Current vs New GST Return System in India

Old vs New GST Return System in India: Key Differences and Impact

Understand key differences between current and new GST return systems in India and how the changes impact businesses and tax compliance.

Written by : Knowledge Centre Team

2026-01-22

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8 minutes read

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India’s indirect tax framework underwent a historic transformation with the introduction of a unified taxation framework aimed at improving transparency and ease of doing business. For businesses across sectors, understanding how GST compliance evolved has been crucial to staying aligned with regulatory requirements.

To help organise the multitude of complex taxes and deductions across the country, the Government of India introduced the Goods and Services Tax or GST on July 1, 2017. Prior to GST, every state in the country had implemented its own collection of taxes with little to no transparency. The new GST tax scheme was launched with the purpose of serving as a ‘one nation, one tax’ solution.

However, while the GST scheme was launched with the intention of integrating and simplifying taxes on goods and services across the board, it also led to a certain degree of confusion. Over time, discussions around the new GST return system and proposed changes to the GST return format further highlighted the need to understand the differences between the old GST and new GST mechanisms, and how they impact day-to-day tax filing and compliance.

Key Takeaways

  • India introduced GST as a unified “one nation, one tax” framework to simplify indirect taxation and improve transparency across states

  • Under the earlier framework, businesses had to file forms like GSTR-1 and GSTR-3B, along with reconciling data through GSTR-2A/2B, which increased compliance complexity

  • The proposed structure introduced GST RET-1, supported by GST ANX-1 and ANX-2, aiming to reduce duplication and streamline GST return filing

  • The new GST system introduced near-real-time invoice upload and acceptance features to improve Input Tax Credit (ITC) accuracy and reduce reconciliation issues.

  • Changes such as invoice-level HSN reporting, monthly tax payment through PMT-08 (for quarterly filers), and removal of redundant document summaries were designed to lower compliance burden and enhance efficiency.

What is the GST Return System in India?

The GST return system in India refers to the process through which registered taxpayers report details of their sales, purchases, tax collected, and tax paid under the Goods and Services Tax framework introduced on July 1, 2017. GST replaced multiple indirect taxes to create a unified and transparent tax structure across the country.

Under the original structure, often called the old GST system, businesses were required to file multiple returns depending on their turnover and registration type. The most common forms included GSTR-1 (details of outward supplies) and GSTR-3B (summary return with tax payment), along with auto-generated forms like GSTR-2A/2B for inward supplies. Although designed to ensure accurate Input Tax Credit (ITC) matching, the system was often considered complex due to frequent filings and reconciliation requirements.

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Why was a New GST Return System Proposed?

The initial GST framework faced challenges such as multiple return filings, complex invoice matching for Input Tax Credit (ITC), frequent reconciliation requirements, and technical glitches on the portal, all of which increased the compliance burden for businesses.

As a result, to further simplify the GST scheme and streamline the filing process, a new GST return system was introduced. During the 37th GST Council Meeting, it was determined that the new GST return system will be implemented from April 2020. However, given the changing circumstances, the timeline for the same was postponed.

As per the revised schedule announced at that time, implementation was expected from October 2020, while the previous GST return filing system continued until September 2020. The proposed changes aimed to introduce simpler return formats and make GST compliance more user-friendly for taxpayers.

Key Differences Between the Old and New GST Return System

The proposed new GST return system was designed to simplify compliance when compared to the earlier framework. While GST ANX-1 under the new structure was broadly similar to GSTR-1 under the old GST system, several operational and reporting changes were introduced to improve transparency and ease of filing. Below is a structured comparison of the two systems:

  • Structure and Number of Returns: Under the old GST return system, taxpayers were required to file multiple forms, such as GSTR-1 (outward supplies) and GSTR-3B (summary return and tax payment), along with relying on auto-drafted forms like GSTR-2A/2B for reconciliation.

    Under the new GST return system, these multiple forms were replaced with a single main return, GST RET-1, supported by two annexures:
    1. GST ANX-1 (for reporting outward supplies, imports, and inward supplies liable to reverse charge)
    2. GST ANX-2 (for viewing and confirming inward supplies)

This shift aimed to reduce duplication and streamline the overall GST return filing process.

  • Reporting of Reverse Charge Mechanism (RCM) Supplies: In the old system, invoice details were uploaded in GSTR-1 and later reflected in GSTR-2A for the recipient, often leading to delays in reconciliation.

    Under the new framework, invoice uploading and viewing were designed to happen on a near real-time basis through ANX-1 and ANX-2. This allowed recipients to accept, reject, or mark invoices as pending, enabling quicker action and improved ITC accuracy.
  • HSN Code Reporting: Earlier, HSN summaries were reported separately in GSTR-1 based on turnover thresholds.

    Under the new GST return system, HSN codes were to be declared at the invoice level to enhance transparency and data consistency. This approach was further strengthened through phase-wise implementation in GSTR-1 starting April 2022, with progressive tightening of HSN reporting requirements through November 2022 and stricter system-based validation from May 2025 onwards.
  • Reporting of Imports: Under the old return structure, only the eligible ITC on imports was declared in GSTR-3B.

    In the proposed new return format was implemented from October, 2020 onwards where taxpayers were required to report imports of goods and services directly in GST ANX-1. 
  • Tax Payment Mechanism: In the earlier system, taxpayers discharged their entire tax liability while filing GSTR-3B each month.

    Under the new GST return system, the requirement to pay tax monthly through Form PMT-08, even for taxpayers opting to file returns quarterly, was implemented as part of the revamped return framework and is now in effect (with this monthly payment mechanism established under the new GST return rules). 
  • Reporting of Documents Issued: The old GST system required taxpayers to report details of documents issued during the tax period, including invoice serial numbers, debit and credit notes, delivery challans, and vouchers.

    The proposed new GST return format removed the requirement to separately report document summaries, thereby reducing reporting redundancy.

Wrapping Up

Overall, the new GST system is set to make filing, managing, amending, and submitting GST returns easier and more convenient than before. Changes in tax filing systems strive to improve and streamline the process, but require time and patience for adjustment. In view of constant changes in tax filing, it is important to ensure that your finances are secured for your and your family’s future needs.

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Glossary

  1. GST Return System: The process of reporting sales, purchases, and tax liability under GST regulations
  2. Input Tax Credit (ITC): Credit businesses claim for GST paid on purchases to reduce their overall tax liability
  3. GST RET-1: Proposed main return form under the new GST return system, replacing multiple filings
  4. GST ANX-1: Annexure for reporting outward supplies, imports, and reverse-charge transactions
  5. Invoice Matching: Process of reconciling supplier and buyer invoices to validate ITC claims
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FAQs

The new GST Return System, widely seen as a key element of "GST Reforms 2.0," is being rolled out in phases, with significant structural, rate, and compliance changes set to take effect from September 22, 2025.

The main difference between the old GST and the new GST lies in the return structure. The earlier framework required multiple filings and reconciliation, while the proposed new GST return format aimed to introduce a single main return (RET-1) with annexures to simplify compliance, improve invoice matching, and reduce duplication.

The proposed new GST system in India is designed to lower the compliance burden through simplified filing, continuous invoice upload, and improved ITC visibility. When implemented fully, the new GST return filing would help businesses manage records more efficiently and reduce reconciliation efforts.

A GST comparison under the old and new regimes shows that the earlier regime focused on multiple returns and periodic reconciliation, whereas the proposed GST new return system emphasises a single return, real-time invoice updates, and streamlined tax payment. The objective is to make compliance simpler while maintaining transparency.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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