Introduction
The Indian government continues to tighten GST compliance to curb tax evasion and improve revenue collection. In FY 2024-25 alone, authorities detected ₹1.95 lakh crore in GST fraud across 25,000+ cases. Fake Input Tax Credit (ITC) claims accounted for ₹46,472 crore, revealing loopholes that fraudsters continue to exploit.
To address this, the government has introduced new security measures, stricter documentation requirements, and advanced tracking mechanisms to ensure businesses remain compliant. Let’s break down the most critical GST compliance updates for 2025 and how they impact businesses.
🔑 Major GST Compliance Changes in 2025
1. Multi-Factor Authentication (MFA) for GST Portal Login
Starting April 1, 2025, all taxpayers must enable Multi-Factor Authentication (MFA) to log in to the GST portal. The phased implementation was as follows:
- January 1, 2025 – Mandatory for businesses with an annual turnover of ₹200 crore+
- February 1, 2025 – Applied to businesses with turnover above ₹50 crore
- April 1, 2025 – Mandatory for all taxpayers, regardless of turnover
👉 Impact on Businesses:
This security measure prevents unauthorized access and safeguards taxpayer data. Businesses must update their login credentials and ensure all authorized users register for MFA.
2. Stricter E-Way Bill (EWB) Validity Rules
The government has tightened E-Way Bill (EWB) rules to reduce fraudulent invoicing:
- Base documents must not be older than 180 days for generating an EWB.
- Maximum extension period capped at 360 days from the original EWB generation date.
👉 Impact on Businesses:
Backdating invoices or using outdated documents for EWB generation is no longer possible. Businesses must ensure timely and accurate documentation to avoid compliance issues.
3. Track & Trace System for High-Risk Goods
A new Track-and-Trace mechanism has been introduced for industries prone to tax evasion, such as:
- Pharmaceuticals
- Alcohol & tobacco
- Luxury goods & electronics
This system uses unique identification markings on invoices and products to track movement across the supply chain.
👉 Impact on Businesses:
Companies dealing in these sectors must adopt digital tracking systems and maintain real-time documentation. Non-compliance can lead to penalties and operational disruptions.
4. Higher Penalties for Non-Compliance
A new penalty provision under Section 122B of the GST Act imposes:
- ₹1 lakh or 10% of the tax payable (whichever is higher) for businesses that fail to comply with Track & Trace rules.
- ₹50,000 fine for repeated failures to update records as per EWB regulations.
👉 Impact on Businesses:
With increased scrutiny, businesses must prioritize accurate record-keeping and ensure invoices, transportation details, and e-way bills are updated as per GST rules.
📌 Government Measures to Prevent GST Fraud
To counter large-scale frauds, the government has implemented AI-driven analytics & real-time tracking:
- Project Anveshan – Uses AI-powered fraud detection via facial recognition, e-way bill tracking, and invoice verification.
- Data Integration with PAN & Aadhaar – GSTINs linked with Aadhaar verification to prevent fake registrations.
- Automated ITC Matching System – Reduces fake Input Tax Credit (ITC) claims by cross-verifying transactions before approval.
🚀 Key Takeaways for Businesses
✔ Enable Multi-Factor Authentication (MFA) to prevent unauthorized access.
✔ Ensure timely invoice generation to comply with EWB rules.
✔ Adopt digital tracking for high-risk goods to avoid penalties.
✔ Maintain accurate GST records & verify ITC claims to prevent compliance risks.
✔ Stay updated on GST changes to avoid financial and legal liabilities.
Final Thoughts
With ₹1.95 lakh crore GST fraud detected in FY25, businesses must adapt to the new compliance landscape to avoid penalties and disruptions. By staying proactive, implementing digital solutions, and ensuring accurate documentation, companies can navigate these changes efficiently.