On economic front, according to MoF, geopolitical tensions, trade policy uncertainties, volatility in international commodity prices and financial market uncertainties pose considerable risks to India’s economic growth in coming year. Global trade continues to be affected by uncertainty in the policy environment.. tariff related developments in multiple countries have heightened trade related risks, affecting investment and trade flows globally.
S&P global, rating agency has lowered India’s growth forecast to 6.5% from earlier 6.7% for FY 2025-26, while World Bank and ADB have retained the same at 6.7 and 6.5 % respectively.
As we enter yet another new financial year 2025-26 w.e.f. 01.04.2025, a lot many changes have been made effective from 01.04.2025 and many more to be notified in due course. Importantly, multi-factor authentication on GST portal and input service distribution need to be mentioned.
The Finance Act, 2025 (as Act No. 7 of 2025) has since been enacted on 29.03.2025 with the assent of President of India. It inter alia, contains changes to Indirect Tax laws. In GST, most of the amendments will be notified separately for implementation. However, few changes like that of input tax credit on plant and machinery have been made effective from retrospective date i.e. 01.07.2017. This amendment has nullified the apex court ruling in Safari Retreats case.
CBIC has issued notification for change in Rule 164 in relation to GST amnesty scheme Circular No. 148 too clarifies few doubts on implementation and benefit of the scheme. A set of FAQs too was released recently on change in tax mechanism for restaurant services from premises situated in hotels. This relate to furnishing if declarations by taxpayers to opt-in or opt-out option for next financial year.
Finance Act, 2025 also provides for a special provision for retrospective exemption from service tax in relation to specific insurance services for agriculture.
The Finance Minister has said in Parliament recently that GST Council through Group of Ministers (GoM) is reviewing a proposal to reduce GST rates on agricultural equipments and farm inputs including tractors, drop irrigation system, fertilizers and pesticides. It may be noted that average GST rate is presently 12.2%, down from 15% in 2017.
In one of the rulings, Supreme Court has dismissed the revenue petitions and allowed taxpayers to rectify clerical errors in tax filings, even after the timelines if there is no loss suffered by the revenue. It opined that right to correct mistakes flows from the right to do business and should not be denied unless there is a good justification.
In yet another related ruling, Delhi High Court has held that restaurants and hotels can not force customers to pay service charges as it is in violation of consumer rights. Service charge is a voluntary payment by the customer and it cannot be made compulsory. It observed that the camouflaged and coercive manner in which service charge is being collected by restaurants shows its unfair nature.
Mr. Ajay Seth has been designated as new Finance Secretary in MoF. He was Secretary of Department of Economic Affairs till now.
GST collection for March, 2025 grew by 9.9% on YoY basis to cross Rs. 1.96 trillion (Rs. 1.96 lakh crore) which only indicates strong business under-current, improved compliances, better tax administration and expanded tax base. For whole of financial year 2024-25, GST collection grew by 9.7 over FY 2024 whereas growth in FY 2024 was 11.7% and in FY 2023 22%
With this issue of newsletter, we have added one new column viz, ‘Indirect Taxes Conner’ to update on other indirect taxes.
What changes in GST from April 1, 2025
Under the GST regime, from 01.04.2025, several key changes in taxation will come into effect in India as the new financial year begins. With this objective in mind, we have prepared list of compliances and checklist which may be referred to wherever applicable:
- Input Service Distribution (ISD) mechanism has been made mandatory and the distribution of ITC of common input services procured from third parties needs to be done from 1st April 2025.
- The GST portal will implement mandatory multi factor authentication (MFA) for taxpayers, enhancing security on common GST portal for generation of E-way bills and e –invoices.
- E-way bills to be generated for documents not older than 180 days.
- With the start of the new financial year, it is advisable to start a new invoice series, unique for the financial year.
Finance Act, 2025
Finance Bill, 2025 has been enacted after the President’s assent on 29.03.2025. The provisions of Finance (No. 7) Act, 2025 in relation to GST are as follows:
|
Section in
Finance (No. 7) Act, 2025
|
Corresponding
Section in CGST Act, 2017
|
Brief Description
|
Effective date
|
|
121
|
2
|
Amendment in definitions in Clause 61(Input service distributor) and 69 and insertion of new clause 116A (Unique Identification Marking)
|
01.04.2025
|
|
122
|
12
|
Omission for time of supply of goods in respect of transaction in vouchers
|
To be notified
|
|
123
|
13
|
Omission for time of supply of services in respect of transaction in vouchers
|
To be notified
|
|
124
|
17
|
Amendment in Clause 5(d) of Section 17 – ITC on plant and machinery
|
01.07.2017
|
|
125
|
20
|
Amendment in relation to Input service distributor provisions
|
01.07.2025
|
|
126
|
34
|
Amendment in Section 34(2) in relation to reversal of Input tax credit
|
To be notified
|
|
127
|
38
|
Amendment in sub-Section 1 and 2 to omit the expression “auto-generated” with respect to statement of Input tax credit
|
To be notified
|
|
128
|
39
|
Amendment in relation to GST returns
|
To be notified
|
|
129
|
107
|
Amendment in relation to reduction in pre-deposit requirement from 25% to 10%
|
To be notified
|
|
130
|
112
|
Amendment in pre-deposit requirement of 10% of the penalty amount for filing an appeal before Appellate Tribunal against an order which involves demand of penalty only
|
To be notified
|
|
131
|
122B
|
Insertion of new Section 122B to provide for penal provisions for contravention of provision relating to track and trace mechanism
|
To be notified
|
|
132
|
148A
|
Insertion of new Section 148A to provide for Track and Trace Mechanism for certain specified commodities
|
To be notified
|
|
133
|
Schedule III
133
|
Insertion of new clause (aa) in paragraph 8 of Scheduled III of CGST Act, 2017
|
01.07.2017
|
|
134
|
No refund shall be made of all such tax which has been collected, but which would not have been so collected, had section 133 been in force at all material times.
|
(Source: Finance Act, 2025)
Amendment in Rule 164 for Amnesty Scheme u/s 128A
- Where notice / order partially covers period under the scheme and other period also, application can be filed after payment of full amount of tax related to the period covered.
- However, no refund in such cases shall be available for any tax, interest or penalty which has already been discharged for the entire period prior to 27.03.2025.
- Application u/s 128A is to be accompanied by documents evidencing withdrawal of appeal or writ petition to establish eligibility.
- Where notice / order includes demand of tax partially for period covered u/s 128A and partly for other period, assessee need not withdraw the appeal but shall intimate the Appellate Authority that the does not wish to pursue appeal for the partially covered period and such Authority shall take note of such request and pass order only for the uncovered period i.e., not covered u/s 128A.
- Such appeal shall be deemed to have been withdrawn to the extent of intimation for the period 01.07.2017 to 31.03.2020 or part thereof.
(Source: Notification No. 11/2025-Central Tax dated 27.03.2025)
Clarifications on GST Amnesty Scheme under Section 128A
Clarification No. 1
- Vide Circular No. 238/32/2024-GST dated 15th October, 2024, it was clarified that any amount paid towards the said demand prior to the date notified under Section 128A(1) i.e. 1st November 2024, shall be considered as payment made towards the amount payable under Section 128A(1), as long as the said amount has been paid prior to 1st November, 2024 and was intended to be paid towards the said demand.
- Rule 164 (1) provides that in order to avail the benefit under section 128A, payments are to be made in FORM GST DRC-03 towards the tax demanded in respect of a notice or a statement mentioned in section 128A (1) (a).
- Rule 164(2) provides that tax payment shall mandatorily be made only by crediting the amount in the electronic liability register against the debit entry created in respect of orders mentioned in clauses (b) and (c) of section 128A(1).
- Any taxpayer who intends to avail the benefit of the said provision on or after the said section comes into force, i.e.1st November 2024 shall be required to make payments necessarily through the modes as prescribed under Rule 164 of the CGST Rules, 2017.
- Thus, it has been clarified that the cases where the payment of tax has been made through FORM GSTR 3B prior to the issuance of demand notice and/or adjudication order before 1st November, 2024, shall also be eligible for benefit under section 128A of the CGST Act, subject to verification by the proper officer.
Clarification No. 2
- Whether (i) the entire amount of tax demanded is required to be discharged and (ii) the appeal is required to be withdrawn for the entire period, where notices/statements/orders issued to taxpayers, pertains to period covered partially under Section 128A and partially by those outside it ?
- In cases where the notice/statement or order etc. pertains to the period partially covered under Section 128A and partially beyond the said period, Rule 164 (4) and proviso to Rule 164(7) have been amended to allow the taxpayer to file an application under FORM SPL-01 or FORM SPL-02 as the case may be after making payment of his tax liability for the periods covered under section 128A.
- The taxpayer after filing FORM SPL- 01 or FORM SPL-02 shall intimate the appellate authority or Tribunal his intent to avail the benefit of Section 128A and that he does not intend to pursue the appeal for the period covered i.e. FY 2017-18 to 2019-20.
- The Appellate Authority or Appellate Tribunal as the case may, shall after taking note of the said request, pass such order for the period other than that mentioned in the sub-section, as it thinks just and proper.
(Source: Circular No. 248/05/2025-GST dated 27.03.2025)
FAQ’s on ‘Restaurant Services’ supplied at ‘Specified Premises’
- CBIC has issued certain clarifications and explanations on levy of GST on restaurant services supplied at ‘specified premises’ for better comprehension and understanding of taxpayers.
- The new concept of levy of GST on supply of food items through restaurants situated at specified premises of hotels has undergone a change w.e.f. 01.04.2025.
- A "specified premises" is defined as a place providing hotel accommodation services, where the value of any unit of accommodation exceeds Rs. 7,500 per unit per day. Additionally, suppliers may declare their premises as specified, either during the financial year or at the time of registration.
- W.e.f. 1st April 2025, the definition of "specified premises" will be based on the value of supply in the previous financial year, instead of the "declared tariff”.
- There are 28 FAQ’s which relate to changed scenario / concept, taxability, rate of tax, ITC, procedure, etc are on following topics:
- Scope of specified premises
- Rate of Tax – 5% or 18%
- Change in concept of taxation from ‘declared tariff to ‘specified premises’.
- Filing of various declarations (opting in / opting out) by hotel accommodation services providers and their validity (Annexure VII, VIII and IX).
- Eligibility of ITC based on GST rate.
(Source: GST FAQ’s dated 28.03.2025)
Issue in filing applications (SPL 01/SPL 02) under waiver scheme
- The GSTN has issued an advisory dated 21.03.2025 in relation to issue in filing applications (SPL 01/SPL 02) under waiver scheme.
- The Goods and Services Tax Network (GSTN) has received multiple grievances from taxpayers regarding difficulties faced while filing waiver applications. The GSTN team is actively working to resolve the following reported issues:
- The order number is not appearing in the dropdown for selection.
- Order details are not getting auto-populated after selecting a specific order in SPL-02.
- Payment details are not getting auto populated in table 4 of SPL-02.
- After filing SPL-02 for a demand order, taxpayers are unable to make payments using the “Payment Towards Demand” functionality. Taxpayers cannot adjust the amount paid through DRC-03 against the same demand order using DRC-03A.
- Taxpayers are unable to withdraw Appeal applications (APL-01) filed before the First Appellate Authority against a specific order.
Further, there is a misconception among taxpayers regarding the last date to file waiver applications. Please note the following points:
- The deadline to file waiver applications is NOT 31.03.2025.
- As per Rule 164(6) of the CGST Rules, 2017, taxpayers must file waiver applications within three months from the notified date. Hence, waiver applications in SPL-01/02 can be filed until 30.06.2025.
- However, as per Notification 21/2024-CT dated 08.10.2024, the due date for tax payment to avail of the waiver scheme is 31.03.2025.
- Taxpayers are advised to make the necessary payment by 31.03.2025 using the “Payment Towards Demand” functionality on the GST portal.
- If any difficulty arises while using this functionality, taxpayers should make a Voluntary Payment using Form DRC-03 under the category ‘Others’.
- After payment, submit Form DRC-03A to link the payment with the relevant demand order.
- If payment details are not auto-populated in Table 4 of SPL-02, verify them in the Electronic Liability Ledger on the GST portal.
- Navigation path: Login >> Services >> Ledgers >> Electronic Liability Register.
(Source: GST Advisory dated 21.03.2025)
GST Collection in March, 2025
- GST collection for March, 2025 grew by 9.9% on YoY basis to cross Rs. 1.96 trillion (Rs. 1.96 lakh crore) which only indicates strong business under-current, improved compliances, better tax administration and expanded tax base.
- GST revenue from domestic transaction is Rs. 1.49 lakh crore (up by 8.8% ) where as GST on imports is Rs. 46,919 crore (up by 13.56%).
- Total refunds amount to 19,615 crore, a rise of 41%
- Net GST collection is thus Rs. 1.76 lakh crore showing a growth of 7.3% on YoY basis.
- The GST collection in March, 2025 at a glance is:
|
Tax
|
Amount (Rs. in trillion)
|
YoY growth
|
|
Domestic
|
1.49
|
8.8
|
|
Import
|
0.46
|
13.5
|
|
Gross collection
|
1.96
|
9.9
|
|
Total refund
|
0.19
|
41.2
|
|
Net collection
|
1.76
|
7.3
|
- States with better GST collection are Bihar, Rajasthan, Tripura, Meghalaya, Chhattisgarh, Maharashtra, Goa and Ladhak.
- UP’s growth is 10% on YoY basis which hosted Mahakumbh in February, 2025. Collection of Rs. 10,000 crore is its 11 months high though collection in April, 2024 was highest crossing 12,000 crore.
- Few states with negative growth are J & K, Himachal Pradesh, Manipur and Telangana.
(Source: GSTN revenue collection dated 01.04.2025)
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