CA’s GST Compliance Compendium 2025-26: High-Risk ITC Scenarios, RCM Rules, Amendments Explained

The GST regime for FY 2024-25 and 2025-26 is shifting from return filing to precision-based scrutiny, making Chartered Accountants responsible not just for compliance but for audit-proof documentation and risk control. This compendium highlights critical ITC rules such as mandatory GSTR-2B matching, time-barred reversals, HSN penalties, RCM documentation, and GSTR-1 vs 3B mismatch liabilities.

It also decodes major amendments effective April 2025, including compulsory Input Service Distributor (ISD) registration, the 30-day e-invoice reporting rule for ₹10 crore+ turnover, invoice-level TDS/TCS reporting in GSTR-7/8, and MFA-enabled GST portal logins. With actionable reconciliation checklists and statutory triggers, this guide helps CAs enforce preventive control systems, avoid interest and penalty exposures, and elevate client governance standards.

The CA’s Comprehensive GST Compliance Compendium: Data, Scenarios, and Critical Amendments

This compendium offers a detailed view of the most frequently encountered, high-risk GST scenarios and the critical recent amendments, with an emphasis on actionable data and statutory provisions relevant for CA-led client compliance, especially for FY 2024-25 and FY 2025-26.

Part I: Expanded Data for Critical Compliance Scenarios

Part II: Technical Deep Dive into Critical Recent Amendments

1. Mandatory Input Service Distributor (ISD) Mechanism (w.e.f. April 1, 2025)

The Finance Act 2024 mandates ISD registration, overturning the earlier flexibility of using cross-charge for common services.

• Statutory Basis: Amendment to Section 20 of the CGST Act, 2017.
• Definition: Input Services where the credit is attributable to more than one recipient (distinct person) must be distributed only through the ISD mechanism. Examples: Head Office Rent, Audit Fees, Group Software Licensing.
• Distribution Formula (Rule 39): ITC must be distributed pro-rata based on the aggregate turnover of the recipients in the preceding financial year.
• Action for CA:
  • Initiate ISD registration immediately for all multi-state clients (same PAN, different GSTINs).
  • Set up a process to issue ISD Invoices and file GSTR-6 monthly.

2. E-Invoicing Timeline and Turnover Expansion (w.e.f. April 1, 2025)

The focus is now on immediate reporting to plug tax evasion and secure ITC.

• 30-Day Limit Expansion: The rule requiring e-invoices to be reported within 30 days of their issue date is extended to taxpayers with an AATO exceeding ₹10 Crore (down from ₹100 Crore).
• IRN Rejection: The IRP will automatically reject any e-invoice submitted after the 30-day window.
• Impact on ITC: An invoice lacking a valid IRN is not a valid tax document, making the recipient ineligible to claim ITC on it, leading to supply chain disruption.
• Action for CA:
  • Update ERP/Billing systems of affected clients to include automated checks and daily/near-real-time IRN generation.
  • Inform clients that an e-invoice is incomplete without the IRN and QR code.

3. GSTR-7 (TDS) & GSTR-8 (TCS) Reporting Granularity

• Change: Notification mandates invoice/document-wise details in GSTR-7 and GSTR-8 from February 11, 2025.
• Implication: Tax deductors/e-commerce operators can no longer use summary figures; they must report specific GSTINs against specific Invoice/Document Numbers.
• Compliance Risk: This change enhances the auto-population accuracy of the deductee’s GSTR-2B and GSTR-2A, increasing the scrutiny on the recipient’s TDS/TCS credit claims.

4. Multi-Factor Authentication (MFA) on GST Portal (w.e.f. April 1, 2025)

• Requirement: MFA will be mandatory for all taxpayers to secure access to the GSTN portal.
• Action for CA: This is a key risk management measure. Ensure clients update their security protocols and register multiple authorised contacts for receiving OTPs to prevent login failures.

Part III: Essential Reconciliation and Audit Closing Checklist

The period between April and November following the financial year is critical for reconciliation and spillover management.

1. GSTR-1 vs GSTR-3B Reconciliation

2. Year-End ITC Reconciliation (GSTR-2B vs. Books)

1. Missing ITC: Identify invoices from FY 2024-25 recorded in the purchase ledger but missing in GSTR-2B. Follow up with suppliers to ensure they upload these invoices in their GSTR-1 by the October 2025 deadline. Claim the eligible ITC in the client’s GSTR-3B of October 2025.
2. Blocked ITC (Sec 17(5)): Verify that no ITC has been claimed on blocked items (e.g., motor vehicles, food & beverages, beauty treatment services, works contract for immovable property). Any such availed ITC must be reversed in GSTR-3B (Table 4B(2)).
3. Annual Reversal (Rules 42/43): Conduct the final annual re-computation of ITC attributable to exempt/non-business supplies. Any net additional reversal/reclaim must be adjusted in the GSTR-3B of October 2025.

3. Reverse Charge Reconciliation

• Identify RCM Services: Reconcile expense accounts for RCM-liable services (e.g., GTA, legal services, import of services).
• Self-Invoice Audit: Ensure a Self-Invoice and Payment Voucher are raised for every RCM transaction and that the RCM liability is paid in cash in the same month it is recorded, with ITC claimed in the same GSTR-3B for a simultaneous effect.

By maintaining this high level of transactional granularity and adherence to the latest statutory timelines, CAs can effectively mitigate audit risk and ensure robust client compliance under the evolving GST regime.