RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

According to Economic Survey, GDP growth is forecast to be in the range of 6.3% to 6.8% for FY 2026 in the back drop of robust economic fundamentals. India will be the third largest economy in the world in next few years by 2030. Its median age of 28 years is the key driver of the growth. India’s economic prospects for FY 2026 are balanced.

The Budget 2025 session of the Parliament begun on 31st January, 2025 with the address of President of India and tabling of Economic Survey 2024-25.

The Union Finance Minister has presented her 8th consecutive Budget for the year 2025-26 today, 1st February, 2025 in the Parliament and also introduced Finance Bill, 2025 on the Lok Sabha. Along with Budget, a complete set of Budget documents is also presented to the Parliament.

This year’s Budget focuses to accelerate growth, secure inclusive development, enhance private sector investments, uplift household sentiments and enhance spending power of middle class in the country. Its underlying theme is to unlock nation’s potential for prosperity, global positioning and to march forward resolutely.

CBIC has issued many Notifications and Circulars during the last few days to implement the decisions taken recently by the GST Council. Three clarificatory Circulars have also been issued to clarify on taxability / scope / exemption / payment etc in relation to various services and waiver of late fees. Grounds of arrest have also been emphasized to be informed to the person being arrested before the arrest itself. GSTN has also issued various advisories to smoothen up the processes.

GST collection in January, 2025 has grown by 12% to Rs. 1.95 lakh crore which is the second highest in current FY 2024-25 (Rs. 2.10 lakh crore in April, 2024). It is expected that collection for FY 2025 may exceed revised estimates. Domestic collection rose by 10% while GST on imports was up by 20% on YoY basis. Net collection is Rs. 1.72 lakh crore. Total refunds were of Rs. 23.85 crore.

Grant of Temporary Identification Numbers

• CBIC has amended the CGST Rules, 2017 to notify the provision for grant of temporary identification number by tax officers to persons not liable to be registered otherwise.
• New Rule 16A has been inserted to enable GST officers to grant temporary identification number to unregistered persons for making a payment required to be made under the provisions of CGST Act, 2017.
• Form GST REG-12 (Order for grant of Temporary Registration) has been substituted with a new form to incorporate the changes made due to insertion of Rule 16A. The new form shall be used for Order of Grant of Temporary Registration/Suo Moto Registration/ Temporary Identification Number.
• Part A of Form provides details of persons to whom temporary registration is granted and Part B of the form pertains to details of person to whom temporary identification number has been granted.
• This shall come into force from a date to be notified.

(Source: Notification No. 07/2025-CT dated 23.01.2025)

Waiver of late fee for filing Form GSTR 9C

• CBIC has issued notification to waive off the late fee in respect of filing of return u/s 44 of the CGST Act, 2017, i.e., Form GSTR 9C, for the financial years 2017-18 to 2022-23 by waiving off the excess amount of late fee payable u/s 47 till the date of filing of Form GSTR-9 for these years.
• In order to avail the waiver, FORM GSTR-9C for the relevant year must be filed on or before March 31, 2025.
• No refund of late fees already paid for delayed filing of FORM GSTR-9C for such financial years shall be available.

(Source: Notification No. 08/2025-CT dated 23.01.2025)

Clarification on Regularizing Payment of GST on Co-insurance Premium and Re-insurance Commission

• Based on the recommendations of the GST Council in its 53^rd GST meeting held on 22.06.2024, CBIC has issued clarification on regularizing payment of GST on co-insurance premium apportioned by the lead insurer to the co-insurer and on ceding /re-insurance commission deducted from the reinsurance premium paid by the insurer to the reinsurer.
• Following activities or transactions were included in Schedule III of CGST Act, 2017 to be treated neither as a supply of goods nor as a supply of services vide N No. 17/2024 – CT dated 27.09.2024, w.e.f. 01.11.2024 namely:

a) Activity of apportionment of co-insurance premium by the lead insurer to the co-insurer for the insurance services jointly supplied by the lead insurer and the co-insurer to the insured in co-insurance agreements, subject to the condition that the lead insurer pays the applicable CGST/SGST/IGST/UTGST tax on the entire amount of premium paid by the insured.

b) Services by insurer to the reinsurer for which ceding commission or the reinsurance commission is deducted from reinsurance premium paid by the insurer to the reinsurer, subject to the condition that the applicable CGST/SGST/IGST/UTGST tax is paid by the reinsurer on the gross reinsurance premium payable by the insurer to the reinsurer, inclusive of the said ceding commission or the reinsurance commission.

• Accordingly, CBIC has now clarified that the payment of GST on the activities or transactions specified above is regularized for the period 01.07.2017 to 31.10.2024, on ‘as is where is’ basis.

(Source: Circular No. 244/01/2025-GST dated 28.01.2025)

CBIC clarification on taxability of various services

Based on the recommendations of the GST Council in its 55th meeting held on 21st December 2024, CBIC has clarified on taxability / scope / exemption / payment etc in respect of following services:

• Applicability of GST on penal charges being levied by the Regulated Entities (REs) in view of RBI instructions dated 18.08.2023 directing such Regulated Entities (REs) to levy penal charges in place of penal interest.
• Whether GST exemption under Sl. No. 34 of notification No. 12/2017-CTR dated 28.06.2017 is available to payment aggregators in relation to settlement of an amount, up to two thousand rupees in a single transaction, transacted through credit card, debit card, charge card or other payment card services?
• Regularizing payment of GST on research and development services provided by Government Entities against consideration in the form of grants received from Government Entities.
• Regularizing payment of GST on skilling services provided by Training Partners approved by the National Skill Development Corporation.
• Applicability of GST on facility management services provided to Municipal Corporation of Delhi (MCD) Headquarters.
• Whether Delhi Development Authority (DDA) is a local authority as per section 2(69) of the CGST Act, 2017?
• Regularizing payment of GST on Reverse Charge (RCM) basis on renting of commercial property by unregistered person to a registered person for taxpayers registered under composition levy.
• Regularizing payment of GST on certain support services provided by an electricity transmission or distribution utility.
• Regularizing the payment of GST on services provided by M/s Goethe Institute/Max Mueller Bhawans.

 (Source: Circular No. 245/02/2025-GST dated 28.01.2025)

Applicability of late fee for delay in furnishing of Form GSTR-9C

• The CBIC has issued clarification in relation to levy of late fee payable for delay in furnishing of reconciliation statement in FORM GSTR-9C.
• As per section 44 of the CGST Act, 2017 read with Rule 80 of the CGST Rules, 2017 registered persons required to furnish an annual return in FORM GSTR-9 for a financial year shall also furnish along with it, a duly certified or self-certified reconciliation statement in FORM GSTR-9C, which reconciles the value of supplies declared in FORM GSTR-9 furnished for the said financial year with the audited annual financial statement. Reconciliation statement in FORM GSTR-9C is required to be filed only if the aggregate turnover of the said registered person during a financial year exceeds the specified threshold limit.
• Late fee is not separately leviable for delayed furnishing of FORM GSTR-9 and delayed furnishing of FORM GSTR-9C. The late fees is payable for the delay in furnishing of complete annual return under section 44 of the CGST Act, i.e. both FORM GSTR-9 and FORM GSTR-9C.
• Late fee has to be calculated for the period from the due date of furnishing of annual return under section 44 of the CGST Act till the date of furnishing of complete annual return.
• No additional late fee shall be payable for delayed furnishing of FORM GSTR-9C which is in excess of the late fee payable under section 47 upto the date of furnishing FORM GSTR-9 for the financial years up to FY 2022-23.
• Thus, in cases where reconciliation statement in FORM GSTR-9C was required to be furnished along with the return in FORM GSTR-9, but was not furnished so for any financial years upto FY 2022-23, and has been furnished subsequently on or before 31st March, 2025, then no additional late fee shall be payable for delayed furnishing of FORM GSTR-9C which is in excess of the late fee payable under section 47 upto the date of furnishing FORM GSTR-9 for the said financial year.
• No refund shall be admissible in respect of any amount of late fee already paid in respect of delayed furnishing of FORM GSTR-9C for the said financial years.

(Source: Circular No. 246/03/2025-GST dated 30.01.2025)

CBIC cautions on fraudulent practices

• CBIC has issued a caution against fraudsters issuing fake and fraudulent Summons for GST violations. Accordingly, some individuals with fraudulent intent are creating and sending fake summons to the taxpayers who may or may not be under investigation by the Directorate General of GST Intelligence (DGGI), Central Board of Indirect Taxes and Customs (CBIC).
• These fake summons resembles very closely with the original due to use of Department’s logo and Document Identification Number (DIN). But these DIN numbers are fake and are used by the fraudsters to make the document look and feel genuine.
• It has been advised that taxpayers can easily verify the genuineness of any communication (including Summons) issued by any officer of CBIC by using the ‘VERIFY CBIC-DIN’ window on the CBIC’s website https://esanchar.cbic.gov.in/DIN/DINSearch.
• On verifying the DIN, if any individual or taxpayer finds that the Summon/letter/Notice is fake, it may immediately be reported to the office concerned which will enable the competent DGGI / CGST formation to take law enforcement action against the fraudsters for using fake Summons/letter/Notice to dupe the public.
• Reference can also be made to CBIC Circular No. 122/41/2019-GST dated 05th November 2019 regarding generation and quoting of DIN on communications sent by all CBIC officers.

(Source: CBIC PIB Release ID 2095881 dated 24.01.2025)

GSTN advisory on implementation of mandatory HSN Codes in GSTR-1 and GSTR 1A

Phase III of the implementation of HSN Code related changes to GSTR – 1 and GSTR – 1A is being implemented w.e.f. return period of February, 2025 –

• In Phase III for Table 12 of GSTR-1 and GSTR 1A, manual entry of HSN has been replaced with choosing correct HSN from dropdown.
• Table 12 has been bifurcated into two separate tabs for B2B and B2C supplies to report such supplies separately.
• Validations regarding values of the supplies and tax amount involved has also been introduced for both tabs of Table 12 and for initial period these validations have been kept at warning modes, which means that filing of GSTR-1 and 1A would be allowed even on failing of these validations.
• As an enhancement, a downloadable list of HSN and SAC Codes is also available in Table 12 and in the existing button for “Product Name as in My Master”, search option has been enabled.

(Source: GSTN Advisory dated 22.01.2025)

GSTN advisory on Business Continuity for e-invoice / e-way bills

• GSTN has issued an advisory on Business Continuity for e-Invoice and e-Waybill Systems to highlight the alternate mechanisms and business continuity plans available for both the e-Invoice and e-Waybill systems.
• GSTN has suggested that if taxpayer has not integrated these alternate mechanisms into the existing systems or are not currently utilising them, taxpayer may coordinate with it system integrators, IRPs, ERPs, GSPs, or ASPs to enable these redundancies to ensure that these mechanisms are fully operational and accessible when needed.
• This includes:

• Multi IRPs for e-Invoice Reporting – six invoice registration portals (IRPs) are operational.
• Dual Portals for e-Waybill Services
• Unified Authentication Token at NIC-IRP & e-Waybill Portal
• API Interoperability for Seamless Operations

• Actions recommended for taxpayers include:

• Direct API Access: Verify that your systems support cross-portal interoperability for seamless service access.
• Coordination with Service Providers: Engage with your IRP, ERPs, GSPs, or ASPs to ensure alternate mechanisms are enabled and fully integrated into your systems.
• Explore Additional IRPs: In addition to NIC-IRP 1 & 2, other IRPs are also available for use.

• This advisory is aimed to ensure that taxpayers are connected with the necessary backup to maintain seamless operations during any service disruptions.
• Taxpayers may refer to advisory for details.

(Source: GSTN Advisory dated 24.01.2025)

Advisory on deferment of hard-locking of auto-populated liability in GSTR-3B

• GSTN had issued an advisory dated 17.10.2024 in relation to locking of auto-populated liability in GSTR-3B which was to be made applicable from January 2025 tax period, but considering the representations on its implementation, it has been decided that this change of making non-editable of auto-populated liability in GSTR-3B is not to be implemented from January tax period on the GST portal.
• It will now be introduced in near future after due announcement.

(Source: GSTN Advisory dated 27.01.2025 read with Advisory dated 17.10.2024)

LUT Filing Functionality for FY 2025-26 made available on GST Portal

• Option to File LUT for FY 2025-26 is now available for Exporters, GSTN has updated the Portal with a new functionality to file Letter of Undertaking (LUT) for FY 2025-2026.
• An LUT is a declaration filed by exporters in Form GST RFD-11 on the GST portal. The due date to file Form GST RFD-11 on the GST portal for FY 2025-26 is 31.03.2025.
• To file the Letter of Undertaking (LUT) for export of goods or services at the GST Portal, following steps are to be performed:

1. Access the GST Official Portal. The GST Home page is displayed.
2. Login to the GST Portal with valid credentials.
3. Click the Services > User Services > Furnish Letter of Undertaking (LUT) command.
4. Form GST RFD-11 is displayed. Select the financial year for which LUT is applied for from the LUT Applied forFinancial Year drop-down list.
5. Click the Choose File button to upload the previous LUT.
6. Select the declaration checkboxes.
7. In the Name, Address and occupation of the independent and reliable witnesses section, enter the name and address of 2 witnesses.
8. In the Place of Filing LUT field, enter the place.
9. In the Name of Primary/ Other Authorized Signatory drop-down list, select the name of authorized signatory.

• For details, refer to the Advisory.

(Source: GSTN Portal dated 27.01.2025)

Import of services by Establishment of Foreign Airlines

• In terms of Notification No. 8/2024-IT dated 08.10.2024, import of services by an establishment of a foreign airlines company from a related person or any of its establishment outside India, when made without consideration was exempted subject to following conditions:

1. GST at applicable rates is paid by the establishment of the foreign airline company in India on transport of goods and passengers as may be applicable.
2. Ministry of Civil Aviation (MoCA) certifies that the establishment of the foreign company in India is that of an airline company which has been designated by the foreign government under the applicable bilateral air services agreement with India.
3. Ministry of Civil Aviation certifies that on a reciprocal basis, designated Indian airlines are not subject to levy of similar taxes by whatever name called for the same services appearing under the entry, by the Government of the country designating the foreign airline company.

• For second condition, MoCA has provided a list of designated foreign airlines that are currently operating from India as per ongoing Winter 2024-25 schedule.

• For third condition, MoCA has shared comments from Indian carriers.

(Source: CBIC Instructions / Orders-GST [F.No. 190341/12/2025-TRU dated 31.01.2025]

GST collection in January, 2025

• Gross GST collection in January, 2025 has registered revenue of Rs. 1,95,506 crore as against Rs. 1,74,106 crore in January, 2024.
• January, 2025 collection is second highest in FY 2024-25 with highest being in April, 2024 for Rs. 2.10 lakh crore.
• GST collection has grown by 12% in January, 2025 on YoY basis.
• Net GST collection in January, 2025 is Rs. 1,71,653 crore as against Rs. 1,54,851 in January, 2024.
• Refunds in January, 2025 amounted to Rs. 23,853 crore (23.8 %) more on YoY basis.
• GST on imports was Rs. 48,382 crore with 19.8% growth on YoY basis.
• The GST collection growth in double digits in states like J & K, U.P., Sikkim, Arunachal Pradesh, Nagaland, Tripura, Gujarat, Maharashtra, Tamil Nadu and Andhra Pradesh.
• Negative growth is seen in states like Himachal Pradesh and Mizoram.