Key Changes in GST, Effective from 1-4-2025

As we move further into 2025, several important changes in the Goods and Services Tax (GST) framework are coming into effect. Whether you're a business owner, a tax 
professional, or just someone interested in staying updated, here’s a quick breakdown of the key GST updates you need to know:

1. Mandatory Implementation of the ISD Mechanism 

Starting from April 1, 2024, the Input Service Distributor (ISD) mechanism becomes mandatory for businesses that need to distribute Input Tax Credit (ITC) on common services—such as rent, advertising, and professional fees—across multiple GST registrations under the same PAN.

Key points to note:

Businesses must issue ISD invoices for these services.

Filing GSTR-6 on a monthly basis is now compulsory, with a due date of the 13th of each month.

Non-compliance can be costly, potentially leading to denial of ITC and penalties up to ₹10,000 or the amount of incorrect ITC claimed.

Businesses should set up robust systems to manage ISD compliance to avoid disruptions and penalties.

2. "Declared Tariff" Term Removed for Hotels

In a welcome simplification for the hospitality industry, the concept of "declared tariff" has been scrapped. GST will now be levied based solely on the actual amount charged to customers.

Here’s the breakdown:

Hotels charging above ₹7,500 per day will be treated as "specified premises."

These specified premises will attract 18% GST on restaurant services.

Input Tax Credit (ITC) benefits will continue to be available.

This change aims to bring greater transparency and consistency in GST application across the hotel sector.

3. Multi-Factor Authentication (MFA) Becomes Mandatory

To bolster the security of the GST portal and protect taxpayer data, Multi-Factor Authentication (MFA) is now mandatory for all users, regardless of turnover.

With cyber threats becoming more sophisticated, MFA will add an essential layer of protection, ensuring that only authorized users can access sensitive GST data and functionalities.

4. Revised GST Rate on Sale of Old Cars

In a move impacting individuals and businesses involved in selling pre-owned vehicles, the GST rate on the sale of old cars has been revised:

New Rate: 18% (up from 12%)

Sellers will need to account for this rate change in their pricing and invoicing to ensure compliance.

Final Thoughts

These changes reflect the government's continued efforts to streamline the GST framework, enhance security, and promote fair taxation practices. Businesses should proactively update their compliance processes and educate their teams to navigate these updates smoothly.