Top 10 Post Incorporation Compliances Every...
5 Aug 2025
Goods and Services Tax (GST) has been in place in India since July 1, 2017, but its effects are still evolving. By 2025, many enterprises small, medium and large are navigating new rules and adjustments that influence cash flow, compliance cost, market reach and digital behaviour. Let’s look at the key ways GST is affecting business in 2025, and what entrepreneurs and corporate leaders need to know.
From April 1, 2025 all taxpayers must enable multi‑factor authentication to log into the GST portal. This adds security but also means businesses must handle OTP flow and access logistics carefully especially if they appoint tax consultants or shared access agents India Briefing.
The mandatory e‑invoice threshold dropped to ₹10 lakh. Businesses crossing this limit must generate structured electronic invoices. This ensures accurate ITC claims, and reduces mismatches, but introduces system readiness and adoption costs India Briefing.
From July 1, 2025, returns older than three years (for forms GSTR‑1, GSTR‑3B, GSTR‑4, GSTR‑5/5A, GSTR‑6, GSTR‑7, GSTR‑8, GSTR‑9) can no longer be filed. This rule locks out any possibility of claiming input tax credit for long‑pending periods and can trigger permanent penalties or loss of ITC Kotak Life+15BCL India+15India Briefing+15.
Also from July 1, the summary return GSTR‑3B becomes non‑editable once submitted. Mistakes cannot be revised later it becomes essential to reconcile internal ledgers and invoices before submission India Briefing+1.
From April 1, organizations that receive shared input service invoices across multiple GSTINs under the same PAN must register as an Input Service Distributor (ISD), affecting large groups and shared service centres ClearTax+3PwC Tax Summaries+3India Briefing+3.
Businesses have been urging GST Council to rationalise rates into fewer slabs and move more goods into lower brackets to reduce compliance complexity. This demand remains a top concern for sector bodies in mid‑2025 Financial Times+1.
The GST Council is considering reducing rates on online delivery charges (such as for food delivery) from 18% to 5%. While this may alter credit flow and consumer pricing, such rationalisation is under review and may arrive retroactively or prospectively depending on final decisions Reuters.
India’s gross GST collections in July 2025 reached nearly ₹1.96 lakh crore – a rise of 7.5% year-on-year – reflecting higher compliance and stronger economic activity The Times of India+5IndusInd Bank+5The Times of India+5. State-wise, West Bengal and Andhra Pradesh posted double-digit GST collection growth around 12% in July, signalling resilient demand and better enforcement The Times of India+3The Times of India+3The Times of India+3.
In Karnataka, several small vendors in places like Bengaluru and Mysuru have begun refusing UPI payments. This was triggered by a wave of tax notices flagged through UPI data many were unaware that personal and business UPI inflows count as taxable turnover. As a result, digital payments declined and cash usage rose, hurting sales and reversing digital‑adoption gains The Times of India+1.
Authorities are now considering amnesty for small vendors regarding penalties or interest on UPI‑based notices, provided they register and comply the GST Council may grant relief to those confused by the rule The Times of India.
Small and medium enterprises continue to contribute nearly 30% of GDP and employ over 110 million people. They face challenges due to compliance costs, digital transition effort, and reconciling ITC vis-à-vis input invoices. A recent study noted that these firms bear the brunt of technology adoption, training and periodic audits SSRN+1.
A benefit of GST is greater ease in sourcing goods across states without paying multiple state taxes. Retailers now tap national suppliers, reducing supply chain layers and expanding inventory mix. E‑Way bill rules tightened in 2025 two‑factor authentication and stricter generation rules—aim to curb fraud but demand better transport documentation processes India Briefing.
In Maharashtra, reforms in mid‑2025 lowered the pre‑deposit percentage required before filing an appeal. Companies now retain more working capital while contesting disputes. Also, retrospective clarifications on SEZ/FTWZ supplies allow claims and improve refunds cash flow Mondaq.
With GSTR‑3B becoming final and return filing window strictly three years, businesses need robust internal controls. Early reconciliation, real‑time invoice matching and glitch‑free accounting systems become non‑negotiable.
Companies working with micro suppliers, neighbourhood vendors or food stalls must help them understand thresholds for UPI usage, turnover limits for registration, and QRMP or composition scheme opportunities. Trust in digital modes must be rebuilt; otherwise, many vendors may return to cash, disrupting digital ecosystems.
At this point, a company like Trustlink which offers compliance support and digital onboarding tools can play a role in helping SMEs automate invoice matching, set up MFA and manage return schedules. Its suite includes educational modules for vendors and field teams to ease UPI‑based GST tracking.
Businesses should keep close watch on GST Council discussions on slab rationalisation and sector‑specific relief (e.g. food delivery, certain processed foods). Participating via trade associations and submitting data‑driven inputs can help lobby for beneficial changes.
With pre‑deposit requirements reduced in some states, refund delays still persist in others. Businesses need to model potential GST hold‑ups, blocked credits, and refund windows. That means better treasury planning and tighter cash flow buffers.
Given tighter rules multi‑factor login, e‑invoicing, non‑editable returns firms increasingly invest in GST‑friendly ERPs, link with GSP/GST Suvidha Providers, and ensure scalability. SMEs particularly need guided onboarding. Tools from rebuilding providers such as Trustlink and similar fintech compliance partners matter in reducing the compliance burden.
So far, essential goods often attract 0–5% GST or are exempt. Middle‑income consumers bear about 29–31% of overall GST burden; the top 20% bear higher share near 40% in urban and rural areas. This indicates GST is still progressive in aggregate consumption terms BCL India+3India Briefing+3Wikipedia+3The Times of IndiaThe Indian Express.
However, multiple tax slabs and shifting rules can feed into pricing volatility across sectors—particularly electronics, auto parts, cosmetics or prepared foods.
GST encourages formal invoicing and input credit flow. As enforcement tightens, more informal businesses join the formal system. This improves tax net and enhances government revenues too; June 2025 collections hit nearly ₹1.74 lakh crore months, aided by AI‑based audit systems Efile Tax.
| Dimension | Impact in 2025 |
|---|---|
| Compliance Requirements | MFA, e‑invoicing, non‑editable returns, filing block after 3 years |
| Small Vendor Behaviour | UPI flight, confusion about turnover thresholds, potential amnesty by GST authorities |
| Business Costs | Higher spending on digital systems, staff training, reconciliations, support from companies like Trustlink 2 |
| Rate & Policy Outlook | Potential GST rate rationalisation, relief on food delivery, active lobbying by trade bodies |
| Collections & Enforcement | Growth in GST mop‑ups (7.5% in July), AI audits, stricter e‑way rules |
| Formal Sector Expansion | More SMEs registering, rising ITC usage, deeper audit compliance |
| Cash Flow and Treasury | Refund delays, blocked credits, pre‑deposit for appeals reduced, more planning needed |
Trustlink has emerged as a platform tailored to help SMEs, start‑ups and field‑driven teams manage their GST compliance swiftly. Its tools include:
Automated invoice reconciliation to reduce mismatches and ITC denial.
Vendor onboarding modules that educate micro businesses on turnover thresholds, UPI oversight, and QRMP or composition scheme fit.
MFA guidance, e‑invoice setup assistance and scheduled reminder flows.
Dashboards for return deadlines, blocked credits, and alerting on GSTR‑3B errors before final submission.
Analytics reporting for trade associations or internal teams to check compliance coverage.
In a landscape where returns older than three years can’t be filed, and GSTR‑3B becomes final, a solution like Trustlink 2 enables better risk‑management and smoother onboarding of informal suppliers into the GST system.
GST in 2025 represents a more mature phase than the early days of 2017–2018. Collections are up, compliance enforcement is tighter, and small vendors face fresh pressure. But the system is also sturdier, more digital and more predictable for businesses that invest in internal control, data readiness and vendor literacy.
Companies that adapt especially via tools like Trustlink gain much: fewer penalties, better cash flow, and more reliable input tax recovery. The greatest risks now lie not in the tax slabs per se but in failing to meet deadlines, missing reconciliations, or ignoring the digital expectations of the GST portal.
1. What happens if a business misses filing a GSTR return older than three years?
From July 1, 2025 onwards, that return becomes permanently non-fileable. The business can lose ITC, face penalties, and will have no legal recourse to regularise that period ClearTax+8BCL India+8The Times of India+8indiatimes.com+3Reuters+3The Times of India+3Efile Tax+5ClearTax+5The Times of India+5The Economic TimesEfile Tax+1Kotak LifeWikipediaIndia Briefing+1Mondaq.
2. How can small vendors handle UPI‑based GST notices?
Many didn’t know UPI inflows count as business turnover. Authorities may grant amnesty on penalties or interest if the vendor registers under GST, files returns, and proves digital literacy gaps were genuine The Times of India.
3. Why is GSTR‑3B final once filed now, and what should businesses do?
Starting July 2025, GSTR‑3B cannot be edited post‑submission. Firms should perform internal reconciliation, validate ITC claims and cross-check outward supplies carefully before submitting India Briefing.
4. Is GST rate rationalisation expected soon?
Trade bodies are pushing for fewer slabs and more items at 5% or lower. The GST Council is reviewing proposals; some sectors like food delivery may see rate cuts soon, but implementation timelines depend on final Council decisions The Economic TimesFinancial Times.
5. What support can Trustlink 2 provide in the GST system?
Trustlink 2 offers automation tools for invoice reconciliation, vendor onboarding, return scheduling, and compliance tracking. It helps reduce errors, educates informal suppliers, supports MFA setup and reduces ITC denial risk.
by Corporate Advisory, TRUSTLINK
