New GST Changes from 1 October 2025 | NEXT GENT GST 2.0 Update

New GST Changes from 1 October 2025 | NEXT GENT GST 2.0 Update

• Effective Date for New Changes:
• Many new GST changes, notified through Notification No. 16/2025, will become effective from October 1, 2025. These changes were introduced through the Finance Act, 2025.
• Changes in Definitions (Section 2):
  • Local Authority: The definition of “Local Authority” under Section 2(69) has been amended to remove ambiguities.
  • Unique Identification Marking: A new clause, 116, has been added to Section 2, introducing the definition of “Unique Identification Marking”. This refers to a unique, secure, and non-removable digital stamp or mark that will be mandatory for certain notified goods. This is part of a new “Track and Trace” mechanism being introduced in GST. The government will notify which goods this applies to, but it is expected to cover items like sin products and scrap iron.
• Changes Regarding Vouchers (Time of Supply):
  • The provisions defining the time of supply for vouchers in Section 12 (for goods) and Section 13 (for services) have been omitted.
  • Vouchers will now be treated as neither a supply of goods nor a supply of service, which eliminates the need to determine their time of supply and resolves previous confusion.
• Blocked Credit (Section 17(5)) – Retrospective Amendment:
  • To nullify the effect of the Supreme Court’s judgment in the Safari Retreats case, the government has made a retrospective amendment effective from July 1, 2017.
  • In Section 17(5), which deals with blocked Input Tax Credit (ITC), the term “plant and machinery” will be substituted with “plant and machinery”.
  • An explanation has been added to clarify that any reference to “plant and machinery” in any court judgment or order will be treated as a reference to “plant and machinery”. This change is intended to prevent revenue loss for the government.
• Credit Notes (Section 34):
  • It is now mandatory for the recipient of a credit note to reverse their ITC if the supplier reduces their output tax liability.
  • Starting from the October tax period, the Input Management System (IMS) will include a “Pending” option for credit notes. This option will be active for one month, allowing recipients time to verify the details before taking action.
• Three-Year Limit for Filing Old Returns:
  • From November 1, 2025, the GST portal will block the filing of returns that are more than three years old.
  • The portal has provided deadlines for filing pending returns from previous periods (e.g., returns for July 2017 to September 2022).
• Track and Trace Mechanism (New Sections 122B & 148A):
  • Two new sections, 122B and 148A, have been inserted to support the “Track and Trace” mechanism.
  • Section 148A empowers the government to notify the classes of goods or persons to whom this mechanism will apply.
  • Section 122B introduces a penalty clause for non-compliance with the mechanism.
• Schedule III – Retrospective Amendment:
  • A new entry (clause ‘AA’) has been added to Schedule III, also with retrospective effect from July 1, 2017.
  • This entry clarifies that the supply of goods from a warehouse in a Special Economic Zone (SEZ) or Free Trade Warehousing Zone (FTWZ) to any person before clearance for home consumption is considered neither a supply of goods nor a supply of service.
  • No refund will be granted for any tax that was paid on such transactions before this amendment was introduced.
• Other Important Updates:
  • GSTR-9 & 9C Limit: The turnover limit for exemption from filing GSTR-9 (annual return) remains at ₹2 crore for the financial year 2024-25 and subsequent years.
  • GSTR-7 Filing: From the September 2025 tax period, invoice-wise reporting is now mandatory for GSTR-7 filers. Consolidated figures are no longer permitted. Filing is also mandatory even for a nil return.
  • GST Appellate Tribunal: The GST Appellate Tribunal is set to become active, and related forms have been notified.
  • GST Rate Changes: Several GST rates for goods and services were changed effective September 2, 2025. These are detailed in separate notifications, particularly Notification No. 1/2017 for goods, which has been superseded.