Introduction
From 22 September 2025, GST rates were rationalised following GST Council recommendations and the related rate notifications.
Detailed explanation
Most goods and services now fall under 5% or 18%. A 40% rate applies to specified goods. The earlier 12% and 28% slabs were removed for most items. Special rates such as 0.25% and 3% continue for specific goods. Compensation cess was folded in for most goods, with specific transition rules for some items.
Applicability
All registered persons, for supplies made on or after the effective date. The applicable rate depends on the time of supply rules and the HSN/SAC classification.
Relevant statutory provisions
- Section 9, CGST Act, 2017 and section 5, IGST Act, 2017 (levy)
- Sections 12 and 13, CGST Act, 2017 (time of supply)
- Rate notifications effective 22 September 2025
Practical example
A product previously taxed at 12% may now be taxed at 5%. An invoice for goods supplied on 20 September 2025 uses the old rate; for goods supplied on 23 September 2025, the new rate applies, subject to time of supply rules.
Step-by-step: what to update
- Map each HSN/SAC in your item master to the new notified rate.
- Update billing software and e-invoice configuration.
- Review open purchase orders and contracts for price changes.
- Check transitional treatment for advances and supplies spanning the change.
Important conditions and exceptions
Do not assume a rate from the product description alone. A GST Council recommendation is not law until notified.
Common mistakes
- Using the old rate for supplies after 22 September 2025
- Not updating e-way bill and e-invoice masters
Frequently asked questions
Does ITC change? ITC continues as per section 16, but check items where the effective rate changes affect inverted duty refunds.
Where do I check my rate? CBIC rate notifications and the GST Portal HSN/SAC search.