GST amendments applicable from 01st April, 2025!

On June 22, 2024, the 53rd GST Council meeting was held in Delhi, chaired by Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman. The council recommended several key changes, including modifications to GST rates, trade facilitation measures, and steps to simplify GST compliance.

Following the meeting, multiple circulars and notifications were issued to implement these recommendations. One of the significant notifications was Notification 12/2024 – Central Tax, issued on July 10, 2024. However, certain changes introduced in this notification did not specify their effective dates.

To address this, the effective dates for these amendments have now been officially notified through Notification No. 09/2025 – Central Tax, dated February 11, 2025.

Let's have a look at the amendments made applicable from 01^st April 2025!

Changes applicable from 1^st April 2025:

1. Changes in distribution of Input Tax Credit (ITC) by an Input Service Distributor (ISD)

Rule 39 of the CGST Rules, 2017 defines the procedure for the distribution of input tax credit by Input Service Distributor. Following are the changes made to the said rule:

a.) Substitution of Rule 39(1):

The existing Rule 39(1) has been substituted with a modified procedure for the distribution of ITC by ISD as follows:

• ITC available for distribution in a month must be distributed within the same month and the details of ITC distribution must be furnished in FORM GSTR-6 as per Chapter VIII of the GST rules.
• The amount of ITC distributed cannot exceed the available credit.
• Credit attributable to a specific recipient must be distributed only to that recipient. 
• ITC for input services used by multiple recipients must be distributed only to those recipients and such distribution shall be pro rata on the basis of their turnover in a State/UT during the relevant period.
• The distribution must be pro-rata, considering the recipient's turnover in proportion to the total turnover of all operational recipient’s credits in the current financial year, during the said relevant period.
• Modified Formula for Pro-Rata Distribution of Input Tax Credit (ITC) that is required to be distributed by the provisions:

C 1 = (t 1/T) x C

where,

"C" is the amount of credit to be distributed,

"t1" is the turnover, as referred to in clauses (d) and (e), of the  person

R1 during the relevant period, and

"T" is the aggregate of the turnover, during the relevant period, of all recipients to whom the input service is attributable by the provisions

‍

• Eligible and ineligible ITC (as per Section 17(5) or other provisions) must be distributed separately by the Input Service Distributor.
• ITC on central tax (CGST), state tax (SGST), union territory tax (UTGST), and integrated tax (IGST) must be distributed separately.
• ITC on account of integrated tax must be distributed as input tax credit of integrated tax to every recipient.
• ITC on CGST & SGST/UTGST must be: 

>>Distributed as CGST & SGST/UTGST if the recipient is in the same State/UT as the ISD.

>>Distributed as IGST if the recipient is in a different State/UT from the ISD and the amount to be so distributed shall be equal to the aggregate of the amount of input tax credit of central tax and State tax or Union territory tax that qualifies for distribution to such recipient.

• The ISD must issue an Input Service Distributor Invoice (as per Rule 54(1)) for ITC distribution only.
• If ITC is reduced for any reason, an Input Service Distributor Credit Note must be issued by the ISD.
• If a debit note increases ITC, it must be distributed as per the conditions specified and such credit shall be distributed in the month in which the debit note is included in the return in FORM GSTR-6.
• If a credit note reduces ITC, it must be adjusted: 

By reducing the ITC to be distributed in the month of the credit note.

By adding it to the output tax liability if the ITC adjustment results in a negative amount.

b.) Insertion of Rule 39(1A):

• New sub-rule 1A has been inserted as follows:

(1A) For the distribution of credit in respect of input services, attributable to one or more distinct persons, subject to levy of tax under sub-section (3) or (4) of section 9, a registered person, having the same PAN and State code as an Input Service Distributor, may issue an invoice or, as the case may be, a credit or debit note as per the provisions of sub-rule(1A) of rule 54 to transfer the credit of such common input services to the Input Service Distributor, and such credit shall be distributed by the said Input Service Distributor in the manner as provided in sub-rule (1).”

• This clarifies that a registered person with the same PAN and State code as an ISD can issue an invoice or credit/debit note to transfer common input service credit to the ISD. The ISD will then distribute this credit as per the standard rules.

‍

c.) Insertion of Explanation to Rule 39:

• The following explanation is added to rule 39:

“Explanation. - For the purpose of this rule, -

(i) The term "relevant period" shall be

(a) If the recipients of credit have turnover in their States or Union territories in the financial year preceding the year during which credit is to be distributed, the said financial year; or

(b) If some or all recipients of the credit do not have any turnover in their States or Union territories in the financial year preceding the year during which the credit is to be distributed, the last quarter for which details of such turnover of all the recipients are available, previous to the month during which credit is to be distributed;

(ii) The expression "recipient of credit" means the supplier of goods or services or both having the same Permanent Account Number as that of the Input Service Distributor;

(iii) The term ''turnover'', in relation to any registered person engaged in the supply of taxable goods as well as goods not taxable under this Act, means the value of turnover, reduced by the amount of any duty or tax levied under entries 84 and 92A of List I of the Seventh Schedule to the Constitution and entries 51 and 54 of List II of the said Schedule.”

‍

2. Updates in GSTR-7: Changes in TDS Reporting Format

The government has introduced amendments to Form GSTR-7, which deals with Tax Deducted at Source (TDS) under GST.  Following are the changes in Form GSTR 7:

• Revised Table 3 for TDS Details:

Table 3 has been substituted to capture invoice/document-wise details of tax deducted. It will now include columns for GSTIN of deductee, invoice details, amount paid, and tax deducted (IGST, CGST, SGST/UTGST).

• Revised Table 4 for Amendments in TDS Details

Table 4 has been restructured to record revisions in TDS details. It now includes original and revised invoice/document details, along with the corresponding GSTIN, taxable value, and deducted tax amounts.

3. Amendment in Form GSTR-08 for supplies effected through E-commerce operator

• Substituted Sl. No. 3 deals with details of supplies made through e-commerce operators as follows:

• Substituted Sl. No. 4 deals with amendments to details of supplies in respect of any earlier statement:

Conclusion

The GST amendments effective from April 1, 2025, mark a significant step towards enhancing tax compliance, simplifying input tax credit distribution, and ensuring accurate reporting in various GST returns. The revised ITC distribution mechanism for Input Service Distributors (ISD) will bring greater transparency and efficiency, while the updates in GSTR-7 and GSTR-08 will streamline TDS reporting and e-commerce tax collection.

With these changes, businesses will need to adapt to the new reporting formats and compliance requirements, ensuring accurate tax distribution and seamless GST return filing. By staying updated and implementing these modifications, taxpayers can avoid discrepancies, reduce compliance risks, and improve overall GST adherence.

As GST continues to evolve, businesses must proactively align their processes with regulatory changes, ensuring smooth compliance and leveraging the benefits of a simplified tax system. 

‍