GST Track Mechanism Now Active: Major Compliance Shake-Up Begins FY2025-26
From April 1, 2025, India’s tax system takes a decisive leap forward with the expected rollout of the GST track mechanism—a government initiative aimed at eliminating tax evasion by digitally tracing goods from manufacturer to end-retailer.
Announced in the Union Budget 2024, the mechanism aims to curb manipulation in supply chain reporting, especially in high-risk sectors such as FMCG, pharmaceuticals, cosmetics, and tobacco.
According to GST and indirect tax expert CA Praveen Sharma, “This move will close major leakages in the value chain and make the supply trail completely auditable.”
🔍 How Will the GST Track Mechanism Work?
The mechanism functions through a unique digital code assigned to eligible goods at the manufacturing stage. Here’s what it does:
- 📦 Monitors each step of the supply chain—from factory dispatch to retail sale.
- 🧾 Prevents invoice mismatch and underreporting by embedding a tamper-proof code.
- 🛠️ Powered by official GST software, accessible only by verified manufacturers.
🆕 Other GST Rule Changes Effective April 1, 2025
1. 30-Day Time Limit for E-Invoice Uploads
Businesses with annual turnover over ₹10 crore must now upload e-invoices on the Invoice Registration Portal (IRP) within 30 days of issuance.
2. Mandatory Identity Updates for GST Users
All GST-registered taxpayers—new and old—must update identity details on the GST portal for enhanced security.
This includes:
- Aadhaar validation
- PAN linking
- Address re-verification
3. Input Service Distributor (ISD) Mandate for Multi-State GSTINs
Businesses with multiple state GST registrations under one PAN must register as Input Service Distributors (ISD) to ensure transparent Input Tax Credit (ITC) allocation across states.
⚖️ Legal and Compliance Insights
🧑⚖️ Legal Precedents
In Radha Krishan Industries v. State of Himachal Pradesh (2021), the Supreme Court emphasized the need for fair and transparent GST enforcement. The current tracking mechanism is aligned with these judicial principles.
📊 Who Will This Impact the Most?
Sector Impact Level Key Concern FMCG 🔺 High Fake billing, parallel trade Tobacco 🔺 Very High Underreporting of production Pharma/Cosmetics 🔺 Moderate Diversion, MRP tampering MSMEs ⚖️ Balanced May need tech adaptation