Updated Tax Rates Applicable to Individuals, HUFs, Firms, Companies and Co-operative Societies for FY 2025-26 & AY 2026-27

The Income-tax framework for Assessment Years 2025–26 and 2026–27 introduces updated slab rates, surcharge rules, cess applicability, and special concessional regimes for various categories of taxpayers. This consolidated guide provides a structured and up-to-date reference of the tax rates applicable to Individuals, HUFs, AOPs, BOIs, Firms, LLPs, Companies, Co-operative Societies, and Local Authorities. It also summarises key provisions relating to AMT, MAT, rebate under Section 87A, and concessional tax regimes under Sections 115BAC, 115BAA, 115BAB, 115BAD, and 115BAE.
The objective of this document is to offer a clear and reliable snapshot of the statutory tax structure as amended by the Finance Act, 2025.

Tax Rates

1. Individuals (Resident or Non-resident), HUFs, AOPs, BOIs, and Other Artificial Juridical Persons

a. Individuals (Other than Resident Senior or Super Senior Citizens)

Net Income Range AY 2026–27 AY 2025–26
Up to ₹2,50,000 Nil Nil
₹2,50,000 to ₹5,00,000 5% 5%
₹5,00,000 to ₹10,00,000 20% 20%
Above ₹10,00,000 30% 30%

b. Resident Senior Citizens

(60 years or more but less than 80 years during the previous year)

Net Income Range AY 2026–27 AY 2025–26
Up to ₹3,00,000 Nil Nil
₹3,00,000 to ₹5,00,000 5% 5%
₹5,00,000 to ₹10,00,000 20% 20%
Above ₹10,00,000 30% 30%

c. Resident Super Senior Citizens

(80 years or more during the previous year)

Net Income Range AY 2026–27 AY 2025–26
Up to ₹5,00,000 Nil Nil
₹5,00,000 to ₹10,00,000 20% 20%
Above ₹10,00,000 30% 30%

d. Hindu Undivided Family (Including AOPs, BOIs, and Other Artificial Juridical Persons)

Net Income Range AY 2025–26 AY 2024–25
Up to ₹2,50,000 Nil Nil
₹2,50,000 to ₹5,00,000 5% 5%
₹5,00,000 to ₹10,00,000 20% 20%
Above ₹10,00,000 30% 30%

Surcharge

Surcharge is levied on the amount of income tax at the following rates when the total income exceeds the specified thresholds:

Total Income Range Surcharge Rate
₹50 lakh to ₹1 crore 10%
₹1 crore to ₹2 crore 15%
₹2 crore to ₹5 crore 25%
Above ₹5 crore 37%

Important Note:

  1. The higher surcharge rates of 25% and 37% do not apply to:

    • Dividend income

    • Income taxable under Sections 111A, 112, 112A, and 115AD(1)(b)

  2. For such incomes, the maximum surcharge is capped at 15%.

    (3) Surcharge Exemption for Specified Funds

    No surcharge is applicable if the total income of a ‘specified fund’ (as defined under Section 10(4D)) includes income from securities referred to in Section 115AD(1)(a).

    Marginal Relief – Conditions and Application

    Marginal relief is provided so that the increase in tax liability (including surcharge) is not disproportionately higher than the increase in income. It applies as follows:

    1. Income above ₹50 lakh and up to ₹1 crore:
      The tax plus surcharge should not exceed the tax payable on ₹50 lakh by more than the amount by which the income exceeds ₹50 lakh.

    2. Income above ₹1 crore and up to ₹2 crore:
      The combined tax and surcharge cannot be more than the tax payable on ₹1 crore plus the income exceeding ₹1 crore.

    3. Income above ₹2 crore and up to ₹5 crore:
      Total tax liability (tax + surcharge) shall not exceed the tax on ₹2 crore by more than the additional income above ₹2 crore.

    4. Income exceeding ₹5 crore:
      The tax plus surcharge should not go beyond the tax payable on ₹5 crore by more than the income exceeding ₹5 crore.

    b. Health and Education Cess

    A cess of 4% is charged on the total of income-tax plus surcharge.

    Exceptions:

    1. No cess is levied on a specified fund (Section 10(4D)) if its income includes securities income covered under Section 115AD(1)(a).

    2. A resident individual with taxable income up to ₹5,00,000 is eligible for rebate under Section 87A, reducing their income-tax liability (before cess) by 100% of tax or ₹12,500, whichever is lower.

    Alternate Minimum Tax (AMT)

    AMT applies when the regular tax payable is less than 18.5% of the adjusted total income. In such cases, tax is computed at 18.5% of adjusted total income.

    For non-corporate taxpayers who are units in an IFSC and earn solely in foreign exchange, AMT is charged at a reduced rate of 9% (plus applicable cess and surcharge).

    1.1 Special Tax Rates for Individuals, HUFs, AOPs, BOIs, and AJPs

    Section 115BAC offers an optional lower tax rate regime (now the default regime). To opt for this structure, the taxpayer must forego various deductions and exemptions.

    Tax Slabs – Assessment Year 2025–26

    Net Income Tax Rate
    Up to ₹3,00,000 Nil
    ₹3,00,001 – ₹7,00,000 5%
    ₹7,00,001 – ₹10,00,000 10%
    ₹10,00,001 – ₹12,00,000 15%
    ₹12,00,001 – ₹15,00,000 20%
    Above ₹15,00,000 30%

    Tax Slabs – Assessment Year 2026–27

    Net Income Tax Rate
    Up to ₹4,00,000 Nil
    ₹4,00,001 – ₹8,00,000 5%
    ₹8,00,001 – ₹12,00,000 10%
    ₹12,00,001 – ₹16,00,000 15%
    ₹16,00,001 – ₹20,00,000 20%
    ₹20,00,001 – ₹24,00,000 25%
    Above ₹24,00,000 30%

    Additional Tax Components

    a. Surcharge

    Surcharge is imposed on income-tax based on the total income:

    Income Range Surcharge Rate
    ₹50 lakh – ₹1 crore 10%
    ₹1 crore – ₹2 crore 15%
    ₹2 crore – ₹5 crore 25%
    Above ₹5 crore 37%

    Notes:

    • The 25% surcharge is not applicable to dividend income or incomes taxed under Sections 111A, 112, 112A, and 115AD(1)(b). For such incomes, the surcharge cannot exceed 15%.

    • If an AOP has only corporate members, surcharge is capped at 15%.

    • Specified funds under Section 10(4D) with eligible securities income have no surcharge.

    Marginal Relief under New Regime

    Provided similarly as in the old regime:

    • Ensures tax + surcharge does not exceed tax on the threshold (₹50 lakh / ₹1 crore / ₹2 crore) by more than the excess income above that threshold.

    Health & Education Cess (New Regime)

    A cess of 4% is charged on tax plus surcharge, except when the taxpayer is a specified fund covered under Section 115AD(1)(a).

    Important Notes

    (a) Rebate under Section 87A

    • Up to AY 2025–26:
      Residents opting for Section 115BAC(1A) and having income up to ₹7,00,000 get a rebate up to ₹25,000.

    • From AY 2026–27:
      Rebate increased to ₹60,000 for residents with income up to ₹12,00,000 under Section 115BAC(1A).
      Rebate cannot exceed the actual tax computed.

    (b) Marginal Rebate (AY 2026–27 onwards)

    If income slightly exceeds ₹7 lakh or ₹12 lakh (as applicable), rebate is adjusted (marginal relief) so that:

    • The tax payable does not exceed the amount by which income exceeds the threshold.

    (c) AMT Exemption under New Regime

    Taxpayers opting for the new regime under Section 115BAC(1A) are not subject to AMT provisions.

    2. Partnership Firm

    A partnership firm, including an LLP, is taxed at a flat rate of 30%.

    Add-On Taxes

    (a) Surcharge
    If the total income exceeds ₹1 crore, surcharge is charged at 12% of the income-tax.
    However, marginal relief applies so that the total tax plus surcharge does not exceed the tax payable on ₹1 crore by more than the income above ₹1 crore.

    (b) Health & Education Cess
    A cess of 4% is levied on the total of income-tax plus surcharge.

    Alternate Minimum Tax (AMT)

    AMT applies when the regular tax is less than 18.5% of adjusted total income. In such cases, tax is computed at 18.5% on the adjusted total income.

    For non-company assessees operating as units in an IFSC and earning exclusively in convertible foreign exchange, AMT is reduced to 9% (plus surcharge and cess).

    3. Local Authority

    A local authority is taxable at a 30% rate.

    Add-On Taxes

    (a) Surcharge
    If income exceeds ₹1 crore, surcharge at 12% is applied, subject to marginal relief so that tax plus surcharge does not exceed the tax on ₹1 crore by more than the excess income.

    (b) Health & Education Cess
    Cess at 4% is charged on income-tax plus surcharge.

    Alternate Minimum Tax (AMT)

    AMT applies when regular tax is less than 18.5% of adjusted total income, making 18.5% the effective tax rate.

    For companies located in an IFSC and earning solely in foreign exchange, AMT is 9%.

    4. Domestic Company

    The tax rates for domestic companies for AY 2025–26 and 2026–27 are as follows:

    Category AY 2026–27 AY 2025–26
    Company with turnover ≤ ₹400 crore in the relevant previous year 25% (PY 2023–24) 25% (PY 2022–23)
    Any other domestic company 30% 30%

    Add-On Taxes

    (a) Surcharge

    • 7% if total income > ₹1 crore but ≤ ₹10 crore

    • 12% if income exceeds ₹10 crore
      Subject to marginal relief ensuring:

      • For income between ₹1–10 crore: tax + surcharge ≤ tax on ₹1 crore + excess income

      • For income > ₹10 crore: tax + surcharge ≤ tax on ₹10 crore + excess income

    (b) Health & Education Cess
    Cess at 4% on income-tax plus surcharge.

    Minimum Alternate Tax (MAT)

    MAT applies when normal tax is less than 15% of book profit. Tax is then computed at 15% of book profit.

    For IFSC units earning exclusively in convertible foreign exchange, MAT rate is 9%.

    4.1 Special Tax Rates for Domestic Companies

    Certain concessional corporate tax regimes are available:

    Section Particulars Tax Rate
    115BA Optional scheme for certain manufacturing companies 25%
    115BAA Concessional regime without incentives/deductions 22%
    115BAB For new manufacturing companies satisfying notified conditions 15%

    Surcharge & Cess

    • For 115BAA and 115BAB, surcharge is a flat 10%, regardless of income level.

    • Health & Education Cess applies at 4%.

    MAT Applicability

    • Companies choosing 115BAA or 115BAB are exempt from MAT.

    • MAT continues to apply where 115BA is chosen.

    5. Foreign Company

    Applicable income-tax rates for AY 2025–26 and 2026–27:

    Type of Income Tax Rate
    Royalty or technical service fees per agreements entered within the eligible historical period (with Central Government approval) 50%
    All other income 35%

    Add-On Taxes

    (a) Surcharge

    • 2% when income exceeds ₹1 crore but ≤ ₹10 crore

    • 5% when income exceeds ₹10 crore
      Marginal relief ensures the surcharge does not create a disproportionate tax burden beyond the excess income.

    (b) Health & Education Cess
    4% cess on income-tax plus surcharge.

    Minimum Alternate Tax (MAT)

    MAT is levied at 15% of book profit, unless the foreign company:

    • Has no permanent establishment (PE) in India, or

    • Is taxed under presumptive schemes: Sections 44B, 44BB, 44BBA, 44BBB.

    In such cases, MAT does not apply.

    6. Co-operative Society

    Tax slabs for AY 2025–26 and 2026–27:

    Taxable Income Rate
    Up to ₹10,000 10%
    ₹10,000–₹20,000 20%
    Above ₹20,000 30%

    Add-On Taxes

    (a) Surcharge

    • 7% when income > ₹1 crore but ≤ ₹10 crore

    • 12% when income > ₹10 crore
      Subject to marginal relief.

    (b) Health & Education Cess
    4% on tax plus surcharge.

    Alternate Minimum Tax (AMT)

    AMT at 15% of adjusted total income applies if normal tax is lower.
    For IFSC units earning solely in convertible foreign exchange, AMT is 9%.

    6.1 Optional Tax Regimes for Co-operative Societies

    Co-operatives may opt for concessional regimes subject to eligibility:

    Section Key Conditions Tax Rate
    115BAE New co-op (registered on/after 01-04-2023), engaged in manufacturing, commenced production before 31-03-2024, and does not claim specified deductions 15% (manufacturing income)
    115BAD If the society forgoes specified exemptions/deductions 22%

    Surcharge & Cess

    • Surcharge is 10% flat under both schemes.

    • Health and Education Cess at 4% applies.

    AMT Exemption

    Co-operatives opting for 115BAD or 115BAE are not subject to AMT, and no AMT credit can be computed or carried forward.

Important Update for All Employees! The New Labour Codes 2025 and All Four Revised Labour Laws Are Now in Effect

On 21 November 2025, the Ministry of Labour & Employment announced the long-awaited implementation of all four Labour Codes — a transformative consolidation of 29 Central labour laws into four simplified, modern, and comprehensive Codes:

  1. Code on Wages, 2019
  2. Industrial Relations Code, 2020
  3. Code on Social Security, 2020
  4. Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020

This landmark move modernises India’s labour framework, improves worker protection, simplifies compliance for industries, and aligns India with global labour standards — a major reform supporting Aatmanirbhar Bharat.

 

Why Labour Reforms Were Needed

Most existing labour laws were drafted between 1930 and 1950, when the nature of work, employer–employee relationships, and industry structures were vastly different. Over the years, global economies have consolidated and upgraded their labour laws, but India continued to function under fragmented, outdated, and complex regulations.

Challenges under the old regime included:

  • Multiple registrations and returns
  • Unequal wage protection
  • Limited coverage of PF, ESIC, and social security
  • Restrictions on women’s employment
  • High compliance burden on MSMEs
  • Lack of protection for gig, platform, and fixed-term workers

The new Labour Codes bring a uniform, transparent, and technology-driven labour ecosystem that strengthens both worker welfare and industrial productivity.

Before vs After: Key Transformations Under the Four Labour Codes

The following table summarises the shift from the old system to the new labour regime:

1. Formalisation of Employment

  • Earlier: Appointment letters not mandatory
  • Now: Mandatory written appointment letters for all workers → transparency, job security, formal recognition

2. Social Security Coverage

  • Earlier: Limited coverage; gig/platform workers not recognised
  • Now: PF, ESIC, insurance & other benefits available to all workers, including gig & platform workers

3. Minimum Wages

  • Earlier: Applied only to scheduled industries; many workers excluded
  • Now: Statutory minimum wages for all workers under the Code on Wages

4. Preventive Healthcare

  • Earlier: No mandatory annual check-ups
  • Now: Free annual health check-up for all workers aged 40+

5. Timely Payment of Wages

  • Earlier: No uniform requirement
  • Now: Mandatory timelines for wage payment → enhanced financial stability

6. Women in Workforce

  • Earlier: Restrictions on night shifts and certain occupations
  • Now: Women permitted in all jobs and night shifts with consent & safety measures → equal opportunities

7. ESIC Coverage

  • Earlier: Limited to notified areas & certain industries
  • Now:Pan-India coverage, including:
    • Voluntary for establishments < 10 employees
    • Mandatory for even 1 worker in hazardous units

8. Compliance Burden

  • Earlier: Many licences, separate registrations, multiple returns
  • Now: Single registration, single licence, single return → low compliance burden

Sector-wise Benefits Under the Labour Codes

1. Fixed-Term Employees (FTE)

  • FTEs get all benefits equal to permanent workers
  • Gratuity eligibility after 1 year (instead of 5 years)
  • Equal wages & better protection
  • Encourages direct hiring, reduces contract labour exploitation

2. Gig & Platform Workers

For the first time, the Codes legally define:

  • Gig workers
  • Platform workers
  • Aggregators

Key provisions:

  • Aggregators to contribute 1–2% of annual turnover (capped at 5% of worker payouts)
  • Aadhaar-linked Universal Account Number ensures portability of benefits across states

On 21 November 2025, the Ministry of Labour & Employment officially confirmed that the long-discussed labour law overhaul is now a reality. India has put into force all four new Labour Codes, replacing 29 separate Central labour laws with a unified, updated, and simplified framework. These four Codes are:

  • Wages Code, 2019

  • Industrial Relations Code, 2020

  • Social Security Code, 2020

  • Occupational Safety, Health & Working Conditions Code, 2020

This marks one of the biggest reforms in India’s labour system, aimed at strengthening worker rights, reducing compliance burden for employers, and bringing India’s labour ecosystem in line with international standards—supporting the government’s broader push towards Aatmanirbhar Bharat.

(Click here for the official press release.)

Why Did India Need These New Labour Codes?

For decades, India relied on labour laws written in the early to mid-20th century. These laws were created for an era with different industries, limited technology, and a smaller workforce. As the economy grew, these outdated laws became complex, overlapping, and difficult to comply with.

The old system had several issues:

  • Multiple registrations and numerous return filings

  • Minimum wage inconsistencies across sectors

  • Many workers excluded from PF, ESIC, and social security

  • Restrictions on women’s working hours and roles

  • High compliance costs for small and medium businesses

  • No legal coverage for gig workers, platform workers, or fixed-term employees

By replacing 29 laws with 4 broad codes, the government has created a centralised, transparent, and digitally integrated labour system that benefits both workers and employers.

Before vs After: Key Reforms Under the Labour Codes

1. Job Formalisation

  • Earlier: Appointment letters often not issued

  • Now: Appointment letters are compulsory for all workers → better protection & clarity

2. Wider Social Security Access

  • Earlier: Only workers in certain industries were covered

  • Now: PF, ESIC, maternity and other social security benefits extend to all worker categories, including gig and platform workers

3. Universal Minimum Wage

  • Earlier: Minimum wages applied only to specific scheduled sectors

  • Now: Every worker is entitled to statutory minimum wages

4. Health Benefits

  • Earlier: No rule for regular medical check-ups

  • Now: Annual health check-up is mandatory for workers aged 40+

5. Standard Wage Payment Timelines

  • Earlier: No uniform rule

  • Now: Strict deadlines ensure timely payment of wages

6. More Opportunities for Women

  • Earlier: Women faced restrictions in certain jobs and in night work

  • Now: Women can work across all sectors, including night shifts, with consent and safety measures

7. ESIC for All Regions

  • Earlier: ESIC limited to notified areas

  • Now: ESIC available across the country, including:

    • Voluntary coverage for units with <10 workers

    • Mandatory for hazardous establishments even with 1 worker

8. Simpler Compliance Structure

  • Earlier: Many licences, registrations and separate returns

  • Now: Single registration, single licence, single return → easier compliance for businesses

Who Benefits the Most?

1. Fixed-Term Employees (FTEs)

  • Same benefits as permanent staff

  • Eligible for gratuity after 1 year

  • Equal wages and protections

  • Promotes direct hiring instead of contract labour

2. Gig Workers & Platform Workers

For the first time, these categories are legally recognised.

Key features:

  • Aggregator platforms must contribute 1–2% of turnover to social security (capped at 5% of payouts)

  • Workers get Aadhaar-linked Universal Account Numbers ensuring portability of benefits

3. Contract Workers

  • Contract labour will now receive the same social security and health-related benefits as permanent employees.

  • Annual medical check-ups are compulsory.

  • Fixed-Term Employees (FTEs) become eligible for gratuity after completing just one year.

  • The primary employer is accountable for ensuring contractor workers’ welfare.

4. Women Workers

  • Equal pay for equal work is mandated across sectors.

  • Women can work in night shifts, hazardous environments, mining, and heavy machinery—subject to their consent and adequate safety protocols.

  • The definition of “family” now includes parents-in-law.

  • Every workplace grievance committee must include women representatives.

5. Young Workers

  • Minimum wages are guaranteed for youth entering the workforce.

  • Written appointment letters are compulsory.

  • Wages must be paid even when the worker is on leave.

  • A national floor wage ensures a decent standard of living.

6. MSME Workforce

  • All MSME workers fall under the Social Security Code.

  • Minimum wage protection is universal.

  • Employers must provide drinking water, rest spaces, canteens, and basic safety measures.

  • Working hours, overtime rules, and paid leave are standardised.

  • Timely payment of wages is mandatory.

7. Beedi & Cigar Workers

  • Minimum wages apply to all workers in the sector.

  • Working hours capped at 8–12 hours per day and 48 hours weekly.

  • Overtime must be paid at double the regular wage rate.

  • Workers become eligible for bonus after 30 days of employment.

8. Plantation Workers

  • Fully covered under the OSHWC and Social Security Codes.

  • Applicable to plantations with over 10 workers or 5 hectares+.

  • Mandatory safety training, PPE, and safe working conditions.

  • ESIC benefits extend to workers and their families.

  • Education facilities for workers’ children are required.

9. Audio-Visual & Media Personnel

  • Covers journalists, voice artists, stunt performers, and more.

  • Appointment letters are obligatory.

  • Wages must be paid promptly.

  • Overtime compensation at double wages.

  • Full social security coverage is ensured.

10. Mine Workers

  • Travel-related accidents are treated as employment-related (subject to conditions).

  • National occupational safety standards apply.

  • Annual free medical check-ups for all mine workers.

  • Work hours capped at 8–12 hours/day, 48 hours/week.

11. Workers in Hazardous Industries

  • Free annual medical examinations are compulsory.

  • Uniform national safety guidelines must be followed.

  • Women can be employed even in hazardous roles with safeguards.

  • Safety committees must be set up at every hazardous site.

12. Textile Sector Employees

  • Migrant and permanent workers receive equal wages and welfare benefits.

  • Claims for outstanding dues can be filed up to 3 years.

  • Overtime payments are mandatory at double the wage rate.

13. IT & ITeS Employees

  • Salaries must be credited no later than the 7th of every month.

  • Women are permitted night shifts with adequate protection.

  • Grievances on wages and harassment must be resolved swiftly.

  • Appointment letters and equal pay for equal work are compulsory.

14. Dock Workers

  • Appointment letters required for every worker.

  • PF, pension, and insurance benefits apply to contract and temporary workers as well.

  • Employers must fund annual medical check-ups.

  • Hygiene, welfare, and first-aid facilities are mandatory.

15. Export Industry Workers

  • Fixed-term workers entitled to gratuity, PF, and other social security benefits.

  • Eligible for annual leave after 180 days of service.

  • Timely wage payment is compulsory; overtime paid at double the rate.

  • Women can work night shifts with their consent and safety measures.

Additional Major Reforms Under the Labour Codes

  • Introduction of a National Floor Wage across India.

  • Gender-neutral provisions, including protections for transgender workers.

  • Inspector-cum-Facilitator model promoting support before penalties.

  • Faster dispute settlement through upgraded Industrial Tribunals.

  • One licence and one registration for working condition compliance.

  • National OSH Board for safety standard-setting.

  • Mandatory safety committees for establishments with 500+ workers.

  • Higher factory thresholds to ease compliance for smaller units.

Transitional arrangements ensure that earlier laws will continue until notifications under the new Codes are fully operational.

Impact on India’s Social Security Framework

India’s social security coverage increased from 19% (2015) to 64% (2025). The new Codes further strengthen this by ensuring:

  • Universal and portable social security benefits

  • Protection for gig workers, platform workers, migrant labour, women, and young workers

  • Reduced compliance burden on employers

  • Improved job creation and workforce skilling

Conclusion

The implementation of the four Labour Codes is the most significant labour policy transformation in India’s history. It modernises labour governance, enhances worker rights, simplifies compliance for industries, and prepares the workforce for the demands of a fast-evolving economy. This progressive shift strengthens a worker-centric, youth-focused, gender-equal, and employment-driven ecosystem—accelerating India’s path toward a stronger, future-ready, and self-reliant nation.

GSTN set to suspend GSTIN over this compliance violation

GSTN, on 20 November 2025, issued a new advisory emphasizing that taxpayers must furnish their bank account details in accordance with Rule 10A of the CGST Rules, 2017. This obligation covers all registered persons, excluding TCS/TDS applicants and individuals who were granted GST registration through suo-moto action by the department.

What Does Rule 10A of the CGST Rules Mean?

Rule 10A requires that every GST-registered taxpayer—except a few specified categories—must provide their bank account details within 30 days of obtaining GST registration or before filing their first outward supply return (GSTR-1 or IFF), whichever occurs earlier.

Latest Update Issued on 20 November 2025

GSTN has announced that strict enforcement of Rule 10A will soon be activated on the GST portal.

Important points from the advisory:

✔ Mandatory Submission Timeline

Bank account details must be furnished:

  • Within 30 days of receiving GST registration,
    OR

  • Before filing GSTR-1 or IFF,

whichever condition is met first.

✔ Who Needs to Follow This Requirement?

All GST-registered persons except the following:

  • TDS deductors (under Section 51)

  • TCS collectors (under Section 52)

  • Taxpayers who received GSTIN through suo-moto registration (Section 62)

✔ What Happens If You Don’t Update Your Bank Details?

Failure to comply may result in suspension of the GST registration on the portal.

Possible consequences include:

  • Inability to file GST returns

  • Blocking of e-way bill generation

  • Restriction on making outward supplies

  • Risk of cancellation proceedings

Taxpayers are strongly encouraged to update their bank details promptly to prevent any operational or compliance-related disruptions.

Why Has GSTN Issued This Advisory at This Stage?

GSTN has released this clarification due to a growing number of instances where:

  • GST registrations are obtained without any real business operations

  • GSTINs are created without linking a valid bank account

  • Fake invoices are generated even before verification is completed

  • Refunds are claimed without proper banking trails or genuine transactions

By tightening compliance under Rule 10A, GSTN aims to:

✔ Detect fake invoicing networks at an early stage
✔ Prevent fraudulent or non-genuine registrations
✔ Reduce refund frauds and misuse of input tax credit (ITC)
✔ Strengthen taxpayer verification and system reliability

This measure aligns with the Government’s ongoing efforts to enhance the transparency and credibility of the GST framework.

Penalties and Consequences for Not Complying with Rule 10A

If a taxpayer does not update their bank account details within the prescribed timeline, the following actions may occur:

1️⃣ GST Registration May Be Suspended

Your GSTIN will shift to a “Suspended” status, immediately affecting business operations.

2️⃣ GSTR-1 Filing Will Be Blocked

You won’t be able to report outward supplies, which affects your customers and hampers regular business activity.

3️⃣ E-Way Bill Services Will Be Disabled

Movement of goods gets restricted because the portal blocks e-way bill generation.

4️⃣ Department May Issue Notices

The GST department may initiate cancellation proceedings under Rule 21.

5️⃣ Customers’ ITC May Get Affected

If your registration is suspended, the ITC of your buyers may be blocked, leading to disputes and compliance issues.

How to Update Bank Account Details on the GST Portal (Step-by-Step)

Bank details must be updated through a Non-Core Amendment on the GST Portal.

Step 1: Log In

Visit gst.gov.in and sign in using your credentials.

Step 2: Open the Registration Section

Go to:
Services → Registration → Amendment of Registration (Non-Core Fields)

Step 3: Choose the ‘Bank Accounts’ Tab

Enter the following information:

  • Account holder’s name

  • Account number

  • IFSC code

  • Bank name

  • Supporting proof (cancelled cheque/passbook/bank statement)

Step 4: Upload Proof

Make sure the uploaded document clearly shows:

  • Account number

  • Name of the account holder

  • IFSC code

  • Bank name

Step 5: Verify & Submit

Submit the amendment using DSC or EVC.
An ARN will be generated after submission.
If the details match PAN records and GST data, approval is usually automatic.

Which Documents Are Accepted as Valid Proof?

The GST Portal permits the following documents as proof of bank account details:

  • A cancelled cheque

  • The first page of the bank statement

  • The first page of the passbook

The document must clearly display the account holder’s name, account number, IFSC code, and bank name.

Common FAQs for Taxpayers and Professionals

1️⃣ Can a savings account be used?

Yes. Proprietors may use a savings account, although opening a current account is preferable for business transactions.

2️⃣ Is a joint bank account allowed?

No. The bank account must be solely in the name of the person or entity holding the GST registration.

3️⃣ What if the bank account has not been opened yet?

Open the account and update the information at the earliest. Delays may result in registration suspension.

4️⃣ Can a taxpayer begin business without updating bank details?

No. GSTR-1 filing is blocked until bank account details are added.

5️⃣ What if incorrect bank details were submitted?

You must revise the information through a Non-Core Amendment. Incorrect details can also trigger suspension.

The GSTN advisory issued on 20 November 2025 clearly indicates that providing bank account information under Rule 10A is no longer optional—it is a mandatory compliance requirement directly tied to maintaining an active GST registration.

Taxpayers and practitioners should ensure the details are updated promptly to avoid disruptions.

Revised ITR forms will be released by January 2026.

The Income Tax Department has announced that the new Income Tax Return (ITR) forms and rules will be notified by January 2026 for Financial Year 2025–26 (Assessment Year 2026–27).

CBDT Chairman Ravi Aggarwal has confirmed that these new forms will be simpler, more user-friendly, and easier to file, ensuring that taxpayers and the tax ecosystem get sufficient time to adjust to the updated system.

This advance announcement is a major compliance reform aimed at reducing last-minute rush, errors, and extensions during the filing season.

Why Are the New ITR Forms Being Released Early? (Key Reason)

The Income Tax Department has chosen to issue the upcoming ITR forms much earlier than before for a very specific reason.

Previously, the forms were released late, which led to several recurring problems:

  • Taxpayers didn’t get enough time to understand the updated forms

  • Tax professionals faced excessive workload and frequent delays

  • Software providers struggled to update their systems on time

  • AIS/TIS mismatches surfaced too late in the filing cycle

  • Filing deadlines had to be extended multiple times

  • Late notifications also slowed down return processing and refund issuance

To prevent these year-after-year disruptions, the Government now aims to achieve:

✔ Timely release of forms
✔ Early readiness of the software ecosystem
✔ A smoother filing season
✔ Reduced pressure on taxpayers and professionals
✔ No requirement for deadline extensions

This is the core reason why the new ITR forms are being scheduled for early notification—by January 2026.

What Will Be New in the Upcoming ITR Forms? (Likely Features)

While the final versions of the new ITR forms are still awaited, government updates and recent policy changes indicate that several enhancements are on the way.

1. Simpler and More Compact Formats

  • Considerably reduced manual data entry

  • Fewer supporting documents or annexures

  • Better-organized and clearly defined schedules

  • Instructions written in easy, plain language

2. Enhanced Prefilled Information

The new system is expected to pull data automatically from multiple sources, including:

  • AIS

  • TIS

  • Form 26AS

  • GST data for businesses

  • Capital gains statements from brokers

This expanded prefilled data will minimize mistakes and speed up return filing.

3. Smart, Category-Based ITR Structure

The government may introduce separate streamlined forms designed specifically for:

  • Salaried individuals

  • Small businesses

  • Professionals

  • Senior citizens

  • Taxpayers with capital gains

  • Companies, LLPs, trusts, and other complex entities

4. Better Technology and Automated Error Checks

  • Instant alerts for mismatches

  • Automatic validation before filing

  • Elimination of duplicate entries

  • More seamless coordination with e-verification and refund systems

The decision to notify the new ITR forms by January 2026 represents a major reform in India’s tax administration. The objective is straightforward:
simple forms + early release + a smoother filing season.

With this early announcement, taxpayers, accountants, and software providers get ample time to prepare before the new forms become mandatory from 1 April 2026. This is expected to reduce errors, minimize mismatches, and create a much better filing experience overall.

Why TDS Is Charged on Cash Withdrawals by Banks – Key Rules Explained

The purpose of introducing Section 194N is to curb heavy cash usage and support the shift toward a digital and transparent economy. According to this section, TDS is deducted on cash withdrawals from banks, co-operative banks, or post offices once the total amount goes beyond the set yearly limit. It covers a wide range of taxpayers—individuals, HUFs, businesses, companies, and trusts—so knowing how it works is crucial for compliance.

Where Section 194N Applies
Section 194N is triggered when cash is taken out from a scheduled bank, a co-operative bank, or a post office. TDS is deducted once the total cash withdrawn during the financial year exceeds the allowed limit.

Cash can be withdrawn through:

  • Self cheques

  • Bearer cheques

  • ATM withdrawals

  • Cash taken directly from the bank counter

Online transfers and digital payments are excluded from TDS.

TDS Rates and Limits
The applicable TDS rate depends on whether the taxpayer has filed income tax returns for the past three assessment years.

A. When the individual has filed Income Tax Returns for any of the previous three years

  • No TDS is applied until total cash withdrawals reach ₹1 crore in a financial year.

  • Once this limit is crossed, TDS is charged at 2% on the amount exceeding ₹1 crore.

Example:
If the total cash withdrawn is ₹1.30 crore, TDS @ 2% will apply on ₹30 lakh.

B. When the individual has not filed ITRs for all of the last three years

  • A 2% TDS rate applies on withdrawals above ₹20 lakh up to ₹1 crore.

  • A 5% TDS rate applies on any withdrawal amount beyond ₹1 crore.

Example:
Total withdrawal = ₹1.50 crore

  • 2% on ₹80 lakh (from ₹20 lakh up to ₹1 crore)

  • 5% on ₹50 lakh (amount beyond ₹1 crore)

Entities Exempt From Section 194N

TDS is not deducted on cash withdrawals made by:

  • Central and State Government bodies

  • Banks, co-operative banks, and post offices

  • Business correspondents operating for banks

  • White label ATM operators

  • Any person or class of persons specifically notified by the government

  • Certain commission agents/traders who withdraw cash on behalf of farmers

These exemptions are designed to keep essential services and banking operations running smoothly.

How Section 194N Works in Practice

How banks calculate TDS

  • Banks total all cash withdrawals across every account held by the user.

  • TDS is triggered immediately once the withdrawal crosses the applicable threshold.

  • PAN data is used to determine whether the person is an ITR filer or a non-filer.

  • Banks may request confirmation of ITR filing status to apply the correct rates.

  • The deducted TDS is reflected in Form 26AS or AIS and can be claimed in the income tax return.

Key Examples

Example 1: ITR Filer

Mr. A (who has filed ITRs) makes the following withdrawals:

  • ₹40 lakh

  • ₹35 lakh

  • ₹30 lakh
    Total = ₹1.05 crore
    TDS = 2% on ₹5 lakh = ₹10,000

Example 2: ITR Non-Filer

Ms. B (no ITR filed for 3 years) withdraws ₹55 lakh.
TDS = 2% on (₹55 lakh – ₹20 lakh) = ₹7,00,000

If she withdraws ₹1.40 crore:

  • 2% on ₹80 lakh

  • 5% on ₹40 lakh

Important Compliance Tips for Professionals

  • Make sure clients have filed their ITRs to avoid higher TDS rates.

  • Advise cash-heavy businesses to plan their yearly cash withdrawals carefully.

  • Track withdrawals from every account held in the same bank.

  • Review Section 194N entries in Form 26AS/AIS regularly.

  • Maintain proper records for audit purposes, especially for large cash withdrawals.

  • Remind clients that TDS is not an additional tax—it can be adjusted or refunded in the ITR.

Frequent Errors to Watch Out For

  • Thinking each account has a separate ₹1 crore limit—limits apply per bank, not per account.

  • Assuming TDS is charged only at the end of the year—it applies as soon as the limit is crossed.

  • Misunderstanding the difference between filer and non-filer status.

  • Failing to monitor withdrawals from all branches of the same bank.

  • Believing TDS is a permanent loss—it is actually claimable

 

 

Taxation of GTA Services under GST and Application of RCM

Definition of a GTA

A Goods Transport Agency is defined as a person providing road transport services for goods and issuing a consignment note.
If a transporter does not issue a consignment note, they are not considered a GTA, and their services are not liable to GST.
Thus, independent truck or tempo owners who do not provide consignment notes are typically not classified as GTA.

GST Taxability Framework for GTA Services (Revised up to 22.09.2025)

Tax Structure

Category GST Rate ITC Availability Person Liable to Pay Tax
RCM (Reverse Charge Mechanism) 5% ITC available to the recipient Recipient of service
FCM (Forward Charge Mechanism) 18%* Full ITC allowed GTA
FCM – Optional Concessional Rate 5% No ITC for the GTA GTA

*Prior to 22.09.2025, the applicable rate was 12% with ITC.

Key Points

A GTA must choose the Forward Charge option (18%) every year by submitting Annexure V on the GST portal.
If the GTA wishes to discontinue the option, Annexure VI must be filed; otherwise, the GTA will continue under the default RCM structure (5%).
Once selected, the option remains valid for the entire financial year.

GTA must also include a declaration on invoices when opting for Forward Charge.

Mandatory Invoice Declaration (for Forward Charge)

When a GTA chooses to pay GST under Forward Charge, they must include the declaration as specified in Annexure III of Notification 13/2017, inserted through Notification 5/2022–Central Tax (Rate) dated 13-07-2022 (effective from 18-07-2022).

Declaration:
“I/We have obtained registration under the CGST Act, 2017 and have opted to pay GST on GTA services for transportation of goods under Forward Charge from the Financial Year ______. We have not switched back to the Reverse Charge Mechanism.”

Liability to Pay GST under RCM

GST under the Reverse Charge Mechanism (RCM) becomes payable when the freight charges are borne by any of the following types of recipients:

  • A factory

  • A society

  • A cooperative society

  • A body corporate

  • A GST-registered person

  • A partnership firm or an Association of Persons (AOP)

  • A casual taxable person

If the freight is paid by an unregistered customer, the GTA will need to charge 18% GST under Forward Charge (only if the GTA has opted for FCM).
If the GTA has not opted for Forward Charge, the service continues to be exempt for unregistered recipients as per GTA provisions.

Situations Where RCM Does Not Apply

The Reverse Charge Mechanism (RCM) is not applicable to GTA services when goods are transported by road in a goods carriage to the following entities:

(a) Any department or establishment of the Central Government, State Government, or Union Territory;
(b) Any local authority;
(c) Any governmental agency,

provided that such entities are registered under the CGST Act solely for the purpose of TDS compliance under Section 51, and not for carrying out taxable supplies of goods or services.

Important Note

These services are exempt from GST under Entry 21B of Notification 12/2017, meaning no GST liability arises in such cases.

GTA Service Exemptions

The following categories of transportation services provided by a Goods Transport Agency remain exempt from GST:

  • Transport of agricultural produce

  • Milk, food grains, and salt

  • Organic manure

  • Newspapers

  • Relief or disaster-related materials

  • Defence-related goods transported for the Government

  • GTA services provided to an unregistered individual, including an unregistered casual taxable person

Place of Supply Rules for GTA Services

  • If the recipient is registered: The place of supply is the location of the recipient.

  • If the recipient is unregistered: The place of supply is the location where the goods are handed over to the GTA for transportation.

Key GST update on GSTR-2B and IMS modifications effective from 1st October 2025

Amidst multiple misleading social media posts regarding significant changes to the GST return system from 1st October 2025, the Goods and Services Tax Network (GSTN) has released a key clarification.
This advisory seeks to clear up confusion about the Invoice Management System (IMS) and its effects on GSTR-2B, GSTR-3B, and the auto-population of Input Tax Credit (ITC)

——————————————————————————————————————————————

📌 1️⃣No Modifications to ITC Auto-Population

GSTN has clearly stated that there is no change in the auto-population of Input Tax Credit (ITC) in GST returns.

The process of auto-populating ITC from GSTR-2B to GSTR-3B will function as it always has.
ITC will continue to be auto-filled based on the invoices uploaded by suppliers in their GSTR-1 filings.
The introduction of the Invoice Management System (IMS) does not impact this auto-population process.

👉 In summary: Taxpayers are not required to manually import ITC data — the system will continue fetching it automatically.

📌 2️⃣GSTR-2B Continues to be Auto-Generated Without Manual Input

GSTN has clarified that GSTR-2B will continue to be auto-generated on the 14th of every month, as is currently the case.

There is no need for taxpayers to manually create or trigger GSTR-2B through the Invoice Management System (IMS).
GSTR-2B will remain an auto-drafted statement, reflecting both eligible and ineligible Input Tax Credit (ITC) based on supplier GSTR-1 filings.

That said, the new IMS will provide taxpayers with enhanced flexibility to manage their invoice data.

🧾 Key actions available in IMS:

  • Accept invoices or mark them as pending

  • Act on credit notes

  • View the reconciliation summary

Even after GSTR-2B is generated, taxpayers can continue to take these actions in IMS until GSTR-3B is filed.
If any updates are made — such as accepting or rejecting invoices or credit notes — GSTR-2B can be regenerated accordingly before submission.

👉 Bottom line: The ITC mechanism remains unchanged, but IMS offers greater control and transparency in handling return data.

📌 3️⃣ New Options for Credit Note Handling Effective October 2025

A major enhancement in Credit Note management will take effect with the introduction of the IMS from the October 2025 tax period.

🧾 Key Highlights:

Greater Control for Recipients:
Recipients will now have the option to keep a credit note or related document in a pending state, rather than being required to act on it immediately.

Flexible ITC Reversal:
Upon accepting a credit note, recipients can choose to reverse Input Tax Credit (ITC) only to the extent that it was actually availed.
This allows for manual adjustment, giving taxpayers more control and precision in calculating ITC.

Purpose of the Change:
This flexibility ensures that recipients don’t have to reverse the entire ITC if only a partial credit was claimed initially.
It helps avoid unnecessary credit loss and better reflects real-world business transactions.

💡 Implications for Taxpayers

✅ No additional effort needed — ITC auto-population and GSTR-2B generation continue unchanged.
✅ Increased flexibility — taxpayers can manage invoices and credit notes in IMS even after GSTR-2B is generated.
✅ Precise credit reversal — recipients can partially reverse ITC based on the actual amount availed.
✅ IMS enhances transparency without adding complexity to the filing process.

⚙️ Practical Example

Scenario:
You claimed an Input Tax Credit (ITC) of ₹8,000 on an invoice, but later the supplier issued a credit note for ₹2,000.
Previously, there was uncertainty about whether you needed to reverse the entire amount.

Starting October 2025 under IMS:

  • You can accept the credit note, and

  • Reverse ITC only proportional to the ₹8,000 actually availed — not the full invoice amount.

—————————————————————————————————————————————-

📢 Essential Insights

  • The ITC auto-population process remains unchanged.

  • GSTR-2B will continue to be auto-generated on the 14th of each month.

  • IMS introduces flexibility to review, adjust, and regenerate ITC details before filing GSTR-3B.

  • Credit Note management is enhanced — enabling proportionate ITC reversal and the option to keep notes pending.

—————————————————————————————————————————————

🧮 In Conclusion

The GSTN’s latest advisory reassures taxpayers that the core GST return filing process remains the same, despite IMS integration.
IMS is designed to make the process smarter, not harder — by allowing flexibility and transparency in invoice and ITC management.

Taxpayers are advised to continue filing their returns as usual and use the IMS dashboard for better control and reconciliation.

In summary:

“IMS is not a replacement for GST returns — it’s a smarter way to manage them.”

Updated GST Refund Mechanism to Roll Out from October 2025

Instruction No. 06/2025-GST

In the 56th GST Council Meeting (3 Sept 2025), it was decided that refund processing should be risk-based and system-driven, to speed up genuine cases and flag risky ones.

  • Accordingly, Rule 91(2) of CGST Rules 2017 was amended (via Notification 13/2025-CT dated 17 Sept 2025).
  • From now, 90% of refund can be sanctioned provisionally if the case is low-risk as per system evaluation.

New Rule 91(2) — Provisional Refund based on Risk Score

  • The GST system will automatically classify refund applications as “Low Risk” or “High Risk.”
  • For Low-Risk cases:
    • 90% of the claimed refund will be released provisionally by the officer.
    • No detailed scrutiny required before provisional sanction.
  • For High-Risk cases:
    • Refund will not be sanctioned provisionally.
    • The officer will carry out detailed verification as per Rule 92.

Officer’s Discretion — When Refund Can Be Withheld

Even if a refund is marked low-risk, the proper officer may decide not to issue provisional refund in specific cases, but he must:

  • Record written reasons, and
  • Proceed for detailed scrutiny under Rule 92.

📌 Examples:

  • Past refund issues pending in appeal,
  • Previous SCN issued,
  • Cases under prosecution or fraud detection, etc.

Non-Eligible Persons under Section 54(6)

As per Notification 14/2025-CT (17 Sept 2025), certain categories of taxpayers cannot get provisional refund for zero-rated supplies (exporters).
Also, those under prosecution in last 5 years for evasion > ₹2.5 crore are not eligible for provisional refund.

Systemic Restrictions

  • Once provisional refund is sanctioned, it cannot be adjusted or withheld for any demand or recovery under Section 54(10)/(11).
  • If a case has any pending demand or SCN, officer should process refund on final basis instead of provisional.
  • Provisional refund must be avoided where earlier refund matter is sub-judice or under dispute.

Trade Facilitation — Use of Discretion Sparingly

  • The new system is meant to facilitate trade, not to delay refunds.
  • Therefore, the proviso to Rule 91(2) (officer’s power to deny provisional refund) must be used rarely and only with strong justification, not just for routine scrutiny.

Excess Provisional Refund — Recovery Mechanism

  • If after final scrutiny it’s found that excess refund was given provisionally,
    the officer will issue FORM GST RFD-08 (Show Cause Notice) under Section 54 read with Section 73 / 74 / 74A to recover the excess.

Applicability Date

  • Risk-based provisional refund applies to all refund applications filed on or after 1 October 2025.

Extension to Inverted Duty Refunds (IDS)

  • Earlier, 90% provisional refund was only for zero-rated supplies (exports).
  • Now, GST Council recommended to extend this to Inverted Duty Structure (IDS) refunds too.
  • Formal amendment to Section 54(6) will take time (via next Finance Act + State amendments).
  • So, as interim trade facilitation, the Centre allowed 90% provisional refund for IDS cases filed on or after 1 Oct 2025—same process as exports.

Processing Flow (Para 3.1 to 3.4)

Step-wise:

  1. Refund application filed (RFD-01).
  2. Officer issues Acknowledgment RFD-02 or Deficiency Memo RFD-03 within prescribed timeline.
  3. If marked Low Risk → officer issues Provisional Refund = 90%.
  4. If High Risk → detailed scrutiny → final refund only after full examination.
  5. System will guide officer based on risk score from analytics module.

Supervision & Monitoring

  • Commissioners will supervise proper implementation.
  • Chief Commissioners must ensure that these trade facilitation measures are followed in letter and spirit.
  • Feedback / implementation difficulties to be reported to CBIC GST Policy Wing.

Key Takeaways for Taxpayers / Exporters / CA Professionals

  • ⏱ Faster Refunds for low-risk and compliant taxpayers.
  • 🧾 Automated Risk Score – keep returns accurate, timely and consistent to stay in low-risk category.
  • ⚠️ No Provisional Refund if prosecution, pending SCN or appeal.
  • 📋 IDS Refunds also eligible for 90% provisional refund (temporary relief).
  • 🧠 Officers’ discretion limited – must record reasons if they hold back refund.
  • 🧮 Check refund history before filing — pending cases may affect risk score.
Key GST Changes from October 2025 You Should Know | Returns, Credit Notes, IMS & Notices

Several important changes to the GST return ecosystem have been introduced recently and brought live on the GST portal. Together they tighten compliance, increase reliance on system-generated data and the Invoice Management System (IMS), and reduce the scope for late/retroactive corrections. Below is a practical explainer of each change, its implications, and an easy checklist of actions.

 

1) Pending GST returns older than 3 years will be blocked on the portal

GSTN has implemented the statutory three-year bar which prevents filing of GST returns beyond three years from their original due date. This enforcement is being rolled out by tax period and taxpayers are being advised that returns older than three years will become non-fileable on the portal once the validation is active for that tax period. In short: if a return’s due date is more than three years in the past, you will not be able to file it on GSTN once the bar is applied for that tax period.

2) Check your GST portal notices:

Tax authorities are active on older years. In particular, the last date for issuing notices under Section 73 (for certain past years) and Section 74 (for other years involving fraud/intentional evasion) is approaching/has been highlighted for specific years — meaning taxpayers should check portal notices immediately and respond where required. If you have not checked notices for FY 2021-22 (Section 73) or FY 2019-20 (Section 74), you may already have pending show-cause action that requires attention.

 

Check our GST Notice course

3) GSTR-1 → GSTR-3B link tightened: auto-populated 3B / non-editable fields

GSTN has further locked down the relationship between outward supplies reported in GSTR-1 and the summary liabilities reported in GSTR-3B. Values auto-populated from supplier filings will populate GSTR-3B and, for many tables, the taxpayer will not be able to edit those auto-populated figures directly in 3B. Corrections will have to be made via the supplier’s subsequent amendments (or through the prescribed amendment flow), not by free edits in the return. This step is intended to reduce manipulations and mismatches

Practical impact: Buyers must ensure their suppliers file GSTR-1 accurately and on time because once the data feeds into 3B it will be locked. Any mismatch will take longer to correct and could delay or deny ITC until corrected by the supplier.

4) GSTR-2B / IMS: GSTR-2B is now a taxpayer-generated statement via IMS — IMS is central to claiming ITC

The traditional notion of an “auto-generated” GSTR-2B statement is changing: taxpayers will rely more on the Invoice Management System (IMS) to generate and manage the ITC-relevant draft, perform matching, accept/reject invoices, and recompute the ITC position. The IMS now provides a controlled workflow — taxpayers can regenerate GSTR-2B-like reports based on actions taken in IMS rather than passively waiting for a portal report. Because of this, IMS records and actions (accept/reject/mark pending/enter ITC availed) are becoming the authoritative source for ITC claims and reconciliations.

Practical impact: Maintain disciplined IMS practices: reconcile invoices, accept only genuine supplies, and keep IMS comments/evidence. IMS snapshots may become crucial evidence during assessments.

5) Credit notes — recipient reversal of ITC now mandatory in proportion; IMS changes to assist reversal

Where suppliers issue credit notes that reduce taxable value or tax, recipients who have already availed ITC on the original invoice are required to reverse the ITC to the extent it was availed (i.e., reversal only to the extent of ITC actually used; if no ITC was taken, no reversal is needed). IMS has been enhanced to allow recipients to declare the exact ITC availed and reverse only that portion — and suppliers and recipients must coordinate via IMS actions. IMS will reflect amended credit note data and recompute recipients’ ITC accordingly.

Practical impact: Recipients must (a) track ITC availed at invoice level, (b) be ready to reverse only the utilized portion when a credit note is issued, and (c) act promptly on IMS notifications to avoid wrong ITC balances.

6) GSTR-7 (TDS Return) now requires invoice-wise reporting

Form GSTR-7 (the return for tax deductors under TDS provisions of GST) has been updated to require invoice-levelreporting rather than summarized figures. The GSTN portal has enabled invoice-wise filing functionality for GSTR-7 and deductors should prepare invoice-level TDS details for the relevant tax periods. This increase in granularity is meant to improve reconciliation between deductors and suppliers.

Practical impact: TDS deductors (platforms, government departments, etc.) must ensure their systems can provide invoice-level TDS details. Manual or summary reporting is no longer adequate.

Other system & procedural changes you should note

  • Non-editable auto-populated fields in 3B: The move to auto-populate and lock certain tables in GSTR-3B (from supplier GSTR-1 data) increases the importance of first-time accuracy.
  • IMS recordability: IMS now supports comments, pending flags, and better audit trail — use these features to create a defensible record.
  • Partial ITC reversal treatment: If only part of ITC was used, reversal is limited to that used portion; if no ITC was taken on that invoice, no reversal required. This is reflected in IMS logic.

What this means for taxpayers — practical scenarios

Scenario A — You are a buyer who claimed full ITC and supplier issues a credit note later:
You must reverse the ITC equal to the amount you actually availed (not necessarily the full ITC on the invoice) via IMS actions so your GSTR-2B/GSTR-3B position is correct.

Scenario B — You are a supplier and you issued corrected invoices/credit notes:
Your liability reduces in your outward returns, but unless the recipient acts on IMS, their ITC position might not get adjusted automatically. Coordinate via IMS and ensure records are synced.

 

Scenario C — You rely on old, delayed filings to fix mismatches:
With the three-year bar live, you cannot indefinitely rely on belated filings. If certain historical returns become barred, unresolved mismatches may remain and can trigger notices.

Checklist: Immediate steps for businesses & professionals

  1. Reconcile urgently: Reconcile GSTR-1 vs books vs buyer acknowledgements and clear pending mismatches via supplier follow-ups and IMS actions.
  2. Check GST portal notices: Regularly review notices for FY 2019-20 and FY 2021-22 periods, and respond promptly where required.
  3. Use IMS actively: Accept/reject invoices, record ITC availed at invoice level, and keep a log of IMS actions for audit trail.
  4. Prepare for locked 3B fields: Do not rely on being able to edit 3B later — ensure GSTR-1 accuracy and preserve proof of reconciliations.
  5. Plan for credit-note reversals: Track how much ITC you actually used for each invoice; be ready to reverse accordingly.
  6. For TDS deductors (GSTR-7): Ready your systems to capture invoice-level details; review past months’ records to avoid omission.
GST Amendments Coming into Force from 1 October 2025

New GST Rate changes of Various Goods and services are already made effective from 22 September 2025, for which below notifications are issued:

Number Date Subject Download
17/2025-Central Tax (Rate) 17-Sep-2025 Seeks to amend Notification No 17/2017-Central Tax (Rate), dated 28th June, 2017 to implement the recommendations of the 56th GST Council English
हिन्दी
16/2025-Central Tax (Rate) 17-Sep-2025 Seeks to amend Notification No 12/2017-Central Tax (Rate dated 28th June, 2017 to implement the recommendations of the 56th GST Council. English
हिन्दी
15/2025-Central Tax (Rate) 17-Sep-2025 Seeks to amend Notification No 11/2017 – Central Tax (Rate) dated 28th June, 2017 to implement the recommendations of the 56th GST Council. English
हिन्दी
14/2025-Central Tax (Rate) 17-Sep-2025 Seeks to notify GST rate for bricks. English
हिन्दी
13/2025-Central Tax (Rate) 17-Sep-2025 Seeks to amend Notification No. 21/2018- Central Tax (Rate) dated 26.07.2018. English
हिन्दी
12/2025-Central Tax (Rate) 17-Sep-2025 Seeks to amend Notification No. 8/2018- Central Tax (Rate) dated 25.01.2018. English
हिन्दी
11/2025-Central Tax (Rate) 17-Sep-2025 Seeks to amend Notification No. 3/2017- Central Tax (Rate) dated 28.06.2017. English
हिन्दी
10/2025-Central Tax (Rate) 17-Sep-2025 Seeks to supersede Notification No. 2/2017- Central Tax (Rate) dated 28.06.2017. English
हिन्दी
Corrigendum 18-Sep-2025 Corrigendum to Notification No. 10/2025 – Central Tax (Rate) dated 17.09.2025 हिन्दी
09/2025-Central Tax (Rate) 17-Sep-2025 Seeks to supersede Notification No. 1/2017- Central Tax (Rate) dated 28.06.2017. English
हिन्दी

Now from 1st October 2025 below more changes are going to be applicable:

The Finance Act, 2025 introduced several amendments in the GST law. The Government has notified that certain sections will be brought into effect from 1 October 2025 through Notification No. 16/2025–Central Tax dated 17 September 2025. Along with this, GSTN has rolled out some major changes in the return filing system and compliance framework.

Activation of Finance Act, 2025 Provisions

From 1 October 2025, the following provisions of the Finance Act, 2025 will come into force:

New Provisions of FA 2025

  • FA Sec. 121 (ii): This section amends Section 2(69) of the CGST Act, which defines “local authority.” The practical effect is to align the definition with the constitutional usage, which helps avoid any overlap or misinterpretation.
  • FA Sec. 121 (iii): This provision introduces a new definition, Section 2(116A), for “Unique Identification Marking.” This new legal basis is crucial for the upcoming “track & trace” regime for goods.
  • FA Sec. 122 & 123: These sections completely omit Section 12(4) and Section 13(4), which previously governed the time of supply for vouchers. This means that the supply of vouchers is now subject to the general time-of-supply rules, simplifying compliance and aligning with global GST practices.
  • FA Sec. 124: This amendment retrospectively changes the wording in Section 17(5)(d) from “plant or machinery” to “plant and machinery.” The purpose of this change is to retroactively nullify the Supreme Court’s order in the Safari Retreat Case, clarifying the scope of what is covered.
  • FA Sec. 126: Amendments to Section 34 aim to streamline reporting by introducing changes to the provisions for credit and debit notes. These changes are linked to the new GSTR formats.
  • FA Sec. 127: A new framework is established under Section 38 for the communication of inward supplies, giving legal recognition to auto-drafted statements like GSTR-2B.
  • FA Sec. 128: Changes to the monthly return filing under Section 39 (GSTR-3B) will enable stronger invoice-matching and error correction processes.
  • FA Sec. 129 & 130: Amendment in section 107 & 112 for 10% pre deposit amount requirement
  • FA Sec. 131: After section 122A of the Central Goods and Services Tax Act, the following section shall be inserted, namely:—
  • “122B. Penalty for failure to comply with track and trace mechanism.—Notwithstanding anything contained in this Act, where any person referred to in clause (b) of sub-section (1) of section 148A acts in contravention of the provisions of the said section, he shall, in addition to any penalty under Chapter XV or the provisions of this Chapter, be liable to pay a penalty equal to an amount of one lakh rupees or ten per cent. of the tax payable on such goods, whichever is higher.”.
  • FA Sec.132: Insertion of new section 148A.
    132. After section 148 of the Central Goods and Services Tax Act, the following section shall be inserted, namely:—
    “148A. Track and trace mechanism for certain goods.—(1) The Government may, on the recommendations of the Council, by notification, specify,—
    (a) the goods;
    (b) persons or class of persons who are in possession or deal with such goods,
    to which the provisions of this section shall apply.
    (2) The Government may, in respect of the goods referred to in clause (a) of sub-section (1),—
    (a) provide a system for enabling affixation of unique identification marking and for electronic storage and access of information contained therein, through such persons, as may be prescribed; and
    (b) prescribe the unique identification marking for such goods, including the information to be recorded therein.
    (3) The persons referred to in sub-section (1), shall,—
    (a) affix on the said goods or packages thereof, a unique identification marking, containing such information and in such manner;
    (b) furnish such information and details within such time and maintain such records or documents, in such form and manner;
    (c) furnish details of the machinery installed in the place of business of manufacture of such goods, including the identification, capacity, duration of operation and such other details or information, within such time and in such form and manner;
    (d) pay such amount in relation to the system referred to in sub-section (2),
    as may be prescribed.”.
  • FA Sec. 133 & 134: These sections clarify the refund framework by restricting refunds on warehoused goods in Special Economic Zones (SEZ) and Free Trade Warehousing Zones (FTWZ). This change is intended to tighten compliance and prevent fraudulent refund claims.

Invoice-wise Reporting in GSTR-7 (TDS Return)

  • GSTR-7 has been amended to allow invoice-wise reporting.
  • Starting from the September 2025 return (due on 10 October 2025), deductors must furnish invoice-wise TDS details.
  • This ensures better transparency and easier reconciliation for suppliers and tax authorities.

Action Point: Deductors must collect invoice-wise details and update their systems accordingly.

Three-Year Time Bar on GST Return Filing

  • Returns under Sections 37, 39, 44, and 52 of the CGST Act cannot be filed after three years from their due date.
  • From October 2025 onwards, the GST portal will block filing of such returns.

Example:

  • GSTR-1 or GSTR-3B of September 2022 will become time-barred in October 2025.
  • Annual returns (GSTR-9/9C) for FY 2020-21 will also be time-barred.

Action Point: File all pending returns immediately before the three-year limit expires.

Changes in Invoice Management System (IMS)

GSTN has simplified IMS with effect from October 2025 tax period. Key features include:

  • Records can be kept “pending” for one period in case of amendments or corrections.
  • Taxpayers can declare partial ITC reversal instead of full reversal.
  • Option to save remarks for rejected or pending records, visible to both supplier and recipient.
  • Applicable only for records filed after rollout.

Impact: This will reduce reconciliation disputes and improve clarity in ITC claims.

Other Changes:

Number Date Subject Download
16/2025-Central Tax 17-Sep-2025 Seeks to notify clauses (ii), (iii) of section 121, section 122 to section 124 and section 126 to 134 of Finance Act, 2025 to come into force. English
हिन्दी
15/2025-Central Tax 17-Sep-2025 Seeks to exempt taxpayer with annual turnover less than Rs 2 Crore from filing annual return. English
हिन्दी
14/2025-Central Tax 17-Sep-2025 Seeks to notify category of persons under section 54(6). English
हिन्दी
13/2025-Central Tax 17-Sep-2025 Seeks to notify the Central Goods and Services Tax (Third Amendment) Rules 2025. English
हिन्दी