Goods and Service Tax (GST), implemented in July 2017, lays down specific rules and regulations for firms operating in India. GST is one of the most critical tax reforms ever introduced in the country. GST has created a unified tax structure, combining taxes like VAT, excise duty, and service tax nationwide. Moreover, it has simplified the taxation process, especially for businesses in India.
It is crucial for Indian companies to comply with GST regulations to run their operations smoothly. These firms must adhere to the rules and regulations set under the GST laws to avoid penalties or audits. They must fulfil all their tax-related obligations within the defined timelines. GST compliance includes registering your firm on the GST portal, timely filing of returns, maintaining authentic invoicing and undergoing regular GST audits.
2025 GST Updates for E-commerce Businesses
In 2025, several updates to India's Goods and Services Tax (GST) framework have been introduced, impacting e-commerce businesses. The government is making strenuous efforts to improve digital security, streamline reporting, and enhance tax transparency. These changes will require firms to reassess their tax techniques and functional workflows. Following are the key changes introduced in 2025:
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Stricter Authentication Procedure
Mandatory Multi-factor authentication has been introduced to increase the safety of the GST portal; MFA will be brought into existence in a phased manner:
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The first phase begins on January 1, 2025, and is mandatory for taxpayers with an Annual Aggregate Turnover (AATO) exceeding ₹200 million.
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The second phase started on February 1, 2025. This applies to taxpayers with an AATO exceeding ₹50 million.
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The third phase will be enforced for all taxpayers, regardless of turnover that begins on April 1, 2025.
Businesses should comply with MFA, ensure that their registered mobile numbers are up to date to receive OTPs and prepare their staff for the new authentication systems.
Simplification of GST Compliance
The Finance Bill 2025 introduced several GST regime changes aimed at simplifying tax compliance, streamlining tax treatment for specific transactions, and improving regulatory supervision.
GST on Delivery Charges
Now, e-commerce platforms must bear GST delivery charges, regardless of whether the platform or the customer pays the tax.
Taxation on Service Fees
The Reverse Charge Mechanism will include commissions, platform fees, and promotional charges. This requires the sellers to pay GST directly.
E-invoicing for Large Businesses
Considering the increasing GST frauds, it is now mandatory for all firms with a turnover of ₹10 crore or more to generate e-invoices. The change will enable businesses to upload invoices directly to the GST portal, and eventually, the procedure will be automated.
Significance of GST Compliance
You must be wondering why it is even important to comply with these updates. Let us break it down for you. GST compliance is important for the following reasons:
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Ensures legal and efficient operation of business.
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Allows the government to maintain records of your business activities.
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Ensures you stay in the right light of the law.
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It makes you eligible to claim benefits and avoid fines and punishments.
It is crucial to stay informed about the recent GST updates for e-commerce businesses to ensure compliance and avoid penalties. Contact Lawgical India Business Developers Pvt. Ltd. to navigate the GST landscape effectively. We will help you figure out the key legal requirements and fulfil them on your behalf. Our team of 80+ professionals is well aware of the intricacies of the GST regime and has ample experience in this field. You can chill while we do all the computation and legal work, ensuring you face no difficulties.
FAQs
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What are the services offered by Lawgical India?
Lawgical India specializes in company registration, obtaining FSSAI license, Apeda Registration, GST Registration, MSME Registration, Pan Registration in India.
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What are the common compliance mistakes?
E-commerce sellers should be avoid common compliance errors:
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Discrepancies between returns.
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Applying incorrect GST rates to products and services.
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Failure to reconcile TCS deductions with actual sales.
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What are the GST updates on Health and Education?
GST exemption remains the same for educational institutions and healthcare services. However, certain services like pharmaceuticals and medical equipment, have been revised and are now subject to a higher GST rate of 18%.
