Important Updates on GST Return for FY 2025-26

GST filing is evolving in FY 2025–26 with tighter rules and smarter features. From July, GSTR 3B auto tax fields become locked, only GSTR 1A allows corrections, reducing errors but adding compliance pressure. Expect mandatory quarterly HSN dropdowns, stronger OTP/MFA login, and a strict three year window to file returns. Staying on top of these changes keeps your business compliant, efficient, and hassle free. This blog will provide you with detailed information on the important updates on GST return for FY 2025-26.

What is a GST Return?

A GST return is a legal document that every registered taxpayer must file with the government to declare their sales, purchases, tax collected, and tax paid. It helps the government track a business’s tax liabilities and ensures that the correct amount of Goods and Services Tax (GST) is paid or refunded. Returns must be filed monthly, quarterly, or annually, depending on turnover and business type.

Types of GST Returns

Under the GST system, different types of GST returns must be filed by registered taxpayers based on their business activity, turnover, and registration type. Each return serves a specific purpose and keeps your GST record updated.

• GSTR 1

This return covers all sales (outward supplies) made by a regular taxpayer. Filed monthly or quarterly (if under QRMP), it supplies invoice details that auto-populate recipient returns. Under QRMP, you can also use the optional Invoice Furnishing Facility (IFF) for early B2B invoicing.

• GSTR 3B

A simplified summary return for tax payments and input credit claims. Filed monthly by most businesses, or quarterly if under QRMP. It must accurately reflect total sales, purchases, and tax amounts to ensure compliance, even if there is no transaction.

• CMP 08

This statement-cum-challan form is for composition dealers (small taxpayers paying tax at a fixed rate). It is filed quarterly to declare turnover and make tax payments. You must submit it by the 18th of the month after each quarter, even if there is no turnover.

• GSTR 4

This is the annual return for composition taxpayers, summarising their quarterly CMP 08 filings. From FY 2024 25 onward, the due date is June 30. It consolidates your yearly turnover, tax paid, and tax liabilities as a small-scale operator.

• GSTR 5

For non-resident taxable persons, this monthly return reports supplies made in India. The due date is the 20th of the following month, awaiting final update from CBIC, but currently scheduled by default.

• GSTR 5A

Used by international OIDAR service providers (digital services) supplying to Indian consumers. It reports their monthly sales and tax collected, with a due date of the 20th of the following month.

• GSTR 6

Filed monthly by Input Service Distributors (ISD) to declare the input tax credit they distribute across branches. This ensures that shared tax credits are passed correctly within the organisation.

• GSTR 7

For businesses or agencies deducting TDS under GST, this monthly return reports tax collected at source and deposit details. Timely filing by the 10th helps maintain compliance.

• GSTR 8

This form is for e-commerce operators who collect TCS under GST. It reports their monthly sales and tax collected on behalf of sellers through their platform.

• GSTR 9

The annual return for regular taxpayers, summarizing sales, purchases, credits, and taxes paid over the year. It helps reconcile monthly filings and must be completed by December 31.

• GSTR 9C

Required when turnover exceeds Rs. 5 crore, this is a reconciliation statement between audited accounts and GSTR?9. It must be certified by a Chartered Accountant and filed along with the annual return.

• GSTR 10

When a business cancels GST registration, this final return must be filed within three months. It documents closing stock and pending liabilities after deregistration.

• GSTR 11

This monthly return is for UIN holders like embassies and UN bodies to claim GST refunds on inward supplies. Filed by the 28th of the next month.

• ITC 04

For principals sending goods to job-workers, these return details inputs or capital goods dispatched. Filing is annual if turnover ≤ Rs. 5 crore (due April 25) or half-yearly if turnover > Rs. 5 crore (due April 25, October 25).

Important Updates on GST Return for FY 2025-26

Here are the important updates on GST return for FY 2025-26:

GSTR 3B Gets Locked from July 2025

Starting July’s tax period, auto populated liability fields in GSTR 3B will be non-editable. You must file sales in GSTR 1 (or GSTR 1A corrections) before GSTR 3B due dates (by the 20th). After this, edits are not allowed, increasing the need for early accuracy.

Introducing GSTR 1A for Corrections

To adjust sales data, use GSTR 1A before filing GSTR 3B. However, it doesn’t update in real time, and changes after the 14th may only reflect next month, potentially delaying Input Tax Credit (ITC).

Three-Year Filing Limit Now Enforced

From July 1, 2025, GSTN will block return filing older than three years from the due date. Forms like GSTR 1, 3B, 4, 5, 6, 7, 8, and 9 will be inaccessible once this window closes. No late filings mean no ITC recovery for missed periods after the deadline.

Mandatory HSN Code Reporting

HSN code rules have been strengthened:

• Turnover ≤ Rs. 5 crore requires 4-digit HSN codes.
• Turnover > Rs. 5 crore requires 6-digit codes.

Manual typing is disabled; codes must be selected from the dropdown in GSTR 1/1A.

Enhanced Security & Two-Factor Login

GST users may soon need two-factor authentication (OTP or Aadhaar) for filing HSN-heavy returns like GSTR 1 and HSN modal screens, strengthening account security and compliance.

Why These Changes Matter?

• Accuracy is key: With locked returns and no manual edits, focus on error-free GSTR 1 filings.
• Filing windows narrowed: Three-year block means no catching up late.
• Improved HSN transparency: Standardised codes help tracking and reduce discrepancies.
• Security gets stronger: Multi-factor login helps protect taxpayer data.

Who is Affected by These Changes?

The following details include the people who are affected by these changes:

• Regular GST-Registered Businesses: All businesses registered under GST must now file GSTR-1 accurately. Once filed, the details are locked in GSTR-3B, so corrections are no longer allowed later.
• Taxpayers under the QRMP Scheme: Small businesses using the quarterly return and monthly payment scheme must be careful with Invoice Furnishing Facility (IFF) and quarterly GSTR-1 filing, as mistakes may delay ITC claims.
• Late Filers or Those with Pending Returns: Taxpayers who missed filing GST returns for previous years will be blocked from filing them if they are older than 3 years, starting July 1, 2025. This can lead to permanent loss of input tax credit.
• SMEs and Start-ups: Smaller businesses that often face staff shortages or compliance delays may struggle with stricter timelines, correction limits, and the risk of penalties for inaccuracies.
• Accountants and CA Firms: Professionals managing multiple clients must now ensure correct HSN codes, secure login, and timely corrections through GSTR-1A, as filing errors are harder to fix.
• E-commerce Sellers and Service Providers: Businesses dealing with high invoice volumes are more exposed to mismatches, making them vulnerable to ITC rejections or audit flags.

Benefits of GST Return Filing

The details below include the benefits of GST return filing:

1. Claiming Input Tax Credit (ITC): When you file GST returns on time, you can claim the Input Tax Credit for tax paid on purchases. This reduces your overall tax liability and improves cash flow. Regular filings ensure you don’t miss eligible credits due to mismatched invoices.
2. Better Cash Flow Management: Timely GST filings help you reclaim paid taxes faster and avoid penalties. With accurate tracking of credits and liabilities, you can budget more effectively and maintain smoother cash flow.
3. Avoiding Penalties and Interest: Filing on time keeps you free from late fees, interest charges, and notices. Penalties can add up to Rs. 50 per day (or more), so punctuality helps keep your expenses in check.
4. Strengthening Compliance and Credibility: Consistent GST return filing builds a clean compliance history. This boosts trust with suppliers, banks, and investors. A strong compliance record can help in securing loans or entering supply chains.
5. Reducing Audit Risk and Legal Hassles: Timely return submission reduces the chances of being selected for audits or scrutiny. Proper documentation and consistency protect your business from government penalties or enforced audits.
6. Simplifying Financial Management: Regular filings encourage you to reconcile sales, purchases, and taxes promptly. This leads to cleaner accounting, easier financial analysis, and timely identification of discrepancies.
7. Access to Government Schemes and Incentives: Many government programs and subsidies require GST compliance as a criterion. Filing returns regularly can help you become eligible for benefits like grants or tender licenses.
8. Transparent Pricing and Market Advantage: GST compliance ensures that your pricing reflects tax credits and avoids invoicing errors. Transparent costs build trust with customers and partners, enhancing brand reputation.
9. Legal and Policy Clarity: GST returns supply accurate data to the government, supporting informed policy decisions and maintaining transparent tax systems. As a compliant taxpayer, you contribute to stronger national economic health.
10. Data Driven Business Insights: GST data can reveal trends in sales, procurement, and tax liabilities. Analysing this information helps make strategic decisions, such as identifying cost-saving opportunities or planning inventory.
11. Professional Reliability and Lower Costs: Using GST filing services or software reduces manual errors and cuts down the administrative burden. It saves professional costs in the long run and improves operational efficiency.
12. Boosting Industry Image and Partnerships: Regular GST filings reflect professionalism and accountability. This helps in forming business partnerships, winning client trust, and expanding into new markets.

Common Mistakes to Avoid When Filing GST Returns

The following details include some common mistakes to avoid when filing GST returns:

• Entering Wrong GSTIN

Mistyping your own or vendor GSTIN leads to mismatches and processing delays. Always double-check the GSTIN before submitting returns.

• Mismatch Between GSTR-1 and GSTR-3B

If your sales figures in GSTR 1 don’t match the summary in GSTR 3B, this raises red flags and can delay Input Tax Credit (ITC). Reconcile both before filing.

• Incorrect Input Tax Credit Claims

Claiming ITC incorrectly, on blocked items or without valid invoices, can trigger penalties or credit denial. Match your GSTR 2A data with purchase records carefully.

• Missing NIL Returns

Even with no transactions, you must file NIL returns each period. Skipping this invites penalties and compliance issues.

• Wrong Classification of Supplies

Confusing zero-rated (exports) and nil-rated supplies (intra-state services at 0% tax) leads to credit rejections. Check classification before filing.

• Forgetting Reverse Charge Details

If tax is payable under Reverse Charge, it must be declared and paid. Missing this step means penalties and blocked ITC.

• Entering Incorrect HSN or Tax Codes

Wrong HSN codes or mixing IGST/CGST/SGST can disrupt reconciliation and attract scrutiny. Always use accurate tax headings.

• Late Filings and Penalties

Missing deadlines (like 20th for GSTR 3B or monthly returns) leads to Rs. 50 per day fines, plus interest. Set reminders and consider software tools.

• Ignoring Auto-Populated Data Edits

From July 2025, liability fields in GSTR 3B are auto-filled and locked. Any correction must be made early via GSTR 1A before filing GSTR 3B.

• Not Reconciling Regularly

Failing to reconcile purchase invoices with GSTR 2A/2B or bank statements makes errors harder to fix later. Monthly reconciliation prevents issues.

GST return filing in FY 2025–26 brings stricter rules, smarter tools, and no room for delay. With locked GSTR-3B fields, limited correction windows, and a three-year filing cap, businesses must act fast and file right. Staying compliant now means more savings, better credibility, and smooth operations ahead. Get GST-smart today, and avoid tomorrow’s tax troubles. In this article, you have learned about the important updates on GST return for FY 2025-26 in detail. Contact Online Legal India to get assistance and support in GST registration and GST return filing from professional experts.