🚨 GST Rate Change Effective 22nd September 2025 – What Businesses Must Know 🚨

The Government has notified revised GST rates effective 22nd Sept 2025, following the 56th GST Council Meeting. While the changes bring relief for some sectors, they also create compliance challenges for businesses.

Here’s a one-stop guide to help you navigate the transition smoothly 👇

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🔑 Key Highlights from the Notification

• 📌 2.5% GST – Essential food & agri-based items (milk, cereals, pulses, nuts).

• 📌 9% GST – Certain intermediate/industrial inputs.

• 📌 20% GST – Specific luxury goods.

• 📌 1.5% GST – Selected niche commodities.

• 📌 0.125% GST – Precious metals/jewellery related items.

• 📌 0.75% GST – Specific agricultural/allied goods.

• 📌 14% GST – Notified high-value goods/services

  Rate Notification

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📖 ITC Implications – Section 18(4), Rule 44

1️⃣ Rate Reduction (Taxable → Lower Rate)
✔ No ITC reversal required. ITC remains in credit ledger.
❌ Refund of excess ITC not allowed.

2️⃣ GST Exemption (Taxable → Exempt)
✔ Entire ITC on closing stock (as on 21st Sept) must be reversed.

3️⃣ Refund of ITC
❌ No refund allowed on rate reduction.
❌ No inverted duty refunds in such cases.

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⚙️ ERP Posting Challenges – Microsoft D365 F&O

1️⃣ Transaction posted after rate change, invoice date before → Old Rate
2️⃣ Transaction & invoice both after → New Rate
3️⃣ Sales Return/Purchase Return → Debatable (old vs new rate). Best practice: align with GST portal → New Rate.
4️⃣ Credit/Debit Note (without return order) → Select tax rate type carefully; mismatches may occur.

⚠️ Note: GST portal auto-applies new rates post 22nd Sept. Filing returns with old rates may cause compliance mismatches.

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⏱️ Transition Rules – Section 14 of CGST Act

👉 Applicable rate depends on Supply Date, Invoice Date, and Payment Date.

If Supply was Before 22nd Sept

• Invoice & Payment both after → New Rate

• Invoice before & Payment after → Old Rate

• Payment before & Invoice after → Old Rate

If Supply was After 22nd Sept

• Invoice before & Payment after → New Rate

• Invoice & Payment both before → Old Rate

• Invoice after & Payment before → New Rate

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📌 Action Checklist for Businesses

✅ Update ERP/Accounting systems with new rates
✅ Check stock as on 21st Sept midnight
✅ Reverse ITC for exempted items
✅ Align ERP postings with GST return filing
✅ Maintain detailed records for audits

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⚡ Final Word: GST rate changes affect pricing, ITC, and compliance simultaneously. Applying the wrong rate or missing ITC reversal can trigger disputes & penalties.

💡 At Eaztaxbiz – Making Easy Business & Taxation, we help businesses with rate transition audits, ITC reversal workings, ERP setup support, and GST compliance reviews.

Connect : +91-9921010284

Website: www.eaztaxbiz.com