GST: The Journey so far
The introduction of Goods & Services Tax (GST) in July 2017 is the biggest tax reform in the indirect taxation in India. A much-elaborated base of legal provisions and fully automated interface between taxpayer and tax authorities through common GST portal has been introduced. There is no physical interface between taxpayer & tax administrator after the successful implementation of new tax regime GST in mid-2017.
A new assesse specific administration has replaced the earlier tax-specific administration, as now, the Union & State Governments charge tax on a single tax base and the taxpayer has interface with a single authority- either Central or the State or the Union Territory, as the case may be. The first five years of GST in India will always be remembered as a saga of perseverance, determination and will to conquer all hurdles to move forward.
Being the biggest tax reform in indirect taxes for integration of the entire nation’s diverse tax portfolios into a single taxation system that too on a single electronic platform commonly known as GST Portal maintained by Goods & Services Tax Network (GSTN), no blue print could perhaps, ever be perfect. Problems related to GST System Application design, development & operation were tackled by the highest decision making constitutional body GST Council with active participation of the Union & States.
Most of the procedure have already been streamlined and now, the returns filing system is also being revamped with major amendments already made in the CGST/SGST Act by the Finance Act, 2022 and thus has put to an end of the mismatched ITC in the supply chain of GST, which resulted earlier ITC claim denials due to GSTR-2A/3B discrepancies. After a long wait, the Returns cycle, which is an important link between the taxpayer and tax authorities, has been finally completed.
Naturally, the pace of amendments in the initial phase of GST was very fast and sometimes, even clarifications given through various circulars had to be amended subsequently. Keeping track of all the changes and remain updated was a daunting challenge for the trade as well as the officers of tax department. However, over this period, GST has undergone significant transformations, moving from initial teething problems to a more mature tax system.
The financial year 2024-25 has been particularly eventful, marked by several important amendments, compliance challenges, and policy shifts aimed at refining the tax structure. The key developments in seven & half year journey of GST are broadly divided into three phase’s with initial implementation phase (2017-2019) for introduction of a unified tax system replacing multiple indirect taxes, establishment of GST council as the governing body for taking decisions, phased implementation of periodical return filing system and gradual expansion of tax base.
The 2nd Consolidation Phase (2019-2022) was with introduction of e-Invoicing in a phased manner initially started for large & medium taxpayers, implementation of QRMP scheme for small taxpayers, rationalization of tax rates & slabs and introduction of stricter compliance measures to improve compliance rate from taxpayers. The 3rd one is called the maturity phase ( 2022-2025) with enhanced focus on technology driven compliance, expansion of e-invoicing to small taxpayers and introduction of GST Amnesty schemes and strengthening of anti-evasion measures.
The recent amendments & changes in GST law:
There are some major amendments and changes that happened in GST during the financial year 2024-25 on the recommendation of highest decision making governing body, GST Council. The government introduced an Amnesty Scheme under section 128A of the CGST Act, offering complete waiver of interest & penalty for the tax periods from July 2017 to ending March 2020, providing that if taxpayers pay the 100% of the principal tax amount of demand by the end of March 2025.
The pre requisition and the condition for waiver scheme was that the Show Cause Notice or Demand Order should have been issued under section 73 of CGST Act, by the adjudicating authority. A circular no 238/32/2024-GST Dated 15-10-2024 with complete SOPs and guidelines were issued by CBIC for taxpayer & tax authorities for procedure & to adopt common uniformity for Amnesty scheme. Also, Rule 164 introduced as an amendment to CGST Rules 2017 vide notification no. 20/2024-CT dated 08-10-2024 and other notifications 21/2024-CT Dated 08-10-2024 & 22/2024-CT dated 08-10-2024 were issued by CBIC for waiver scheme with effect from 01-11-2024.
The deadline for payment is ending March 2025, with online application accepted on common GST Portal until June 30, 2025. For demands spanning multiple financial years or tax periods, partial withdrawal of appeals is now allowed. The e-invoicing reforms and significant changes to e-invoice took effect from April 1, 2025.
The threshold for mandatory e invoicing was reduced to Rs.5 crore & above. The new 30-day deadline for uploading invoices to the Invoice Registration Portal (IRP) is also in place. Introduction of compulsory two-factor authentication for e-invoice generation and automatic rejection of invoices submitted after the 30-day window is also available on portal now. Major reforms to Input Service Distributor (ISD) provisions is effective from April 1, 2025.
The J&K Legislative Assembly has very recently passed the J&K Goods and Services Tax (Amendment Bill) 2025 with amendments/insertion in various sections of the J&K GST Act, 2017 in the ongoing budget session. The ISD Mechanism changes introduced are, the mandatory ISD registration for businesses with multiple registrations under the same PAN, new rules for distribution of common Input Tax Credit (ITC), introduction of detailed procedure for ITC distribution including modified pro-rata formula and separate distribution requirement for eligible and ineligible ITC. The financial year 2024-25 saw unprecedented compliance challenges. To reduce the compliance burden & retrospective scrutiny on various issues like massive volume of show Cause Notice (SCN) for past years 2017-18 to 2019-20, system-generated discrepancies leading to tax demands without proper verification, lack of proper speaking orders in many cases violating of principles of natural justice and intensive departmental audits u/s 65 & 66 focusing on ITC claims and returns reconciliations, the recent amendments are useful for taxpayers.
Some new key year-end compliance requirements and important compliance activities also taking place in March, 2025 with introduction of submission of Letter of Undertaking (LUT) for zero-rated supplies by March 31st, opting for composition scheme via Form GST CMP-02 before April 30th, QRMP scheme selection by April 30 for taxpayers up to Rs.5 crore turnover, implementation of new Invoice series from April 1 and comprehensive reconciliation of outward & inward supplies. The other significant changes also includes, mandatory reporting of HSN/SAC codes from predefined lists in statement of outward supplies GSTR-1 returns, new requirements for ITC reversal certificates for credit notes for above Rs.5 lakh, changes in GSTR-7 format for TDS reporting for tax deductor, amendments to GSTR-08 for e-commerce operators and introduction of Invoice Management system (IMS) for effective Input Tax Credit (ITC) tracking.
These changes and amendments will not only streamline the very basic purpose of GST, but also will put to an end several issues & difficulties faced by taxpayers like, retrospective tax demands creating financial strain, mismatches between GSTR-1, GSTR-2A/2B & GSTR-3B discrepancies, ITC claims denials due to GSTR-2A/3B discrepancies, reclassification of transactions and applicable GST rates and delayed SCN giving minimal time response.
Since, we are now in the eighth year of GST, the taxpayer must hope for reduced unnecessary litigations & retrospective demands, mandatory issuance of proper & speaking orders for transparency, faster resolution of all pending appeals before appellate authorities, improved ITC reconciliation mechanisms and simplified compliance procedures. The eight-year journey of GST has been transformative for India’s indirect taxation system. While significant progress has been made during these 7 & ½-year journey in streamlining processes and expanding the tax base. F/Y 2024-25 highlighted ongoing challenges, particularly regarding compliance burdens and retrospective assessments.
The recent amendments and changes in GST law, especially those related to Amnesty Scheme, e-invoicing, ISD mechanisms, QRMP schemes, comprehensive reconciliation of outward & inward supplies, amendments in GSTR-7 & GSTR-08, mandatory reporting of HSN/SAC codes, IMS system for tracking ITC, improved ITC reconciliation mechanisms, simplified compliance procedures etc. demonstrate the government’s efforts & sincerity to balance enforcement with taxpayers facilitation to ease of doing business.
As the system matures, the focus should shift towards greater predictability, transparency, responsibility and ease of compliance to fully realize GST’s potential as business – friendly tax regime. The GST is role based and taxpayers & tax authorities are main stakeholders in this tax regime. The GST is not all about paying tax or filing tax returns, but timely compliance is equally important for all taxpayers.
Hamid H. Ganai, designated All India Master Trainer in GST, is presently working as State Taxes Officer in J&K State Taxes Department.
