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Published on 9 April 2025

Understanding GST in India: Structure, Compliance, and 2025 Updates

Introduction

The Goods and Services Tax (GST) is a historic overhaul of India's tax structure, aimed at unifying the country's indirect tax system. Envisioned by the Kelkar Task Force in 2000 and drafted after prolonged consultations between the central and state governments, GST has substituted a disjointed system of taxation with a unified, technology-based one. Since its launch on July 1, 2017, GST has been changing continuously to cater to the needs of stakeholders and the changing economic situation.

Framework of GST (2025)

Double Structure: CGST, SGST, and IGST

  • CGST and SGST: Levied together by Centre and States on intra-state supplies.
  • IGST: Levied by Centre on inter-state supplies and imports, with revenue being transferred to the destination state.

GST Council's Role

The GST Council consists of the Union Finance Minister and state members, with the power to decide tax rates, exemptions, and compliance regulations. It operates on the principle of consensus to facilitate coordination between the Centre and the States.

Compensation Mechanism

The Centre provides states with financial compensation for revenue shortfalls, initially guaranteed for five years until June 2022. Extended talks are in progress for assisting states with ongoing revenue challenges.

Major Features of GST

  1. Comprehensive Indirect Tax Regime

    • GST consolidates various indirect taxes, such as VAT, Service Tax, and Excise Duty, into a single tax, making it simpler to comply and eliminating the cascading tax effect.

  2. Input Tax Credit (ITC)

    • Businesses can claim ITC on taxes paid on inputs, thereby lowering their overall tax burden and double taxation. The new regulations have offered stricter time limits and documentation standards for claiming ITC.

  3. Composition Scheme

    • Small and Medium Enterprises (SMEs) with a turnover of up to ₹1 crore (or ₹75 lakh in special category states) may opt for a simpler payment model, forfeiting ITC benefits.

  4. Four-Tier GST Rate Structure

    • Current GST rates are 5%, 12%, 18%, and 28%. Though the GST Council is exploring possible rationalization, the rates remained unchanged until May 2025.

  5. Threshold Exemption

  • GST registration is not needed for:
    • Intra-state goods suppliers having turnover less than ₹40 lakh.
    • Less than ₹20 lakh service/mixed suppliers.
    • Special category states may have their thresholds reduced even further.
  1. Technology-Driven Compliance
  • GST Network (GSTN) portal offers registration, return filing, ITC claims, and payment, with more recent additions including Multi-Factor Authentication (MFA), biometric authentication, and upload document improvements.

Major GST Amendments and GST 2025 Updates

Compliance Changes of Import

  • Multi-Factor Authentication (MFA): Mandatory for all users of the GST portal w.e.f. April 1, 2025.
  • E-Way Bill Limitations: Only valid until 180 days' bills from January 1, 2025, with a maximum 360-day extension.
  • Biometric Authentication: Required for company directors at GST Suvidha Kendras from March 4, 2025.
  • GSTR-7 & GSTR-8 Amendments: Invoice-wise TDS/TCS information should be submitted from February 11, 2025.
  • New Invoice Series: Sequential, distinct, year-specific invoices will be required from April 1, 2025.
  • ISD Registration: Compulsory for single PAN entities with multiple GSTINs from April 1, 2025.
  • GST Amnesty Scheme: Allows principal payment of tax for FYs 2017–18 to 2019–20 by March 31, 2025, to waive interest and penalty.
  • GST Appellate Tribunal (GSTAT): Relaxation of appeal timeframes and pre-deposit amount from August 1, 2024.
  • Anti-Profiteering Sunset Clause: Section 171 has introduced a sunset clause; pending matters will be referred to the GSTAT.
  • Hotel GST: On actual transaction values and not on declared tariffs; full ITC allowed.
  • Uniform 18% GST on Used Cars: Implemented uniformly in all types of vehicles, on margin value.
  • GSTN Portal Enhancements: Enhanced features in address fields, document upload, and return tracking.

Recent GST Council Decisions

  • 54th & 55th Meetings (2024): Rate revisions in GST for some goods and services, without altering the overall slab system.
  • Record GST Collection: In April 2024, the collection figure was ₹2.10 lakh crore.

FAQs: GST in India (2025)

  • What are the current GST rates in India?

    • The rates stand at 5%, 12%, 18%, and 28%, with no slabs altered till May 2025.

  • Is GST registration compulsory for all businesses?

    • Only those with turnover above ₹40 lakh (for goods) or ₹20 lakh (for services) need to register; there may be lower thresholds in special category states.

  • What are the changes in GST compliance for 2025?

    • Key changes include MFA, stricter e-way bill rules, a new invoice sequence, mandatory ISD registration, and others.

  • How do I make my GST returns filing?

    • All the registration, filing of returns, and payment functions have to be carried out using the GSTN portal with MFA as a pre-requisite for access.

Conclusion

India's GST framework has become a comprehensive, tech-enabled tax regime that encourages ease of doing business, transparency, and Centre-State fiscal collaboration. With ongoing reform and updates facilitated by the GST Council, GST continues to shape a changing economy's needs suitably.

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