GST Tightens the Reins: No More Edits, No More Extensions

India’s goods and services tax (GST) journey began in 2017, with an aim to unify the country’s fragmented indirect tax system and advancing the broader goal of promoting ease of doing business. But eight years on, that promise seems to be caught in a web of ever-evolving compliance rules. What began as an effort to streamline India’s tax landscape is now increasingly burdened by frequent shifts in the system that are beginning to chip away the very foundation of “ease of doing business”.

In recent days, in a move aimed towards tightening and strengthening the compliance ecosystem, the Government has issued two key advisories that may have a significant impact on taxpayers.

Advisory on three-year time-limit for GST return filing

The advisories issued on 7-6-2025 and 18-6-2025 has reaffirmed the introduction of a three-year statutory time-limit for filing GST returns. The said advisory has stated that the taxpayers shall not be allowed to file their GST returns after the expiry of a period of three years from the due date of furnishing the said return under Sections 37¹, 39², 44³ and 52⁴ of the Central Goods and Services Tax Act, 2017 (CGST Act). This change, while rooted in legislative amendments is now being operationalised in the GST portal as well.

The said time-limit of 3 years was introduced by amending the abovementioned sections of the CGST Act. While these were amended last year through the Finance Act, 2023⁵, the recent advisory marks the practical restriction introduced in the GST portal.

The three-year limitation period has been made applicable to all GST returns i.e. GSTR-1, GSTR-3B, GSTR-4, GSTR-5, GSTR-5A, GSTR-6, GSTR-7, GSTR-8 and GSTR-9. It applies universally to all registered persons, including those whose registrations stand suspended or cancelled.

The said restriction on filing GST returns aligns with the recommendations of the 48th GST Council Meeting⁶, where the need for a final cut-off date was emphasised to streamline the storage system and promote a definitive compliance timeline. Although the said change has been introduced by the Government with well-intentions, the blanket application of this time-limit may create certain practical hardships for the taxpayers.

In cases where registration remains suspended or cancellation has not been revoked in time, taxpayers may find it impossible to file returns within the prescribed three-year window.

Moreover, no specific redressal mechanism has been prescribed by the GST authorities for genuine hardship cases. As a result, affected taxpayers may have no option but to knock the doors of the High Courts by filing writ jurisdiction.

Advisory on non-editable auto-populated liability in GSTR-3B

To further tighten the compliance mechanism, the Government has issued another advisory on 7-6-2025, announcing that auto-populated liability in Form GSTR-3B, derived from GSTR-1 and GSTR-1A, will become non-editable from July 2025.

This marks a critical step and is expected to have a considerable impact on return filing practices across industries.

As per current practice, GSTR-3B, the summary return for reporting outward and inward supplies and discharging tax liability, is auto-populated with data from GSTR-1 (outward supplies) and GSTR-1A (auto-drafted amendments). Until now, taxpayers had the flexibility to edit this auto-populated data, which enabled them to manually report invoice-wise liability especially in cases where there was a failure in correctly reporting the transactions in GSTR-1.

However, with effect from July 2025, GSTR-3B will be locked and become non-editable with auto-populated data flowing from GSTR-1 and GSTR-1A.

It was an industry practice to discharge tax liability via demand and recovery certificate — DRC-03 to avoid interest liabilities in case even when it had failed to disclose such liability in GSTR-1. The corresponding outward liability in GSTR-3B after reporting the liability in GSTR-1 in subsequent months was manually adjusted.

However, with the new restriction in place, such manual adjustment of tax liability in GSTR-3B will no longer be feasible, potentially resulting in dual taxability. As a result, the option of routing the tax payment via DRC-03 seems impossible.

A fresh advisory issued on 16-5-2025 has momentarily eased concerns around non-editability of auto-populated values in Table 3.2 of GSTR-3B from April 2023 which was mandated by an earlier advisory issued on 11-4-2025. Amidst mounting pushbacks from taxpayers over operational challenges, the Government has now kept Table 3.2 of GSTR-3B editable. While this may appear as a breather, the broader message is clear that the Government is steadily steering towards a return ecosystem where manual intervention will not be allowed by the taxpayers.

Despite the fact that mechanism of amending GSTR-1 vide GSTR-1A has been available from 2024, the practice of amending the said return has not yet gained full traction within the industry, as many businesses have yet to institutionalise this process at an organisational level.

It is important to note that this restriction is limited to the outward tax liability section sourced from GSTR-1/1A. Taxpayers will still have the flexibility of reconciling and editing the sections pertaining to input tax credit (ITC) availment, providing some leeway to the taxpayers.

If similar restrictions are placed even on other key tables, such as Table 4 wherein the values are auto-populated from GSTR-2B, taxpayers will face considerable hurdles in managing reconciliation and compliance.

What further amplifies the concerns around these advisories is the absence of clear legislative backing under the GST law for rendering GSTR-3B as non-editable. None of the statutory provisions empower the authorities to unilaterally restrict the editability of return fields through mere advisories. This potentially will lead to disputes and compliance uncertainty for taxpayers.

With GSTR-3B’s window closing on edits and the option of tax payment via DRC-03 off the table, businesses are left with limited recourse. This makes it imperative for taxpayers to ensure that they file GSTR-1 accurately the first time around and leverage GSTR-1A for any corrections.

Conclusion

While the three-year time-limit on return filings and the non-editable nature of auto-populated liabilities in GSTR-3B are steps aimed at curbing misuse and ensuring stringent compliance, they also pose practical hurdles for businesses. These changes may lead to unintended litigation and overhaul of the existing compliance structure.

The taxpayers to keep pace with the Government’s evolving regulatory expectations, may no longer be able to treat return filing as a secondary task. Equal attention is required to be given to the compliance side of the operations as well, ensuring timely, accurate and procedural adherence to GST returns filed by them.