The Goods and Services Tax Network (GSTN) and the Central Board of Indirect Taxes and Customs (CBIC) have recently issued several advisories and notifications, introducing significant changes in GST compliance. Here’s a detailed analysis of the latest updates that taxpayers need to be aware of:
1. Mandatory Mentioning of HSN Codes in GSTR-1 & GSTR-1A
Following the successful implementation of Phase-I and Phase-II, Phase-III of Table 12 in GSTR-1 & GSTR-1A has been implemented from the January 2025 return period.
Comparison Before and After the Amendment:
| Criteria | Before Amendment | After Amendment (Effective Jan 2025) |
|---|---|---|
| HSN Code Entry | Manual | Dropdown selection |
| Classification | No segregation | Segregated into B2B & B2C |
| Error Handling | No validation | Warning messages for errors |
Impact: These changes aim to improve accuracy and ease of compliance for taxpayers by ensuring correct reporting of HSN codes.
2. E-Way Bill (EWB) for Gold in Kerala
Effective January 20, 2025, a new option to generate EWB for gold has been introduced in Kerala for goods under Chapter 71 (excluding Imitation Jewellery – HSN 7117).
Key Highlights:
Scope: Applicable only for intrastate movement within Kerala.
Imitation Jewellery (HSN 7117): EWB generation for these items will continue under the existing system.
Impact: This initiative enhances tracking of gold movement within Kerala.
3. Locking of Auto-Populated Liability in GSTR-3B
GSTN had initially planned to restrict the editing of auto-populated liabilities in GSTR-3B from January 2025. However, based on requests from the trade community, this restriction has been deferred for now.
What’s Next?
The change will be introduced soon.
Taxpayers are advised to prepare for this transition and align their systems accordingly.
4. Amendments to CGST Rules – Notification No. 07/2025
CBIC has introduced Rule 16A, which allows the grant of a Temporary Identification Number (TIN) for individuals not liable for GST registration but required to make payments under the Act.
Significance:
Enables non-registered persons to comply with GST obligations efficiently.
5. Changes in GST Rates for Hotel Accommodation – Notification No. 05/2025
Comparison of GST Rates Before and After:
| Criteria | Before Amendment | After Amendment (Effective April 1, 2025) |
| Definition of Declared Tariff | Present | Removed |
| Accommodation Above ₹7,500 | 18% GST | 18% GST with ITC |
| Lower Tariff Hotels | 5% GST | 5% GST without ITC |
| Restaurant Services in Hotels | Fixed rate | 18% with ITC option |
Impact: Standardizes tax calculation for hotel stays, eliminating ambiguities related to declared tariff.
6. Forward Charge Mechanism for Sponsorship Services
CBIC’s Notification No. 07/2025 brings sponsorship services provided by body corporates under the Forward Charge Mechanism.
Impact: Businesses receiving sponsorship services must pay GST directly instead of relying on the reverse charge mechanism.
7. Place of Supply for Online Services to Unregistered Persons
Circular No. 242/36/2024-GST clarifies that:
Suppliers must record the recipient’s state on tax invoices for online services.
Place of supply will be the recipient’s location as per Section 12(2)(b)(i) of IGST Act.
Impact: Ensures proper determination of GST liability, especially for online service providers.
8. GST Treatment of Vouchers
Circular No. 243/37/2024-GST states:
Vouchers are not supplies of goods or services.
Unredeemed vouchers (breakage) are not taxable.
Impact: Provides clarity on tax treatment of vouchers, distinguishing them from taxable transactions.
9. ITC Eligibility for Ex-Works (EXW) Contracts
Circular No. 241/35/2024-GST clarifies that:
Dealers purchasing goods under EXW contracts receive the goods when handed over to the transporter.
ITC is available at this point, aligning with Section 16(2)(b) of CGST Act.
Impact: Provides much-needed clarity to automobile dealers and other businesses operating on EXW terms.
10. High Court & Supreme Court Rulings on ITC and Arrests
Bogus ITC Claims
High Court upheld demand and penalty against a taxpayer for availing ITC on fictitious transactions.
Supreme Court dismissed the appeal, reinforcing the burden of proof on taxpayers.
Delhi HC: Grounds for Arrest Must Be in Writing
W.P. (CRL) No. 3770/2024 mandates that the “grounds of arrest” must be clearly communicated in writing.
Aligns with Supreme Court judgments on transparency in arrests.
Impact: Strengthens accountability and compliance in GST enforcement actions.
The recent GST updates introduce important compliance measures, streamline tax administration, and bring more clarity to taxation rules. Taxpayers should prepare for the upcoming changes, particularly in HSN reporting, auto-populated liabilities in GSTR-3B, jewellery movement in Kerala, and ITC eligibility. Staying updated with these developments will ensure seamless compliance and avoid penalties.
