Goods and Services Tax (GST) compliance is essential for businesses in India to avoid penalties, claim benefits like Input Tax Credit (ITC), and ensure smooth operations. Whether you're dealing with GST invoices, e-way bills, GST billing software, or handling a GST notice, understanding the current rules can save you time and money. This comprehensive guide addresses common queries on GST compliance, GST help, GST raids, GST bills, GST invoice software, free billing options, and invoice generators, based on the latest regulations effective from 2025.
GST Basics and Input Tax Credit (ITC)
What is Input Tax Credit (ITC) in GST, and how does it work?
Input Tax Credit allows businesses to reduce their GST liability by subtracting the GST paid on purchases (input tax) from the GST collected on sales (output tax). Essentially, you only pay tax on the value added.
Example:
- Purchase raw materials: ₹10,000 + ₹1,800 GST
- Sell product: ₹15,000 + ₹2,700 GST
- Net GST payable: ₹2,700 – ₹1,800 = ₹900
Key ITC Conditions (Section 16 of CGST Act):
- Valid Tax Invoice: Must possess a valid tax invoice or debit note
- Receipt of Goods/Services: Must have received the goods or services
- Tax Payment: Supplier must have paid the tax to the government
- Return Filing: Must file required GST returns
- 180-Day Payment Rule: Must pay supplier within 180 days from invoice date
Visit: cbic-gst.gov.in for detailed ITC guidelines.
Why is GST registration beneficial even if my turnover is below the threshold?
While GST registration is not mandatory for turnover below ₹40 lakh (goods) or ₹20 lakh (services), voluntary registration offers strategic advantages:
Benefits:
- Claim Input Tax Credit on purchases, reducing overall tax burden
- Enhanced business credibility with vendors and clients
- Easier interstate trade without compliance restrictions
- Eligibility to sell on e-commerce platforms like Amazon and Flipkart
- Better access to business loans due to improved financial documentation
Drawbacks to Consider:
- Regular GST return filing obligations
- Potential increase in CA fees or software costs
- Need to collect GST on every sale, which may affect pricing competitiveness
Assessment Tip: Evaluate if your customers need GST credit and if you plan to scale or sell across states before deciding on voluntary registration.
In which 5 cases is voluntary GST registration recommended, even below the turnover threshold?
Recommended Scenarios:
- Input Tax Credit Claims: To claim ITC on office supplies, equipment, or machinery
- B2B Client Requirements: When serving business clients who require GST invoices
- E-commerce Platform Sales: Mandatory for selling on Amazon, Flipkart, etc., regardless of turnover
- Business Credibility: A GSTIN signals legitimacy and fixed business premises
- Export Services: Freelancers receiving foreign payments need GST registration for zero-rated supply benefits
Reference: Visit services.india.gov.in for GST registration procedures.
GST Invoices, Billing Software, and Compliance
Why do GST-compliant invoices matter, and what happens if you fail to issue them properly?
As per GST regulations, failure to issue proper invoices can lead to:
- Penalties up to ₹10,000
- Loss of Input Tax Credit claims
- GST notices and scrutiny
Creating GST-compliant invoices helps avoid penalties, enables ITC claims, and builds trust with customers and authorities. Digital tools like GST invoice software or free billing apps simplify creation and ensure compliance.
What are the mandatory fields in a GST invoice or GST bill format?
Essential Invoice Elements:
- Invoice Number & Date: Unique identifier and issue date
- Supplier Details: Name, address, and GSTIN
- Recipient Details: Name, address, and GSTIN (if registered)
- HSN/SAC Code: Classification for goods/services
- Item Details: Description, quantity, rate, taxable value
- Tax Details: CGST, SGST, or IGST rates and amounts
- Total Amount: Including applicable taxes
Using a software, such as TaxEase makes the invoicing hassle free. Creating invoices is absolutely free on TaxEase.
Resource: Check cbic-gst.gov.in/gst-goods-services-rates.html for current GST rates.
What should you consider about quoted prices and invoice amounts in GST transactions?
Key Considerations:
- Understand if quoted price is inclusive or exclusive of GST
- Verify supplier's GSTIN validity for legitimate ITC claims
- Confirm your eligibility to claim ITC on the transaction
- Calculate actual payment amount after GST
Important: Use GST strictly for business-related expenses to avoid notices and penalties. Proper invoicing with GST software prevents financial errors and ensures compliance.
What happens if you forget to cancel an e-invoice on the portal? How to fix the issue of mismatch in such case?
If you've cancelled an invoice in your books but forgot to cancel it on the e-invoice portal:
Timeline: GST rules allow only 24 hours to cancel an e-invoice
Solution if 24 hours have passed:
- Issue a Credit Note
- Adjust in your GSTR filing to align books and portal data
- Use reliable billing software with automated reminders for compliance
Important: Data mismatches in GSTR-1 can lead to GST notices and compliance issues.
GST Registration and Documentation
What documents are acceptable as address proof for GST registration?
Valid Address Proof Documents:
- Latest Electricity/Water Bill or Property Tax Receipt
- Rent Agreement (with owner's NOC if rented)
- Latest Bank Statement or Passbook with address
- Municipal Khata Certificate or Trade License
- Ownership Documents like Sale Deed or Registry Copy
- Shop Establishment Certificate
- Landline or Broadband Bill with business name and address
Best Practice: Ownership documents provide strongest proof for self-owned premises.
Can two GSTIN numbers be registered at the same address?
Yes, the GST Act does not prohibit multiple GST registrations at a single address, as clarified by the Kerala Advance Ruling Authority in the Space Lens Office Solutions Pvt. Ltd. case.
Compliance Requirements:
- Obtain landlord's permission for sub-leased arrangements
- Ensure clear space demarcation (desk or cabin assignments)
- For inventory-based businesses, stock separation may be challenging
- Feasible for startups and service-based businesses if rules are followed
How do you update your business name in GST registration?
Process:
- File Form REG-14 with supporting documents
- GST officer will verify and approve the changes
- Update promptly to avoid Section 28 notices
Important: Always update changes in business name, address, or details promptly for GST compliance.
How can you avoid PAN verification errors during GST registration?
Common Issue: Name spelling mismatch between PAN card and Income Tax records
Solution:
- Verify PAN details match the Income Tax database before applying
- Use the exact name format from IT records
- Complete PAN corrections if needed before GST registration
- Valid PAN is mandatory for GST registration
When is GST registration required for a food business?
Registration Requirements:
- Online Platform Sales (Swiggy, Zomato): GST registration not required (platforms handle GST)
- Offline Sales (restaurant, café, direct delivery): Mandatory after ₹20 lakh annual turnover
- Start without registration and apply later when threshold is crossed
Exports under GST
What is FIRC, and why is it important for exporters under GST?
Foreign Inward Remittance Certificate (FIRC) is issued by your bank to confirm receipt of foreign payment and validates zero-rated supply under GST.
Required By:
- Exporters receiving foreign currency payments
- Freelancers with international clients
- Agencies providing digital services abroad
- GST-registered businesses claiming ITC on exports
Process:
- After payment receipt, request FIRC from your bank
- File RFD-01 for GST refund
Important: Without FIRC, GST officers may reject zero-rated claims, blocking refunds or ITC.
How are exports treated under GST, and what filing rules apply?
Under GST, exports are zero-rated supplies (no GST payable).
Filing Requirements (May 2025 GST Advisory):
- Report export invoices in Table 6A, regardless of recipient type
- In HSN summary (Table 12), select B2C even for foreign B2B clients
- Table 4B is for domestic taxable B2B supplies, not exports
Benefit: Correct filing ensures smooth refunds, no HSN mismatches, and clear audits.
What is a Letter of Undertaking (LUT) for exports, and how do you file it?
LUT Benefits for regular exporters:
- No GST on exports without upfront payment
- No refund claims needed
- Improved cash flow
- Easier compliance
Filing Process:
- Visit www.gst.gov.in
- Go to Services → User Services → Furnish Letter of Undertaking
- File once per financial year
- Fill and submit the form
Alternative: Without LUT, pay GST upfront and claim refunds later.
How do you get an export license in India?
Step-by-Step Process:
- Business Registration: Register as Sole Proprietorship, Partnership, or Private Limited with valid PAN
- Apply for IEC Code:
- Visit dgft.gov.in
- Submit PAN, bank details, business address, KYC
- Obtain HS Code for your product
- Additional Clearances: For restricted goods (food, pharmaceuticals):
- File Form ANF-2N on DGFT
- Secure regulatory clearances
Result: Proper licensing enables confident international operations.
GST Returns and Filing
Which GST returns are mandatory based on business turnover?
Return Filing Requirements as per the turnover:
| Return Type | Mandatory For | Frequency |
|---|---|---|
| GSTR-1 | All registered taxpayers | Monthly (>₹5 cr) / Quarterly (<₹5 cr) |
| GSTR-3B | All registered taxpayers | Same as GSTR-1 frequency |
| GSTR-9 | Annual turnover >₹2 crore | Annual (Due: Dec 31) |
| GSTR-9C | Annual turnover >₹5 crore | Annual (with audited accounts) |
New Rule (July 2025): All GST returns must be filed within 3 years from due date.
What happens if you cancel your GST registration—do you need to file any final returns?
Yes, file GSTR-10 (Final Return) within 3 months of cancellation.
Requirements:
- Report ITC reversal on closing stock
- Disclose pending tax liability
- Failure can result in ₹10,000 minimum penalty plus interest
Recommendation: Set deadline and consult a CA for accurate filing.
What are the major GST compliance changes effective July 2025?
Three Key Changes:
- GSTR-3B Becomes Non-Editable:
- Auto-populated from GSTR-1 or IFF only
- Manual corrections via GSTR-1A only
- Prevents mismatches and revenue leakage
- 3-Year Time Limit:
- Returns older than 3 years permanently blocked
- Clear overdue returns before July 2025
- E-Way Bill 2.0 Portal Launch:
- Synchronized with 1.0 for smooth transition
- Updated compliance requirements
GST Notices, Officers, and Raids
What should you do if you receive a GST notice?
First identify the Section under which the notice has been given:
| Section | Type | Time Limit | Penalty |
|---|---|---|---|
| Section 73 | Non-fraud/Unintentional error | 3 years | 10% of tax or ₹10,000 |
| Section 74 | Fraud/Deliberate error | 5 years | 15-100% of tax |
| Section 74A | Minor offences (≤₹1 lakh) | 42 months | 0-30% of tax |
Response Strategy:
- Don't panic - Understand the section and time limits
- Verify allegations against your records
- Respond within prescribed time
- Seek professional help for complex cases
Key: Departments may misclassify cases; respond according to actual facts, not their classification.
What are the powers of a GST officer during a visit or raid?
Visit Types and Powers:
- Verification:
- Verify location and take photos
- Check bills/agreements
- Cannot ask for invoices/bank statements
- Inspection (Needs Joint Commissioner approval via INS-1):
- Can check invoices, accounts, stock
- Must state reason for inspection
- Search/Seizure (For suspected evasion):
- Full authority to check phones/laptops, documents
- Highest level of scrutiny
Your Rights: Always ask - "Is this verification, inspection, or search?" and check their authority document respectfully.
What if a GST officer asks you to visit the office after registration?
Normal Process: Most registrations are approved online; physical verification is rare.
Triggers for Physical Verification:
- Failed Aadhaar verification
- Risky business flags
- Document doubts
Your Response:
- Officers usually visit your premises - you're not required to go
- If asked to visit, request written notice
- Submit only checklist documents
- Consider sending CA/representative
Why must every branch maintain its own GST records?
Legal Requirement: Section 35 of the GST Act mandates each branch must keep physical records at its location.
Consequences of Non-Compliance:
- Goods may be treated as unaccounted
- Penalties and tax demands
- Increased audit scrutiny
Solution: Ensure branch-specific GST files for compliance - storing only at head office violates rules.
Is it legal to charge GST before GSTIN approval?
No, per Section 32 of the GST Act, you cannot charge GST until GSTIN is approved.
Risks of Premature Charging:
- Application rejection
- Legal issues and audits
- Customer complaints
Solution: If charged by mistake, refund the amount. Start charging only after GSTIN approval.
What bank transaction limits trigger GST registration?
Registration Thresholds:
- Service businesses: >₹20 lakh annually
- Trading businesses: >₹40 lakh annually
Consequences of Non-Registration:
- Legal action for crossing threshold without registration
- Income Tax scrutiny on large deposits
Best Practices:
- Avoid cash acceptance for others
- Prevent third-party transfers
- Keep business/personal accounts separate
- Register and file on time
Latest GST Compliance Updates for 2025
What are the new Multi-Factor Authentication (MFA) requirements?
Implementation Timeline:
- January 1, 2025: Mandatory for AATO >₹20 crores
- February 1, 2025: Extended to AATO >₹5 crores
- April 1, 2025: Mandatory for ALL taxpayers
MFA Requirements:
- Additional verification beyond user ID/password
- OTP to registered mobile number
- Enhanced portal security against unauthorized access
Preparation Steps:
- Update registered mobile numbers
- Train staff on new authentication process
- Test MFA setup before mandatory dates
Reference: www.gst.gov.in for MFA setup instructions.
What are the new E-invoicing rules for 2025?
Effective April 1, 2025:
- Threshold reduced to ₹10 crore AATO (from ₹5 crore)
- Mandatory 30-day reporting to IRP (Invoice Registration Portal)
- Automatic rejection after 30-day window
- Loss of ITC for late submissions
Current Rule (August 2023): E-invoicing mandatory for businesses >₹5 crore turnover.
Compliance Action: Businesses must upload e-invoices to IRP within 30 days of invoice issuance to maintain ITC eligibility.
What are the new E-way Bill restrictions?
Effective January 1, 2025:
- EWB generation restricted to base documents not older than 180 days
- Extension limits capped at 360 days total
- Prevents backdated invoice misuse
Current Requirements:
- Mandatory for goods >₹50,000 value
- Two parts: Part A (consignment details) and Part B (transport details)
- Validity: 1 day per 200 km distance
State-wise Variations: Some states have different thresholds - check local rules.
What is the new Mandatory ISD Registration requirement?
Effective April 1, 2025:
Businesses with multiple GST registrations under same PAN must:
- Obtain Input Service Distributor (ISD) registration
- Issue ISD invoices for common services
- File GSTR-6 returns for ITC distribution
Previously: Could use cross-charge model; now ISD registration is compulsory.
Benefits: Enhanced transparency and standardized ITC allocation across branches.
GST Composition Scheme and GSTR-4
What is GSTR-4 and who needs to file it?
GSTR-4 is the annual return for composition scheme taxpayers.
Eligibility for Composition Scheme:
- Manufacturers/Traders: Annual turnover ≤₹1.5 crore
- Service Providers: Annual turnover ≤₹50 lakh
- Restaurants (excluding alcohol): Up to ₹1.5 crore
GSTR-4 Filing Requirements:
- All composition scheme taxpayers (even if opted out during the year)
- Due Date: June 30 (extended from April 30 for FY 2024-25 onwards)
- Cannot be revised once filed
- Late Fee: ₹50 per day (max ₹2,000 for taxable, ₹500 for nil returns)
Important: GSTR-4 cannot be filed beyond 3 years from due date (effective July 2025).
GST Refunds
What is RFD-01 and how to claim GST refunds?
RFD-01 is the online application for GST refunds.
Types of Refunds Available:
- Export of goods and services (tax paid/unpaid)
- Excess balance in electronic cash ledger
- Accumulated ITC due to inverted duty structure
- Tax paid under wrong head (CGST/SGST vs IGST)
- Excess payment of tax
Filing Process:
- Login to GST Portal - www.gst.gov.in
- Select Refund tab → Application for Refund
- Choose refund type and fill details
- Submit with required documents
- ARN generated for tracking
Officer processes within 15 days
Minimum Refund Amount: ₹1,000
For Exporters: FIRC (Foreign Inward Remittance Certificate) required for foreign payment validation.
Additional GST Help and Best Practices
How can billing software help with GST compliance?
GST Billing Software Benefits:
- Auto-compliant GST invoices with mandatory fields
- Real-time ITC tracking and reconciliation
- E-way bill integration for goods movement
- GSTR filing automation and error reduction
- HSN code suggestions based on product descriptions
- Free billing options available for small businesses
Use an online software, such as TaxEase for creating GST compliant invoices for free. Sign up for plans to file hassle free GST returns.
Key Features to Look For:
- Cloud-based access for multi-location businesses
- Integration with accounting systems
- Regular updates for GST rule changes
- Customer support for compliance queries
Government Resources: Use official portals for authentic information:
- GST Portal: www.gst.gov.in
- GST Council: www.gstcouncil.gov.in
- CBIC: cbic-gst.gov.in
What are the key compliance deadlines to remember for 2025?
Critical Dates:
| Date | Requirement |
|---|---|
| January 1, 2025 | EWB restrictions (180-day limit), MFA for ₹20cr+ |
| February 1, 2025 | MFA for ₹5cr+ turnover |
| April 1, 2025 | MFA mandatory for all, ISD registration, E-invoice 30-day rule |
| June 30, 2025 | GSTR-4 due date (extended from April 30) |
| July 1, 2025 | GSTR-3B auto-lock, 3-year filing limit |
| December 31, 2025 | GSTR-9 annual return due |
How to stay updated with GST changes?
Official Channels:
- GST Portal Notifications: www.gst.gov.in
- CBIC Circulars: cbic-gst.gov.in
- GST Council Updates: www.gstcouncil.gov.in
- State GST Departments: Check respective state portals
- Professional Consultations: CA/tax advisor guidance
Best Practice: Subscribe to official notifications and maintain updated billing software to ensure automatic compliance with rule changes.
Conclusion
This comprehensive FAQ covers essential aspects of GST compliance in India for 2025, incorporating the latest updates on e-way bills, billing software, GST notices, multi-factor authentication, e-invoicing, and refund processes. The GST framework continues evolving with enhanced digital security, streamlined processes, and stricter compliance requirements.
