, they have to choose the appropriate HSN code from a dropdown menu. Furthermore, Table 12 of GSTR-1 has been divided into B2B and B2C supply categories for enhanced reporting clarity. Even though new validation checks have been implemented, they will start off in warning mode and will not prevent return filings.
Introduction of E-Way Bill Requirement for Gold in Kerala
Beginning January 20, 2025, companies engaged in the intrastate transport of gold in Kerala are required to produce E-Way Bills (EWB) for transactions concerning goods categorized under Chapter 71 (excluding imitation jewelry). This new mandate is anticipated to improve transparency in the gold market.
Also Read: How to registered on e-way bills?
Waiver Scheme under Section 128A
The GST portal now supports the submission of waiver requests through Forms GST SPL-01 and GST SPL-02. Nonetheless, companies seeking waivers must initially retract any appeal requests submitted against demand orders. If an appeal was submitted prior to March 21, 2023, and is still pending, the taxpayer needs to request withdrawal via the appellate authority.
Introduction of GST DRC-03A for Demand Payment Adjustments
A new Form GST DRC-03A has been launched to enable businesses to reconcile payments done under DRC-03 with demand orders. Numerous taxpayers had erroneously utilized DRC-03 instead of the “Payment Towards Demand” option, resulting in discrepancies in their electronic liability records. The updated format allows for accurate modifications and connections of payments to unpaid obligations.
Time Limit for Reporting E-Invoices for Businesses with AATO of Rs 10 Crores and Above
Starting April 1, 2025, companies with an annual aggregate turnover (AATO) of Rs. Amounts of 10 crores and more are required to report their e-invoices within 30 days from the date of the invoice. The earlier limit was applicable solely to companies with an AATO of Rs. 100 crores and above, but now a broader group of taxpayers is required to follow this regulation. For instance, an invoice with a date of April 1, 2025, should be submitted by April 30, 2025. The Invoice Registration Portal (IRP) will reject invoices that are more than 30 days old, making it crucial for companies to submit invoices without delay.
Conclusion
By following the updated GST compliance checklist and leveraging new portal features, businesses can streamline their operations, maintain transparency, and contribute to a more efficient tax system in FY 2025-26. Staying informed is key to smooth GST management.
