Auditor’s Opinion on Financial Statements: ICAI Releases Detailed FAQs and Guidance

Important Tax & Compliance Amendments from 1st November 2025 – GST, Income Tax, PAN, and Aadhaar

(Applicable to GST, Income Tax, PAN–Aadhaar, and Banking Compliance)

Starting 1st November 2025, several important regulatory and procedural updates will take effect across GST, Income Tax, Aadhaar–PAN, and Banking regulations.
These changes are designed to streamline compliance, enhance digital verification, and promote greater transparency within the tax and financial ecosystem.

Let’s take a closer look at the major updates coming into force from this date.

🧾 GST Overhaul: Important Changes Taking Effect from 1st November 2025

1️⃣ New Simplified GST Registration for Small & Low-Risk Businesses

A new simplified GST registration framework will roll out on 1st November 2025, aimed at easing the compliance burden and speeding up the onboarding process for small and low-risk taxpayers.

What’s New:

• Instant approval: Applications from low-risk businesses will be automatically processed within three working days.

• Who can apply: Businesses whose output tax on B2B supplies is below ₹2.5 lakh per month (inclusive of all GST components) can register under this scheme.

• Flexible participation: Taxpayers can join or exit the scheme anytime without restrictions.

• Around 96% of new GST applicants are expected to qualify for this faster, paperless process.

Why It Matters:
The move is set to reduce bureaucracy and manual checks, enabling startups, freelancers, and small enterprises to get GST registration swiftly and focus more on business growth than compliance delays.

2️⃣ Smart Refund System for Zero-Rated Supplies (Based on Risk Profiling)

Starting 1st November 2025, exporters and SEZ suppliers can look forward to faster GST refunds under a newly introduced risk-based provisional refund mechanism. The move is aimed at improving liquidity and reducing refund delays while keeping a close eye on compliance risks.

Here’s How It Works:

• Under the revised Rule 91(2) of the CGST Rules, up to 90% of the refund amount will be released provisionally after a system-driven risk check.

• Refunds will only be held back in exceptional cases where a deeper review is needed.

• The government may notify certain high-risk categories that won’t qualify for this automatic process.

Why It Matters:
This update promises a smoother refund experience for exporters and SEZ units — helping them maintain better cash flow and focus on business operations, while the system continues to ensure data-backed risk monitoring.

3️⃣ Faster Refunds for Inverted Duty Structure (IDS) Cases

To provide relief to manufacturers and traders struggling with input tax credit accumulation, the government is introducing provisional refunds for cases under the Inverted Duty Structure (IDS) — a long-awaited reform effective from 1st November 2025.

What’s Changing:

• The CBIC will soon issue instructions allowing 90% of eligible refunds to be released provisionally, based on a risk assessment framework.

• This new process will operate similarly to the zero-rated refund mechanism, ensuring faster processing and reduced delays.

• A formal amendment to the CGST Act is expected to follow, solidifying the provision.

Why It Matters:
This change will bring much-needed cash flow support to manufacturers and sectors where input taxes outweigh output liability, helping them manage liquidity better and ease working capital pressure

4️⃣ Three-Year Deadline Introduced for Filing Pending GST Returns

Beginning 1st November 2025, taxpayers will face a strict three-year time limit for filing any pending GST returns. This change, introduced through the Finance Act, 2023 and implemented via Notification No. 28/2023, aims to bring more discipline and finality to GST compliance.

What’s Changing:
After three years from the original due date, taxpayers will no longer be able to file or revise the following GST returns on the portal:

• GSTR-1, IFF – Outward supplies

• GSTR-3B – Summary return

• GSTR-4 – For composition taxpayers

• GSTR-5 / 5A – For non-residents and OIDAR services

• GSTR-6 – Input Service Distributors

• GSTR-7 / 8 – TDS/TCS returns

• GSTR-9 & 9C – Annual return and reconciliation statement

Example:
If a return for September 2022 (or any earlier period) is still unfiled, it cannot be submitted after 1st November 2025.

Why It Matters:
Businesses with old or pending filings should immediately reconcile records and complete submissions before the deadline. Missing this window could result in permanent blocking of return filing and potential non-compliance issues.

5️⃣ New “Pending” Option for Credit Notes in the GST Invoice Management System (IMS)

To make GST reconciliation smoother and minimize supplier–recipient disputes, a new “Pending” status has been added to the Invoice Management System (IMS) on the GST portal.

What’s New:

• Taxpayers can now mark Credit Notes as “Pending” for a specific tax period, giving them more flexibility in managing input tax credit (ITC) reversals.

• Once the credit note is accepted, taxpayers can update or revise the ITC reversal accordingly.

• This update is designed to reduce timing mismatches and disagreements between buyers and suppliers during return filing.

Why It Matters:
The new option gives businesses greater control and transparency over how credit notes and ITC adjustments are handled — resulting in fewer reconciliation errors and smoother compliance management.

6️⃣ Annual GST Return (GSTR-9 & 9C) Enabled for FY 2024–25

The GST portal has now activated GSTR-9 and GSTR-9C filing for the financial year 2024–25. Taxpayers can begin preparing their annual returns and reconciliation statements for submission.

Key Details:

• Forms Enabled: GSTR-9 (Annual Return) and GSTR-9C (Reconciliation Statement)

• Due Date: 30th November 2025 — also the final date to claim Input Tax Credit (ITC) for FY 2024–25.

Why It Matters:
Businesses should start reconciling purchase data, invoices, and ITC records early to ensure accurate filing. Submitting before the deadline helps avoid ITC loss and ensures error-free compliance for the year.

💼 Key Income Tax & Corporate Compliance Deadlines Ahead

Although no fresh Income Tax amendments take effect from 1st November 2025, this period continues to be a crucial compliance window for taxpayers, businesses, and corporate entities. Multiple statutory filings and reporting obligations converge during the last quarter of the calendar year.

Important Upcoming Deadlines:

• 📅 31st October 2025 –
  • Submission of Tax Audit Reports (Form 3CA/3CB–3CD)
  • Income Tax Returns for companies and audited taxpayers (including partners of audited firms)
  • TDS Returns for Quarter 2 (July–September 2025)
  • Director KYC through DIR-3 KYC / DIR-3 KYC-WEB

• 📆 30th November 2025 – Filing of Transfer Pricing Report (Form 3CEB)

• 💸 15th December 2025 – Payment of the third instalment of Advance Tax

• 🧾 31st December 2025 – MCA Annual Filings – AOC-4 and MGT-7/7A for submission of financial statements and annual returns

Takeaway:
As this period overlaps with GST rule changes and digital compliance reforms, businesses should coordinate tax audits, TDS submissions, and ROC filings in advance. Maintaining consistency across Income Tax, GST, and MCA disclosures helps avoid mismatches, penalties, and last-minute stress.

🪪 Updates on Aadhaar, PAN, and KYC Compliance

As regulatory bodies move toward stronger digital identity verification, several new updates related to Aadhaar, PAN, and KYC procedures will shape compliance practices in the coming months.

📘 Aadhaar Policy Changes

The UIDAI has introduced a refreshed policy for updating Aadhaar information to maintain the accuracy of demographic and biometric data:

• Individuals are now advised to review and update their Aadhaar details every 10 years to ensure their information stays current.

• Both biometric and demographic corrections can be made periodically through authorized service centers.

• Children’s Aadhaar records can be updated free of charge when they reach the ages of 5 and 15.

🧾 PAN–Aadhaar Integration

• The deadline to link PAN with Aadhaar has been set for 31st December 2025.

• Any PAN left unlinked after the cut-off will be temporarily deactivated, restricting access to ITR filing, banking, and investment transactions until the linkage is completed.

💳 KYC Framework Enhancements

• Financial institutions have been directed to implement live Aadhaar-based KYC authentication for faster and more secure identity validation.

• High-value accounts will undergo stricter and more frequent verification cycles to help detect and prevent financial irregularities.

In Short:
Keeping your Aadhaar, PAN, and KYC records up to date is now more critical than ever — delays or mismatches can disrupt essential banking and tax-related activities.

🏦 Upcoming Banking Regulation Updates – Effective Around November 2025

The banking sector is set to roll out a series of compliance and verification updates aimed at improving transparency, reducing fraud, and strengthening digital security.

💰 Stricter Monitoring of High-Value Transactions

Banks will now conduct enhanced checks on large cash and digital transactions, ensuring that every high-value payment or deposit is verified through Aadhaar and PAN.

🧾 Mandatory KYC Re-Verification for Dormant Accounts

Accounts that have remained inactive for over two years will soon require fresh KYC verification before reactivation. This move is intended to prevent misuse of dormant accounts and ensure updated customer records.

⚙️ Digital, Consent-Based Onboarding

A new framework for paperless, consent-driven account opening will be introduced to simplify customer onboarding while maintaining robust data security and compliance with privacy norms.

💳 Revised Credit Card and UPI Linking Rules

Banks and payment platforms will be required to validate PAN details for all credit card and UPI-linked accounts, tightening identity verification and reducing the risk of fraudulent transactions.

Takeaway:
These measures reflect a broader push toward secure, transparent, and digitally integrated banking, aligning financial systems with India’s evolving regulatory and compliance ecosystem.

📅 Mandatory Deadlines – Ensure Completion by 31st October 2025

The period from October to December marks one of the busiest compliance seasons for businesses, professionals, and taxpayers. With GST, Income Tax, and MCA filings due, several key deadlines are approaching.

Check out the full list of upcoming statutory due dates to ensure timely compliance and avoid penalties-

GSTR-3B Filing Deadline – 25th October 2025

Who should file: All regular GST-registered taxpayers
What it is: GSTR-3B is a monthly return summarizing sales, purchases, and taxes paid.
Due date: 25th October 2025 (monthly filers)
For QRMP taxpayers, this is the due date for the July–September quarter.
📌 Penalty for delay: Late fee plus 18% annual interest on tax due.

📅 31st October 2025 – Key Statutory Compliance Deadlines

The end of October brings several critical regulatory filings under both Income Tax and MCA frameworks. Completing these on time is vital to stay compliant and avoid penalties or interest.

🧾 a. Tax Audit Report (Form 3CA/3CB-3CD)

Applicable to: Businesses and professionals who come under Section 44AB of the Income Tax Act.
Summary: Entities covered by tax audit provisions must upload their Tax Audit Report electronically to the Income Tax portal by 31st October 2025.

💻 b. Income Tax Return – Companies

Applicable to: Every registered company, regardless of whether it shows profit, loss, or no income.
Summary: The Income Tax Return (Form ITR-6) for companies not engaged in transfer pricing transactions must be submitted by 31st October 2025.

👨‍💼 c. Income Tax Return – Audited Entities & Partners

Applicable to: Taxpayers whose accounts are subject to audit under Section 44AB, along with their partners.
Summary: Such assessees are required to file their ITRs no later than 31st October 2025.

💸 d. TDS Returns – Quarter 2 (July to September 2025)

Applicable to: All persons or entities responsible for deducting tax at source (TDS).
Summary: TDS statements for the second quarter, including Forms 24Q, 26Q, and 27Q, must be filed by 31st October 2025.

🪪 e. DIR-3 KYC / DIR-3 KYC-WEB

Applicable to: Every individual who holds a Director Identification Number (DIN).
Summary: The last date to complete KYC verification through DIR-3 KYC or DIR-3 KYC-WEB without paying a ₹5,000 penalty is 31st October 2025 (as per the extended deadline).

📌 Note: Missing these filings may attract interest, late fees, or penalties, and for directors, even temporary disqualification under MCA rules.

30th November 2025 – Submission of Chartered Accountant–Certified TP Report

Who it applies to: Entities that have entered into cross-border or specified domestic dealings with their associated enterprises.

What’s required:
Taxpayers falling under the provisions of Section 92E must electronically file Form 3CEB, which needs to be verified and attested by a Chartered Accountant, no later than 30th November 2025.

This date holds significant importance for multinational corporations and related group entities involved in inter-company transactions.

15th December 2025 – Key Date for Advance Tax (3rd Instalment)

Applicability: All taxpayers required to pay advance tax, i.e., those whose total tax liability exceeds ₹10,000 in a financial year.

Details:
By 15th December 2025, taxpayers must ensure that at least 75% of their total estimated tax liability is paid as the third instalment of advance tax.
Failure to pay the required amount may lead to interest charges under Sections 234B and 234C of the Income Tax Act.

💡 Tip: Keep track of your income and tax projections throughout the year to adjust advance tax payments in time and avoid last-minute shortfalls or penalties

31st December 2025 – Critical MCA Compliance: ROC Annual Filings Due

The close of the calendar year brings important company filing obligations under the Companies Act, 2013. All companies are required to complete their annual submissions with the Registrar of Companies (ROC) by this date.

🏢 a. Form AOC-4 – Filing of Financial Statements

Every company must submit its audited financial statements along with the Board’s Report in Form AOC-4 to the ROC within the prescribed timeline.

🧾 b. Form MGT-7 / MGT-7A – Filing of Annual Return

All companies are required to file their Annual Return providing details of shareholders, directors, and other statutory disclosures.
Small companies and One Person Companies (OPCs) must use Form MGT-7A, while all others file Form MGT-7.

📌 Filing Deadline: 31st December 2025, assuming the company’s Annual General Meeting (AGM) was held on or before 30th September 2025.

Filing of GSTR-9 and GSTR-9C for FY 2024-25 is now available on the GST Portal

✅ Recent Update

GSTR-9 (Annual Return) and GSTR-9C (Reconciliation Statement) for FY 2024-25 are now available on the GST Portal.

Taxpayers can now file their annual returns and reconciliation statements in line with the updated formats and instructions, which reflect the recent amendments in GST rules and legislation.

The deadline to file both forms, unless an extension is announced, is 31st December 2025.

🆕 GSTR-9 & 9C: Key Modifications for FY 2024-25

The revised forms include multiple updates based on recent amendments and notifications. Let’s go through them step by step:

1️⃣ Enhanced ITC Reporting and Reversal Requirements

• Taxpayers are now required to submit more detailed information regarding Input Tax Credit (ITC).
• Reversals must be reported separately as per Rules 37, 37A, 38, 42, and 43.

This is intended to enhance reconciliation accuracy and ensure proper tracking of ITC.
👉 Tip: Before submitting, thoroughly check reversal entries, reclaimed credits, and auto-filled data.

2️⃣ New Fields for Import and Transitional Credit Reporting

• New fields have been introduced for reporting import-related ITC and transitional credits.
• This promotes greater transparency for businesses importing goods or transferring credits from previous tax regimes.
  👉 Tip: Match your import details with the ICEGATE system and verify accuracy before submission.

3️⃣ Auto-Population of Data and Mismatch Handling

• The updated forms automatically fetch data from GSTR-1, GSTR-3B, and GSTR-2B.

Several fields will be prefilled to minimize manual mistakes.
However, taxpayers should carefully verify and reconcile all details, as discrepancies may trigger future audits.

👉 Tip: Ensure sales, ITC, and outward supply figures are fully reconciled before filing.

4️⃣Late Fee and Interest Reporting Standardized

• The revised guidelines mandate clear disclosure of any late fees or interest due under Section 47(2).
• All filing delays must be reported transparently in the prescribed form.

👉 Tip: Do not use back-dated entries — ensure the actual delay period and corresponding charges are reported accurately.

5️⃣New Instructions with Relevant Rule References

• The instructions for both GSTR-9 and GSTR-9C have been revised to enhance clarity and ease of understanding.
• Table references and compliance logic have been simplified to minimize errors in interpretation

👉 Tip: Review the updated instruction sheet before beginning the filing process.

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)

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

 No 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.

 GSTR-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.

  New Options for Credit Note Handling Effective October 2025

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.

⚠️ Beyond the Investment: What Startup Fundraising Really Costs You

The Real Price of Raising Capital for Startups

Securing capital marks a defining milestone in every startup’s growth path. While attention often gravitates toward the headline valuation and total funds raised, it’s equally important to understand the actual cost of reaching that milestone.

Recognising these expenses isn’t merely about accounting accuracy — it’s about empowering founders to make informed financial and strategic choices.

Each phase of fundraising comes with its own financial commitments, and these must be anticipated well in advance. The reality is that many of these costs are borne by the startup, whether or not the deal eventually materialises. Proper planning helps safeguard liquidity and ensures the company remains financially stable throughout the fundraising journey.

Key Insight

Raising money can be expensive — and if unmanaged, these costs can quietly consume a notable portion of the very funds you aim to secure.

Expenses such as advisory retainers, legal and diligence fees, marketing costs, and months of lost operating focus can add up quickly. Without careful management, these can strain working capital and delay business progress.

Startup Fundraising Expenses

So, what exactly should founders plan and budget for? Let’s break it down.

1. Upfront Advisory Fees and Retainers

The first expense comes from hiring external experts — placement agents, venture advisors, or fundraising consultants. These professionals often charge monthly retainers to structure your raise, prepare materials, and coordinate investor outreach.

As of 2025, retainers generally range between £2,000 and £10,000 per month, lasting up to a year for larger rounds. Additionally, one-time engagement fees of 2%–5% of the fundraising target are often included.

💡 Tip: Always request a clear deliverables list — such as investor meetings or valuation reports — tied directly to any advance payments. Transparency ensures accountability and value.

2. Success Fees or Commissions

Nearly all intermediaries charge a success-based commission, usually between 3%–7% of total funds raised. On a £1 million round, a 5% fee means £50,000 payable upon closing.

Check whether the commission applies to gross commitments or the net received after deductions, and confirm whether it’s due on signing or on fund transfer.

3. Legal & Advisory Costs

Legal counsel is essential for drafting, reviewing, and negotiating term sheets. Expect to spend between £5,000 and £20,000 depending on deal complexity.

In some cases, investors may ask startups to cover a portion of their legal expenses — adding another £10,000 to £30,000. While cutting corners may seem tempting, solid legal advice protects against future liabilities.

4. Due Diligence Expenses

Investors conduct due diligence covering financial audits, IP verification, and compliance checks. While investors lead the process, startups often pay for supporting reports — ranging from £2,000 to £10,000.

Typical reimbursable costs include accounting verification, IP audits, and secure data room setup for document sharing.

5. Marketing & Investor Material Costs

A strong pitch requires professional storytelling. External support for pitch decks, videos, and financial models can cost:

• Deck design: £1,000–£5,000

• Investor video: £2,000–£10,000

• Financial modelling: £1,000–£5,000

Though optional, polished materials can increase investor engagement by 20–30%.

6. Travel & Investor Meetings

Despite digital tools, many investors prefer in-person meetings. Factor in £1,000–£5,000 for travel, accommodation, and event participation.

7. Time & Opportunity Costs

Fundraising can take 3–9 months — time the founder could otherwise spend on customers or product development. This hidden cost often outweighs direct expenses and must be acknowledged in strategic planning.

8. Post-Funding Obligations

Even after funding closes, administrative and investor management costs persist — such as board meetings, statutory filings, and audit requirements. These recurring commitments should be part of your long-term forecast.

Budgeting Smartly for Fundraising

• List every cost: Treat fundraising as its own project with a detailed budget.

• Demand transparency: Get written confirmation of all fees and conditions from intermediaries.

• Negotiate structure: See if retainers can be adjusted against final fees or legal costs capped.

• Add a buffer: Always include a 10–20% contingency for unforeseen expenses.

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:

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:

New Functionality for Invoice-wise Reporting Now Available on GST Portal

Date: 26th September 2025

The Goods and Services Tax Network (GSTN) has notified that the invoice-wise reporting functionality in Form GSTR-7 is now live on the GST portal. This update is in line with Notification No. 09/2025 – Central Tax dated 11th February 2025, which amended Form GSTR-7 to enable capture of invoice-wise reporting of Tax Deducted at Source (TDS) under GST.

 What is Form GSTR-7?

Form GSTR-7 is a monthly return filed by TDS deductors under GST. It contains details of:

• GST deducted at source on payments made to suppliers,
• The TDS liability payable and paid, and
• Details of TDS deducted available for suppliers to claim in their Electronic Cash Ledger.

Until now, the reporting in GSTR-7 was summary-based, i.e., deductors provided consolidated details of TDS.

What Has Changed?

With the amendment and the new functionality:

• Invoice-wise reporting has become mandatory in GSTR-7.
• Deductors will now be required to enter invoice-level details on which TDS has been deducted.
• This ensures greater accuracy, transparency, and easy reconciliation for suppliers.

 Effective Date

• The functionality is operational from the September 2025 tax period.
• This means while filing Form GSTR-7 for September 2025 onwards, deductors must provide invoice-wise reporting.
• The due date for filing GSTR-7 for September 2025 is 10th October 2025.

 What Deductors Should Do

• Collect and prepare invoice-wise data of all payments on which GST TDS has been deducted.
• Ensure proper matching of invoice details with suppliers’ GST invoices.
• Upload invoice-wise TDS details while filing GSTR-7 from September 2025 onwards.

Issues & Grievance Redressal

In case of any technical difficulty in filing, deductors can:

• Raise a grievance through the Self-Service Portal on the GST portal.
• Provide complete details (error screenshots, GSTIN, period, invoice details, etc.) to enable quick resolution by GSTN.

 Key Takeaway

From September 2025 return period onwards, invoice-wise reporting is mandatory in GSTR-7. Deductors must gear up their systems and processes to ensure compliance, as this will bring enhanced transparency and benefit both deductors and suppliers by reducing mismatches in TDS reporting.