Key Compliance Changes in Budget 2025
The financial year 2024-25 is nearing its end, and March 2025 is a crucial month for businesses and taxpayers to ensure they comply with the latest GST regulations. The Budget 2025 has introduced several GST-related compliance changes that businesses must adhere to in order to avoid penalties and maintain seamless operations.
This blog covers the key GST updates for 2025, including the Section 128A Amnesty Scheme, CMP-05 compliance for small traders, and important GST return adjustments and Input Tax Credit (ITC) reconciliations that need to be completed before March 31, 2025.
Watch For Better Understanding – https://youtu.be/LOkGOcbS16U
Key Changes in GST Compliance for 2025
- Section 128A Amnesty Scheme – Limited Time Relief for Defaulters
The Section 128A Amnesty Scheme has been introduced to provide relief to taxpayers who have failed to comply with certain GST filing requirements in the past. Under this scheme:
- Businesses can file pending GST returns without facing heavy penalties.
- Late fees and penalties may be either reduced or waived off based on the type of non-compliance.
- It is a one-time opportunity to regularize past GST filings and avoid future legal complications.
Who Can Avail This Scheme?
- Taxpayers who have missed filing GSTR-3B, GSTR-1, or other key returns in previous financial years.
- Businesses that had GST registration canceled due to non-compliance and are looking to restore it.
Important Deadline: Taxpayers must complete the required filings under this scheme before March 31, 2025, to avail of the benefits.
- CMP-05 Compliance for Small Traders (Composition Dealers)
For small traders registered under the Composition Scheme, filing CMP-05 is now a mandatory compliance requirement.
- The CMP-05 declaration needs to be submitted by businesses opting to continue under the Composition Scheme for the next financial year.
- Failing to submit CMP-05 can result in automatic conversion to the regular GST scheme, leading to increased compliance burdens.
Action Required:
- Small traders should submit their CMP-05 declaration before March 31, 2025.
- Review their annual turnover to determine whether they are eligible to continue under the Composition Scheme.
- GST Return Adjustments & ITC Reconciliation Before March 31, 2025
As the financial year closes, businesses must focus on GST return corrections and ITC reconciliations to ensure compliance and prevent penalties. Key actions to take include:
- Correcting Errors in GST Returns
- Review past GSTR-3B and GSTR-1 filings for any errors in reporting taxable sales, tax liabilities, or ITC claims.
- File necessary amendments in the March 2025 returns to rectify mistakes.
- Input Tax Credit (ITC) Reconciliation
- Cross-check ITC claims with GSTR-2B and GSTR-3B to ensure there are no mismatches.
- Resolve any missing or incorrect invoices with suppliers before March 31.
- Avoid excess or ineligible ITC claims, as GST authorities are tightening scrutiny on incorrect claims.
- Finalizing Annual GST Compliance
- Ensure all pending GST payments are cleared before March 31, 2025.
- Review outstanding GST liabilities and make necessary tax payments to avoid interest charges.
Consequences of Non-Compliance
Failing to adhere to the above compliance requirements can lead to serious consequences, including:
- Hefty penalties for late GST return filings and incorrect ITC claims.
- Suspension or cancellation of GST registration due to prolonged non-compliance.
- Loss of Input Tax Credit, leading to increased tax liabilities.
- Legal actions and notices from the GST department.
Final Checklist for GST Compliance Before March 31, 2025
✅ File pending GST returns under the Section 128A Amnesty Scheme.
✅ Submit the CMP-05 declaration for Composition Scheme continuation.
✅ Verify and rectify errors in GSTR-3B and GSTR-1 filings.
✅ Reconcile Input Tax Credit (ITC) with GSTR-2B and correct mismatches.
✅ Clear all pending GST payments and ensure tax liabilities are settled.
Conclusion
March 2025 is a critical month for GST compliance, and businesses must act proactively to meet the new regulatory requirements. By taking advantage of the Section 128A Amnesty Scheme, ensuring CMP-05 compliance, and performing necessary return adjustments and ITC reconciliations, businesses can avoid penalties and stay compliant with GST laws.
Stay updated with the latest GST changes and ensure a smooth transition into the new financial year. For more updates, follow our blog and subscribe to our YouTube channel for step-by-step guidance on GST compliance!
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