The Goods and Services Tax Network (GSTN) announced significant updates in May 2025, focusing on compliance and process improvements. Phase-III of mandatory HSN code reporting in GSTR-1/1A requires taxpayers with an annual turnover of up to ₹5 crore to report 4-digit HSN codes and those exceeding ₹5 crore to report 6-digit codes. Manual HSN entry is now replaced with a dropdown selection, and new tabs for B2B and B2C transactions have been introduced. Biometric-based Aadhaar authentication for GST registration applicants began in Sikkim on May 1, 2025, streamlining applicant verification. Additionally, invoice-wise reporting for TDS in Form GSTR-7 took effect on April 1, 2025, enhancing transparency. Refund filing processes for various categories, including deemed export supplies, have been revamped, eliminating the tax period selection and adopting invoice-based filing. An invoice-locking mechanism ensures data consistency. Meanwhile, GSTN issued advisories on appeal withdrawals under the GST Waiver Scheme and value reporting in Table 3.2 of GSTR-3B. A temporary reversal allows manual edits to auto-populated data in response to taxpayer feedback, with further updates pending. These changes aim to improve accuracy, compliance, and user experience in the GST ecosystem.
1. Mandatory HSN Reporting in GSTR-1/1A: Phase-III Implementation from May 2025[1]
The Goods and Services Tax Network (GSTN) has announced the commencement of Phase-III for the mandatory reporting of Harmonized System of Nomenclature (HSN) codes in Table 12 of GSTR-1 and GSTR-1A, effective from the May 2025 return period.
Key Changes in Phase-III
Mandatory HSN Code Selection via Dropdown Menu:
1.Taxpayers with Aggregate Annual Turnover (AATO) up to ₹5 crore: Required to report a minimum of 4-digit HSN codes.
2. Taxpayers with AATO exceeding ₹5 crore: Required to report a minimum of 6-digit HSN codes.
3. Manual entry of HSN codes is no longer permitted; taxpayers must select the appropriate HSN code from a predefined dropdown list.
- Bifurcation of Table 12: Table 12 has been divided into two separate tabs:
- B2B (Business-to-Business): For reporting supplies to registered persons.
- B2C (Business-to-Consumer): For reporting supplies to unregistered persons.
Introduction of Table 13: Table 13 is now mandatory for taxpayers to report a list of documents issued during the tax period. This addition enhances the transparency and traceability of transactions reported in GSTR-1 and GSTR-1A.
Enhanced Validation Mechanisms: Automated validations have been introduced to ensure the accuracy and consistency of reported data. These validations will initially operate in warning mode, allowing taxpayers to file returns despite discrepancies, while encouraging corrective actions.
For detailed advisory visit the following link: https://taxguru.in/goods-and-service-tax/hsn-codes-reporting-table-12-documents-listing-table-13-gstr-1-1a.html
2 Advisory for Biometric-Based Aadhaar Authentication and Document Verification for GST Registration Applicants in Sikkim[2]
Effective May 1, 2025, the Goods and Services Tax Network (GSTN) has introduced a biometric-based Aadhaar authentication process for GST registration applicants in Sikkim. This initiative aims to enhance the verification process and ensure the authenticity of applicants.
Key Points:
- Rule Amendment: Rule 8 of the CGST Rules, 2017 has been amended to allow applicant identification through biometric-based Aadhaar authentication, including a photograph and verification of original documents uploaded with the application.
- Implementation in Sikkim: The new functionality has been rolled out in Sikkim on May 1, 2025, enabling biometric authentication and document verification for GST registration applicants.
- Authentication Process: After submitting the GST REG-01 application, applicants will receive an email with either:
1.A link for OTP-based Aadhaar authentication, or
2. A link to book an appointment at a designated GST Suvidha Kendra (GSK) for biometric authentication and document verification.
- Appointment Booking: Applicants directed to visit a GSK must use the provided link to schedule an appointment. The appointment feature is available for Sikkim applicants starting May 1, 2025.
- Required Documents: At the GSK, applicants must present:
1.A copy of the appointment confirmation email;
2. Jurisdiction details as mentioned in the intimation email;
3. Original Aadhaar and PAN cards; and
4. Original documents uploaded with the application, as specified in the intimation email.
- Biometric and Document Verification: Verification will be conducted at the GSK for all individuals listed in the GST REG-01 application.
- Timeline for Appointment: Applicants must schedule their biometric verification appointment within the maximum permissible period indicated in the intimation email. Application Reference Numbers (ARNs) will be generated once the biometric authentication and document verification are completed.
- GSK Operating Hours: The operation days and hours of GSKs will be as per the guidelines provided by the state administration.
- Implementation of Invoice-wise Reporting in Form GSTR-7[3]
The Central Board of Indirect Taxes and Customs (CBIC), through Notification No. 09/2025 – Central Tax dated February 11, 2025, has mandated the implementation of invoice-wise reporting in Form GSTR-7, effective from April 1, 2025. This change aims to enhance the accuracy and transparency of Tax Deducted at Source (TDS) reporting under GST.
Key Highlights:
- Enhanced Reporting Requirements: Form GSTR-7 will now require detailed, invoice-wise reporting of TDS deductions, including specifics such as invoice numbers, dates, and amounts.
- System Development in Progress: The Goods and Services Tax Network (GSTN) is actively developing and testing the necessary system enhancements to support this new reporting format.
- Deployment Timeline: The updated functionality for invoice-wise reporting in Form GSTR-7 is scheduled to be deployed on the GST portal shortly. Taxpayers will be notified once the new features are live and accessible.
Updates in Refund Filing Process for Various Categories – Effective May 8, 2025[4]
The Goods and Services Tax Network (GSTN) has introduced significant changes to the refund filing process for the following categories, effective from May 8, 2025:
1.Export of Services with payment of tax
2. Supplies made to Special Economic Zone (SEZ) Units/Developers with payment of tax
3. Refund by Supplier of Deemed Exports
Key Changes:
- Elimination of Tax Period Selection: Previously, taxpayers were required to specify a tax period (‘From’ and ‘To’) when filing refund applications. This requirement has been removed.
- Invoice-Based Filing: Refund applications for the above categories will now be processed based on individual invoices rather than tax periods.
- Required Statements:
1.Export of Services with Payment of Tax: Statement 2
2. Supplies to SEZ Units/Developers with Payment of Tax: Statement 4
3. Refund by Supplier of Deemed Exports: Statement 5B
- Invoice Locking Mechanism: Once invoices are uploaded for a refund application, they will be locked and cannot be amended or used in subsequent refund claims unless the application is withdrawn or a deficiency memo is issued.
- Pre-Condition for Filing: Taxpayers must ensure that all returns (e.g., GSTR-1, GSTR-3B) due up to the date of the refund application are filed.
GST Refund Filing Updates for Recipients of Deemed Export – Effective May 8, 2025[5]
The Goods and Services Tax Network (GSTN) has introduced significant changes to the refund filing process for recipients of deemed export supplies, effective from May 8, 2025. These updates aim to streamline the refund procedure and enhance compliance.
Key Changes:
- Elimination of Tax Period Selection: Taxpayers are no longer required to select a specific tax period (‘From’ and ‘To’) when filing refund applications. Instead, they can directly select the refund category and proceed with the application.
- Mandatory Return Filing: All returns (e.g., GSTR-1, GSTR-3B) due up to the date of the refund application must be filed before submitting the refund claim.
- Invoice-Based Refund Filing: Refund applications are now based on individual invoices rather than tax periods. Statement 5B is applicable for recipients of deemed export supplies.
- Revised ‘Amount Eligible for Refund’ Table: The table has been updated with the following columns:
1.Column 1: ‘Balance in Electronic Credit Ledger (ECL)’ – Auto-populated balance under various heads.
2. Column 2: ‘Net Input Tax Credit (ITC) of Deemed Exports’ – Auto-populated based on uploaded invoices in Statement 5B.
3. Column 3: ‘Refund Amount as per Uploaded Invoices’ – Reflects the sum of claimed ITC under all major heads; downward editable.
4. Column 4: ‘Eligible Refund Amount’ – Auto-calculated based on the order of debit specified in Circular No. 125/44/2019-GST dated 18.11.2019.
5. Column 5: ‘Refund Amount Not Eligible Due to Insufficient ECL Balance’ – Reflects the difference between claimed ITC and available balance in ECL.
- Enhanced Refund Claim Functionality: The system now allows taxpayers to maximize the refund amount claimable based on uploaded invoices, irrespective of the balance available in the respective heads of the ECL. The total claim under various heads will be compared with the total available ITC in the ECL.
- Invoice Locking Mechanism: Once invoices are uploaded with a refund application, they will be locked for any further amendment and will not be available for subsequent refund claims unless the application is withdrawn or a deficiency memo is issued.
- Grievance Redressal: If taxpayers encounter issues while filing the refund application, they are advised to raise a grievance through the GST portal at https://selfservice.gstsystem.in/ReportIssue.aspx.
Advisory on Appeal Withdrawal for GST Waiver Scheme – May 14, 2025[6]
The Goods and Services Tax Network (GSTN) has issued an advisory regarding the withdrawal of appeals under the GST Waiver Scheme as per Section 128A.
Key Points:
- Automatic Withdrawal: If an appeal withdrawal application (APL 01W) is filed before the issuance of final acknowledgment (APL 02), the system automatically updates the appeal status from “Appeal submitted” to “Appeal withdrawn.”
- Manual Withdrawal Post-Acknowledgment: If the final acknowledgment has been issued, the appeal withdrawal requires approval from the Appellate Authority. Upon approval, the status will change to “Appeal withdrawn.”
- Waiver Scheme Requirement: Under Section 128A, to be eligible for the waiver scheme, any appeal against the requisite demand order must not remain pending with the Appellate Authority.
- Documentation for Waiver Application: Taxpayers must upload a screenshot of the appeal case folder showing the status as “Appeal withdrawn” when filing or updating their waiver application.
- Advisory on Reporting Values in Table 3.2 of GSTR-3B – May 16, 2025[7]
The Goods and Services Tax Network (GSTN) has issued an update regarding the reporting of inter-state supplies made to unregistered persons, composition taxpayers, and UIN holders in Table 3.2 of Form GSTR-3B.
Key Points:
- Previous Advisory: An earlier advisory dated April 11, 2025, announced that auto-populated values in Table 3.2 would become non-editable starting from the April 2025 tax period (returns filed in May 2025).
- Taxpayer Concerns: GSTN received several representations and grievances from taxpayers regarding this change. These concerns are currently under examination.
- Temporary Reversal: In response to taxpayer feedback, it has been decided that Table 3.2 will remain editable for the time being. Taxpayers are advised to report or amend the auto-populated entries as needed to ensure the accuracy of their returns.
Future Implementation: Taxpayers will be informed through a separate communication once the proposed changes are implemented on the GST Portal.
[4] https://taxguru.in/goods-and-service-tax/gst-refund-process-updates-specific-exports.html
[6]https://taxguru.in/goods-and-service-tax/advisory-gst-appeal-withdrawal-respect-waiver-scheme.html
[7] https://taxguru.in/goods-and-service-tax/gstn-advisory-gstr-3b-table-3-2-remains-editable.html
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Authors: Advocate Ankit Jawaria Advocate, Peeyush Kumar Sahlot Advocate, Kunjal Jawaria Advocate
Author Bio
