The Government has notified the Goods and Services Tax Settlement Rules, 2025, effective from 1st April 2025, with the objective of streamlining the settlement of GST funds between the Centre and the States. These rules introduce a structured mechanism for the proper apportionment of Integrated GST (IGST), which is levied on inter-state transactions, thereby ensuring timely and accurate distribution of revenue.

The framework clearly defines the roles and responsibilities of key stakeholders, including the Central Board of Indirect Taxes and Customs, State tax authorities, and accounting agencies, enhancing coordination and accountability within the system.

A significant feature of the new rules is the introduction of a digital, monthly reporting mechanism, wherein the Goods and Services Tax Network (GSTN) will generate and electronically transmit detailed reports by the 25th of every month, covering tax payments, input tax credit utilisation, cross-utilisation across tax heads, and final settlement figures.

This technology-driven approach is expected to minimize delays, reduce discrepancies, and improve transparency in GST fund transfers. Additionally, the rules provide clarity on handling complex scenarios such as cross-utilisation of ITC between IGST, CGST, and SGST, refund-related adjustments, and transactions involving imports or unregistered persons.

The Complete Rules can be accessed at https://taxo.online/wp-content/uploads/2026/04/MoF-Notification-regarding-Goods-and-Services-Tax-Settlement-of-Funds-Rules-2026.pdf