Understanding the GST Framework: Key Compliance Requirements for Businesses

India’s Goods and Services Tax (GST) regime has transformed the country’s indirect taxation landscape since its implementation in 2017. As we navigate through 2025, businesses face an evolving compliance framework with stricter timelines, enhanced digital mandates, and increased scrutiny from tax authorities. Understanding these requirements is crucial for maintaining operational efficiency and avoiding penalties.

GST Registration and Return Filing

Every business with an aggregate turnover exceeding the prescribed threshold must register under GST. The return filing framework requires monthly or quarterly submissions, depending on turnover. Businesses with aggregate turnover above ₹5 crore must file monthly GSTR-1, while those with turnover up to ₹5 crore can opt for the QRMP scheme and file quarterly returns.

The QRMP Scheme: Simplifying Compliance

The QRMP (Quarterly Return Monthly Payment) scheme is designed for businesses with turnover up to ₹5 crore, enabling them to file GSTR-1 and GSTR-3B returns quarterly instead of monthly. Under QRMP, businesses file quarterly GSTR-1 on the 13th of the month following each quarter and quarterly GSTR-3B on 22nd July 22nd October, 22nd January, and 22nd April.

However, QRMP filers must make monthly tax payments using Form PMT-06, a monthly challan for estimated tax liability. Businesses can opt into or out of the QRMP scheme by April 30, 2025, for FY 2025-26.

Composition Scheme for Small Taxpayers

The Composition Scheme offers simplified tax payment for small businesses at fixed rates. Composition taxpayers file CMP-08, a quarterly statement-cum-challan on the 18th of the month following each quarter. Eligible businesses intending to avail the Composition Scheme for FY 2025-26 must file Form CMP-02 by March 31, 2025. Transitioning requires reversing the Input Tax Credit claimed on stock and capital goods.

E-Invoicing: Critical 2025 Updates

E-invoicing is mandatory for businesses with an annual aggregate turnover of ₹5 crore or more. From April 1, 2025, businesses with a turnover of ₹10 crore or more must upload e-invoices to the Invoice Registration Portal within 30 days of invoice generation. Previously, this 30-day requirement applied only to businesses exceeding ₹100 crore turnover.

All taxpayers must use two-factor authentication for e-invoice and e-way bill generation from April 1, 2025. Failure to report invoices within the stipulated window results in rejection by the IRP, preventing buyers from claiming Input Tax Credit.

Enhanced Security Measures

From April 1, 2025, all GST taxpayers must implement Multi-Factor Authentication when accessing GST portals. The implementation has been phased: mandatory from January 1, 2025, for taxpayers with turnover exceeding ₹20 crore, extended to those exceeding ₹5 crore from February 1, 2025, and applicable to all remaining taxpayers from April 1, 2025.

E-Way Bill Restrictions

Effective January 1, 2025, e-Way Bills can only be generated for documents dated within the preceding 180 days. Extensions are now capped at 360 days from the original generation date. This requires businesses to maintain vigilant document management systems and ensure timely generation of e-Way Bills.

Biometric Authentication for Registration

Starting March 1, 2025, all promoters and directors must complete biometric authentication at any GST Suvidha Kendra in their home state. This simplifies authentication without requiring visits to specific jurisdictional GSKs. The biometric-based Aadhaar authentication has been progressively rolled out across various states throughout 2024 and 2025.

Input Tax Credit Reconciliation

ITC reconciliation is the most complex aspect of GST compliance. Thorough reconciliation between financial records, GSTR-2B, and GSTR-3B is essential to ensure all eligible ITC for FY 2024-25 is claimed and ineligible credits are reversed. Businesses must be particularly vigilant about Reverse Charge Mechanism transactions, including sponsorship services and property rental from unregistered persons.

Recent Regulatory Developments

GST Rate Rationalization

A major GST rate rationalization introduced a new structure primarily consisting of 5%, 18%, and 40% for demerit goods. Daily necessities like soap and toothpaste fall under 5%, electronic appliances under 18%, and demerit goods at 40%.

Key January 2025 Notifications

Fortified Rice Kernel now attracts 5% GST (reduced from 18%). Gene therapy is completely GST-exempt. Old and used vehicles now attract 18% GST (increased from 12%). The concept of “specified premises” for hotel accommodation has been redefined effective January 16, 2025.

Simplified Registration

A simplified GST registration system launched November 1, 2025, allows low-risk applicants to receive automated GSTIN approval within three working days, benefiting 96% of new businesses.

Annual Returns and Year-End Compliance

The deadline for filing GSTR-9 (Annual Return) and GSTR-9C (Reconciliation Statement) for FY 2024-25 is December 31, 2025. GSTR-9C requires certification by a chartered accountant or cost accountant for taxpayers exceeding ₹5 crore turnover.

Exporters must submit a Letter of Undertaking in Form RFD-11 by March 31, 2025, for zero-rated supplies. Credit notes for returns must be issued before November 30, 2025. Businesses should initiate fresh invoice series from April 1, 2025.

HSN Code Reporting

Phase III implementation makes HSN code reporting mandatory in Table 12 of GSTR-1/1A from January 2025. Businesses must ensure their systems capture correct HSN codes at the required digit levels based on turnover thresholds.

Best Practices for Compliance

Implement automated software solutions that integrate with the GST portal for e-invoicing, return generation, and ITC reconciliation. Maintain comprehensive documentation including invoices, delivery challans, e-way bills, and correspondence for at least three years.

Conduct periodic internal audits to identify compliance gaps, validate vendor registrations, and verify transaction classifications. Monitor regulatory updates through official CBIC channels and professional advisories. Maintain a detailed compliance calendar with multiple reminders for all filing deadlines.

Regularly verify vendor GST registration status and return filing compliance, as mismatches can result in ITC denial. Ensure finance teams receive regular training on GST updates and portal features. For complex transactions or contentious issues, consult chartered accountants or GST experts.

Conclusion

The GST compliance landscape in 2025 demands proactive engagement from businesses. Enhanced digital requirements, stricter timelines, and evolving regulations require a combination of technological adoption, systematic processes, and continuous awareness. The QRMP scheme provides relief to small businesses, while enhanced security measures protect system integrity.

Businesses must view GST compliance as an integral component of good corporate governance and financial management. By implementing best practices and staying informed about regulatory developments, companies can navigate the GST framework efficiently, minimize compliance risks, and focus on growth. The key to successful GST compliance lies in preparation, vigilance, and adaptability, turning compliance from a burden into a competitive advantage that demonstrates commitment to transparency and regulatory adherence in India’s evolving tax landscape.