Navigating GST Changes: 5 Essential Updates on E-Way Bill and E-Invoice

E-Way Bill

Navigating GST Changes: 5 Essential Updates on E-Way Bill and E-Invoice

E-Way Bill

As we step into the new financial year 2025-26, businesses must gear up for key compliance changes in GST, particularly concerning E-Invoicing and E-Way Bills. These aren’t just procedural formalities—they’re critical documents that validate tax liability and the movement of goods.

Failure to comply can attract severe consequences, including denial of Input Tax Credit (ITC), penalties of up to 200% on goods in transit, and post-supply penalties of up to 100%. With changes in invoice series and reporting timelines, it’s crucial to update your systems and internal processes accordingly.

Here’s a quick roundup of 5 significant updates you need to be aware of from April 1, 2025 onward.

Multi-Factor Authentication (MFA) Now Mandatory for All

The government has now made Multi-Factor Authentication (MFA) compulsory for all users accessing the e-Invoice and e-Way Bill portals from April 1, 2025. Previously applicable only to large taxpayers (AATO > ₹100 Cr), the MFA threshold was gradually lowered and is now applicable to all registered taxpayers, regardless of turnover.

MFA requires login via:

  • Username and password

  • OTP sent to the registered mobile number/Sandes app

✅ Action Point:
Ensure your GST-registered mobile numbers are active and up to date. Sub-users must be created with valid mobile numbers to avoid last-minute access issues.

Case-Insensitive IRN Validation Starts June 1, 2025

To streamline the invoice registration process, the Invoice Registration Portal (IRP) will treat invoice numbers as case-insensitive from June 1, 2025. For instance, “abc123”, “ABC123” or “Abc123” will all be considered the same.

This aligns with the treatment in GSTR-1, where invoice numbers are already case-insensitive, and will help avoid IRN duplication due to case mismatch.

✅ Action Point:
Standardize invoice number formats in your accounting system—preferably in uppercase—to prevent mismatches during IRN generation.

30-Day Time Limit for E-Invoice Reporting – Now for AATO > ₹10 Cr

From April 1, 2025, businesses with an Annual Aggregate Turnover exceeding ₹10 Cr will no longer be allowed to report e-Invoices older than 30 days on the IRP portal.

For example, an invoice dated April 1, 2025 must be reported by April 30, 2025. This applies to all document types requiring IRN, including credit and debit notes.

✅ Action Point:

  • Integrate your ERP/accounting systems with IRP to enable real-time e-Invoice generation.

  • Train your internal teams to adhere strictly to the 30-day reporting window, as late filing can result in ITC denial to buyers.

Note: This restriction does not currently apply to businesses with AATO between ₹5 Cr and ₹10 Cr, although e-Invoicing remains mandatory for them.

E-Way Bill Generation Timeframe Restricted to 180 Days

Effective January 1, 2025, E-Way Bills can only be generated for documents issued within the last 180 days.

For instance, from January 1, 2025, you cannot generate an E-Way Bill for documents dated before July 5, 2024.

✅ Action Point:
Check the document date carefully before generating E-Way Bills. Delayed dispatches may need revised documentation.

E-Way Bill Extension Limit: Max 360 Days

Also from January 1, 2025, E-Way Bills can only be extended within 360 days from their original date of generation.

For example, a bill generated on January 1, 2025 can only be extended until December 25, 2025. This restricts the earlier practice of indefinite extension in exceptional cases.

✅ Action Point:
Avoid planning long-term dispatches that could exceed the 360-day validity window.

Read More: Pros and Cons of Presumptive Taxation Scheme for Professionals

Final Thoughts: Compliance is a Team Effort

The latest updates in GST E-Invoicing and E-Way Bill mechanisms emphasize the importance of automation, real-time reporting, and inter-department coordination. Compliance is no longer just the responsibility of finance or accounts—it involves your sales, logistics, and operations teams as well.

👉 Recommendations:

  • Upgrade ERP and accounting software for seamless IRN and E-Way Bill generation.

  • Train staff across departments on new SOPs aligned with legal timelines.

  • Consult GST professionals for a comprehensive compliance roadmap.

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Pros and Cons of Presumptive Taxation Scheme for Professionals

Presumptive Taxation

Pros and Cons of Presumptive Taxation Scheme for Professionals

Presumptive Taxation

To reduce the compliance burden for small professionals, the Income Tax Act introduced the Presumptive Taxation Scheme under Section 44ADA. This scheme is especially useful for professionals like doctors, lawyers, architects, engineers, and others specified under Section 44AA.

What is Section 44ADA?

Section 44ADA allows eligible professionals to declare a fixed percentage of their gross receipts as income, without the hassle of maintaining detailed books of account or undergoing tax audits.

Who Can Opt for It?

  • Professionals with gross receipts up to ₹50 lakhs can avail the scheme.

  • From FY 2023-24 onwards, the limit has been enhanced to ₹75 lakhs, provided that at least 95% of the receipts are through banking channels (like cheque, online transfer, or UPI).

Presumptive Taxation

Key Benefits of Section 44ADA

By opting for this scheme, professionals enjoy the following:

✅ No need to maintain books of accounts as required under Section 44AA
✅ No requirement of audit under Section 44AB
✅ Simplified return filing with fewer documentation hassles

How Does It Work?

Income is presumed to be 50% of the gross professional receipts. For instance:

📌 Example:
Dr. Akash earns ₹40 lakhs during the year. Under Section 44ADA, he can declare ₹20 lakhs (i.e., 50%) as income. The remaining ₹20 lakhs is presumed to be professional expenses.

But here’s where most people get it wrong…

Common Misconceptions & A Word of Caution

Many believe that income under 44ADA can always be declared as 50% of gross receipts – regardless of actual expenses or cash flows. This is not true.

📌 Reality:

If your actual income exceeds 50% of your receipts, you must declare the higher income. The tax authorities may assess your income using two methods:

1. Direct Method

Let’s say Dr. Akash has ₹40 lakhs as gross receipts but only incurred ₹5 lakhs as expenses. The rest of the money (₹35 lakhs) is invested or spent personally. In this case, Dr. Akash must declare ₹35 lakhs as income – not ₹20 lakhs.

2. Indirect or Net Assets Method

The tax department can also look at changes in your assets, liabilities, and personal expenses to determine your actual income.

📌 Example:
Dr. Ajith’s Financial Snapshot

ParticularsFY 2021-22FY 2022-23
Assets₹50 lakhs₹75 lakhs
Liabilities₹20 lakhs₹10 lakhs

Personal expenses during the year: ₹5 lakhs
Gross professional receipts: ₹45 lakhs

📊 Income Calculation (Indirect Method):

  • Increase in assets = ₹25 lakhs

  • Decrease in liabilities = ₹10 lakhs

  • Personal expenses = ₹5 lakhs

  • Total = ₹40 lakhs

So, Dr. Ajith must declare ₹40 lakhs as income, not ₹22.5 lakhs (which is 50% of ₹45 lakhs).

⚠️ Consequences of Underreporting

If professionals continue to declare only 50% of their receipts when actual income is higher, the Income Tax Department may treat the differential as unexplained income/investment/expenditure, which can be taxed at a whopping 78% along with 10% penalty.

Presumptive Taxation

Final Takeaway

Section 44ADA is a powerful tool for small professionals to simplify tax compliance. However, it comes with a responsibility to assess actual income carefully. Here’s what you should remember:

  • You can declare higher income than 50%, and must do so if actual profits are more.

  • You can declare lower income, but only if you maintain books of accounts and get them audited.

Read More: Understanding Form 3CD Amendments: What Changed from April 1, 2025

✅ In Summary

SituationAction Required
Income = 50% of receiptsOpt for 44ADA, no audit/books needed
Income > 50% of receiptsDeclare higher income, no audit needed
Income < 50% of receiptsMaintain books and get audit done

Smart compliance is better than risky shortcuts. Use Section 44ADA wisely and stay clear of unwanted scrutiny!

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Understanding Form 3CD Amendments: What Changed from April 1, 2025

Form 3CD

Understanding Form 3CD Amendments: What Changed from April 1, 2025

Form 3CD

The Central Board of Direct Taxes (CBDT), via Notification No. 23/2025 dated March 28, 2025, has introduced key amendments to Form 3CD under the Income-tax Rules, 1962. These changes come into effect for all tax audit reports signed on or after April 1, 2025, and are applicable for Assessment Year 2025–26 onwards.

Key Amendments and Practical Implications

1. Clause 12 – Presumptive Income under Section 44BBC

A new clause has been added to cover entities engaged in broadcasting and production opting for presumptive taxation. Tax professionals should proactively identify clients who may fall under this category to ensure timely and correct reporting.

Form 3CD

2. Clause 19 – Chapter VI-A Deductions

Deductions under Sections 80-IB, 80-IC, and 80-ID have been removed. These sections have lost relevance, and their omission aligns the reporting format with current tax law.

3. Clause 21 – Disallowance under Section 43B

A new reporting requirement has been introduced for “Settlement Expenses” under disallowances. This becomes relevant in cases involving contractual dispute settlements or negotiated resolutions. Teams should closely examine expense classifications during audits.

4. Clause 22 – Interest Payable under MSMED Act

Auditors are now required to report interest payable to Micro and Small Enterprises, regardless of whether the interest has been paid. This change demands accurate vendor classification and a reliable ageing analysis of outstanding dues.

5. Clause 23 – Buy-back of Shares under Section 115QA

This clause now requires disclosure of the amount received and the acquisition cost of shares in buy-back transactions. Auditors must scrutinise valuation methodology and ensure all supporting documents are in place.

6. Clause 26 – TDS on Payments to Non-Residents

This clause has been expanded to include more detailed reporting on TDS compliance related to payments made to non-residents. With increased scrutiny of foreign remittances, maintaining detailed documentation is now more critical than ever.

7. Clauses 28 and 29 – Reporting under Sections 56(2)(viia) and 56(2)(viib)

These clauses have been removed due to legislative changes, simplifying reporting in this area.

8. Clause 31 – Reporting of Loans and Deposits

The clause now requires mandatory classification of loans and deposits into twelve specific categories. This change allows tax authorities better visibility and tracking. Practitioners must ensure all entries are reconciled with the books of accounts and categorised appropriately.

9. Clause 36B – Newly Inserted for Buy-back Transactions

A new clause, Clause 36B, has been introduced for additional reporting of buy-back activities under Section 115QA. While somewhat similar to Clause 23, this addition will likely support more refined data analysis by tax authorities.

Read More: Mutual Funds and Stocks: Understanding Capital Gains Tax Implications in 2025

Effective Date

All amendments are applicable to audit reports signed on or after April 1, 2025, aligning with AY 2025–26.

What This Means for Audit Teams

These changes go beyond compliance—they reflect a broader shift in the way tax audits are expected to function. To stay ahead, firms should:

  • Update internal audit checklists and templates

  • Review client classification procedures, especially for MSME vendors

  • Enhance documentation standards for foreign transactions

  • Educate teams on new clause-level expectations

  • Establish robust reconciliation processes for loans, deposits, and buy-back entries

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