GST Amendments & Updates 2026 - What Changed
What's New in 2026
Major changes in GST compliance - rationalized late fees, lower e-invoicing threshold, stricter ITC rules, and several rate changes. This guide covers all significant amendments affecting your business.
1. Rationalized Late Fee Structure (Major Relief)
One of the most significant changes benefiting small businesses.
What Changed
Before (Pre-June 2021): Flat ₹10,000 cap for all businesses
After (Current): Turnover-based caps
| Business Turnover | Old Cap | New Cap | Savings |
|---|---|---|---|
| Nil Return | ₹2,000 | ₹500 | ₹1,500 (75%) |
| < ₹1.5 Cr | ₹10,000 | ₹2,000 | ₹8,000 (80%) |
| ₹1.5-5 Cr | ₹10,000 | ₹5,000 | ₹5,000 (50%) |
| > ₹5 Cr | ₹10,000 | ₹10,000 | No change |
Impact
Small businesses with turnover under ₹1.5 Cr save 80% on late fees. This recognizes that compliance burden should be proportional to business size.
Real Example: A grocery store with ₹80 lakh annual turnover filed GSTR-3B 40 days late.
Old system: ₹10,000 penalty
New system: ₹2,000 penalty
Saved: ₹8,000
2. E-Invoicing Threshold Reduced
Timeline of Changes
- Oct 2020: Mandatory for > ₹500 Cr
- Apr 2022: Reduced to > ₹20 Cr
- Oct 2022: Reduced to > ₹10 Cr
- Aug 2023: Reduced to > ₹5 Cr (current)
What This Means
If your turnover crosses ₹5 Crore, you must implement e-invoicing from the next month. Many mid-sized businesses now fall under this requirement.
Action Required
- Check your annual turnover from GSTR-9
- If above ₹5 Cr, register on IRP portal
- Update accounting software
- Train team on e-invoice generation
3. Stricter ITC Claiming Rules
Rule 37 Enforcement (180-Day Rule)
Rule: Must pay supplier within 180 days to keep ITC
Change: Government now actively tracking and sending notices
What Happens If You Don't Pay in 180 Days
- ITC must be reversed
- Pay 18% interest on reversed amount
- Can reclaim ITC after paying supplier
- Manual tracking required in books
New in 2026
GSTN now has automated system to identify Rule 37 violations. Expect notices if you claimed ITC but supplier shows unpaid in their books for 180+ days.
GSTR-2B Becomes Primary Source
Change: You can only claim ITC that appears in your auto-generated GSTR-2B
- If supplier hasn't filed return → No ITC for you
- Must reconcile GSTR-2B before filing GSTR-3B
- Manual claims highly scrutinized
4. GST Rate Changes
Rate Increases
- Certain textiles: 5% → 12%
- Footwear (₹500-1000): 5% → 12%
- Some medicines: NIL/5% → 12%
Rate Decreases
- COVID-related drugs: 12% → 5%
- Prosthetic devices: 12% → 5%
- Handmade furniture: 18% → 12%
New Exemptions
- Certain agricultural equipment
- Educational software (conditions apply)
- Handicraft items by registered artisans
Always verify current rates on official GST portal before invoicing. Rates can change quarterly based on GST Council decisions.
5. Return Filing Changes
GSTR-2B Auto-Population
Timeline Changed:
- Old: Available by 14th of next month
- New: Available by 12th of next month
- Gives you more time to reconcile before 20th deadline
GSTR-9 Annual Return
Exemption Raised:
- Old: Mandatory for all registered persons
- New: Optional if turnover < ₹2 Crore
- Filing still recommended for ITC accuracy
GSTR-1 Monthly vs Quarterly
Threshold:
- Turnover > ₹5 Cr → Monthly GSTR-1
- Turnover ≤ ₹5 Cr → Can choose quarterly QRMP scheme
- QRMP: File GSTR-1 quarterly, pay tax monthly via PMT-06
6. GST Portal Improvements
New Features
- SMS alerts: Return due dates, late fees accruing
- Pre-filled data: More fields auto-populated
- Mobile app: File returns from phone
- Chatbot: AI-powered support for queries
Enhanced Search
New GSTIN verification tool shows:
- Business registration status
- Principal place of business
- Date of registration
- Return filing status (last 3 months)
- Helps verify genuineness of suppliers
7. Amnesty Schemes Announced
Late Fee Waiver Schemes (Periodic)
Government periodically announces amnesty where:
- Late fees waived or reduced
- Interest waived on certain types
- Limited-time offer (usually 2-3 months)
How to Know: Check GST portal notifications section or subscribe to updates
Past Amnesty Examples
- 2022: 100% late fee waiver for nil returns
- 2024: 50% reduction in late fees for FY 2022-23
- 2025: One-time ITC reconciliation scheme
8. What's Coming Next
Proposed Changes (Under Discussion)
Single GST Return
Merge GSTR-1 and GSTR-3B into single monthly return. Currently in pilot phase.
E-Invoicing for B2C
Discussion to extend e-invoicing to large B2C transactions (> ₹2 lakh). Not implemented yet.
GST Appellate Tribunal
State-level GST tribunals for faster dispute resolution. Some states operational, others pending.
Composition Scheme Expansion
Proposal to allow e-commerce sellers under composition scheme with conditions. Under review.
How to Stay Updated
Official Sources
- GST Portal: www.gst.gov.in → Notifications section
- CBIC Circulars: Detailed explanations of changes
- GST Council Minutes: Released after every Council meeting
Best Practices
- Subscribe to GST portal email alerts
- Follow CBIC Twitter/social media
- Maintain relationship with CA for updates
- Join GST compliance WhatsApp groups
- Check our blog monthly for simplified updates
Action Items After Each Update
- Read official circular/notification
- Assess impact on your business
- Update accounting software if needed
- Train team on new requirements
- Update invoice templates if required
- Modify internal processes
Summary - Key Takeaways
Major Changes Impacting Most Businesses
- Rationalized penalties: 80% savings for small businesses
- E-invoicing @ ₹5 Cr: More businesses now covered
- Stricter ITC rules: 180-day rule actively enforced
- GSTR-2B primary: Must reconcile before claiming ITC
- Various rate changes: Check rates before invoicing
What You Should Do Now
- Check if e-invoicing applies to you (turnover > ₹5 Cr)
- Review all unpaid supplier invoices > 150 days old
- Start reconciling GSTR-2B monthly
- Update HSN codes with new rates
- Use our penalty calculator to see savings