Software Costs and 2026 GST Rules
GST changes 2025–2026: GSTR-3B lock, three-year bar, IMS, GST 2.0 rates and the 57th Council meeting
The GST return and rate changes in force by October 2026 that affect small businesses and their software, and what the October 2026 GST Council recommended for later.
Since 2025 the GST system has become stricter about the order and timing of returns: liability auto-populated from GSTR-1/1A is locked in GSTR-3B, returns can no longer be filed more than three years after their due date, and input tax credit now flows through the Invoice Management System (IMS) before GSTR-2B is generated. On rates, GST 2.0 replaced most 12% and 28% rates with a 5% / 18% structure and a 40% rate for a few goods from 22 September 2025. The GST Council's 57th meeting on 8 October 2026 then recommended a further set of process reforms, which take effect only when notified. This guide separates what is in force from what is proposed.
It belongs to the GST return filing software overview. E-invoice and e-way bill changes are covered separately in e-invoicing and e-way bill rules.
In force: what changed in returns
| Change | What it means | What to do |
|---|---|---|
| GSTR-1A (from 2024) | Optional form to add or amend the current period's GSTR-1 after filing, before GSTR-3B | Use it to fix outward supply errors before GSTR-3B |
| GSTR-3B liability lock (from the July 2025 tax period) | Liability auto-populated from GSTR-1/1A/IFF cannot be edited in GSTR-3B | Correct liability only through GSTR-1A or later-period amendments |
| Three-year bar (enforced on the portal from the July 2025 tax period) | GSTR-1, GSTR-3B, GSTR-4, GSTR-9 and some others cannot be filed after three years from their due date (provisions inserted by the Finance Act, 2023) | Clear old pending returns now; they become permanently blocked |
| IMS (from October 2024) | Inward supplies uploaded by suppliers appear in IMS; you accept, reject or keep them pending before GSTR-2B is generated | Act on IMS every month before the 14th |
| HSN reporting in Table 12 (2025) | Drop-down HSN selection and B2B/B2C split in GSTR-1 | Keep HSN masters accurate in your software |
| Two-factor authentication | OTP-based second factor on portal login | Keep the registered mobile and email in the owner's control |
| GSTR-9 exemption (FY 2024-25 onwards) | Taxpayers with aggregate turnover up to ₹2 crore exempt from annual return (Notification 15/2025-Central Tax) | Check eligibility each year |
Why the lock matters for software. Before 2025 many businesses typed figures into GSTR-3B that did not match GSTR-1 and fixed the difference later. Now GSTR-3B starts from GSTR-1/1A, so an invoice that was missed or wrongly reported must be fixed in GSTR-1A before you file GSTR-3B. Software that cannot prepare GSTR-1A, or that pushes GSTR-1 late, will create problems you cannot correct in the summary return.
Why the three-year bar matters. A business that stopped filing in 2022 and wants to restart cannot simply file old returns: periods beyond three years are blocked. That affects revocation of cancelled registrations and claims of old credit. See registration cancellation for non-filing.
In force: GST 2.0 rate rationalisation
The 56th GST Council meeting (3 September 2025) recommended replacing the four-slab structure with a standard rate of 18%, a merit rate of 5% and a special demerit rate of 40% for a select few goods and services. The new rates applied to services and to most goods from 22 September 2025. Pan masala, gutkha, cigarettes and certain tobacco products stayed at their earlier rates and compensation cess until the compensation cess loan obligations are discharged.
Examples from the Council's release: many household items and packaged foods moved from 12% or 18% to 5%; small cars, two-wheelers up to 350 cc, air-conditioners, televisions and cement moved from 28% to 18%; hotel rooms up to ₹7,500 a night and services such as gyms and salons moved to 5%. Individual life and health insurance policies were exempted.
For businesses this meant:
- Updating item and service masters in billing software to the new rate for each HSN/SAC.
- Applying the time of supply rules for invoices, advances and payments straddling 22 September 2025.
- Checking ITC on stock where your output rate fell, especially where inputs remain at a higher rate (inverted duty structure refunds).
Most software services, including subscriptions to accounting software, remain at 18%. Always look up your own HSN or SAC in the rate notification on CBIC GST rather than relying on a summary.
In force: other 2025 measures worth knowing
- Simplified registration (from 1 November 2025): automated registration within three working days for low-risk applicants and those whose output tax on supplies to registered persons will not exceed ₹2.5 lakh a month.
- Risk-based provisional refunds of 90% for exports and, administratively, for inverted duty structure claims from 1 November 2025.
- GST Appellate Tribunal (GSTAT): the Council set 30 June 2026 as the limit for filing backlog appeals. Check the GSTAT position for your appeal with a professional.
Recommended in October 2026, not yet law
The 57th GST Council meeting on 8 October 2026 recommended, among other things:
| Recommendation | Status to check |
|---|---|
| Late fee waiver for taxpayers with turnover up to ₹5 crore who file a return under section 39(1) by the end of the month in which it was due | Needs a notification or amendment |
| A new mechanism (rules 61(1A), 61(1B), 86C, 86D) to align GSTR-3B with GSTR-1/1A and GSTR-2B, with corrections, proposed from the April 2027 return after public consultation | Draft for consultation; date proposed |
| IMS rule (60(6A)) on accepting, rejecting or keeping documents pending, including time limits for pending credit notes | Needs amendment |
| No show cause notice where tax involved is below ₹10,000; maximum general penalty reduced from ₹25,000 to ₹10,000 | Needs CGST Act amendment |
| Wider ITC: removing several blocked credits in section 17(5), such as health and life insurance and outdoor catering | Needs CGST Act amendment |
| Optional Annual Return Quarterly Payment (ARQP) scheme for B2C-only taxpayers up to ₹5 crore | In-principle concept only |
| Simplified registration for small e-commerce sellers using an operator's warehouse as place of business | Rule 14B to be inserted |
| Removal of arrest powers and higher prosecution threshold (₹1 crore to ₹5 crore) | Needs CGST Act amendment |
A checklist for your software provider
- Does it prepare and file GSTR-1A, and warn you before GSTR-3B if GSTR-1 needs correction?
- Does it pull IMS data and let you accept, reject or keep pending in bulk?
- Are GST 2.0 rates applied correctly by HSN/SAC, with history for invoices before 22 September 2025?
- Will it support the proposed April 2027 return mechanism if notified?
- Does it alert you to returns approaching the three-year bar?
The software selection checklist covers these and more.
Frequently asked questions
Can I still edit GSTR-3B at all?
Some fields remain editable, such as ITC (within the system's validations) and certain inward supply details. The liability auto-populated from GSTR-1/1A cannot be changed in GSTR-3B.
Has the late fee waiver from the 57th meeting started?
Not as of the date of this guide, as far as we can confirm. It was a recommendation on 8 October 2026; look for the notification on CBIC GST before relying on it.
Did GST 2.0 change return due dates?
No. It changed rates. Due dates are unchanged; see GST return due dates 2026.
What happens to a return blocked by the three-year bar?
It cannot be filed on the portal. Any liability for that period can still be raised by the department through assessment, so speak to a professional.
Sources
- GST Council — press releases for the 56th (September 2025) and 57th (October 2026) meetings
- CBIC GST — rate notifications, CGST (Amendment) Rules, Notification 15/2025-Central Tax
- GST portal — advisories on GSTR-3B lock, three-year bar, IMS and 2FA
