GST Rate Change 2025 – From When Are New GST Rates Applicable?

The Goods and Services Tax (GST) 2.0 reform, implemented in late 2025, brought one of the most significant overhauls in India’s indirect tax structure since its inception. With new slab rates and simplified compliance, taxpayers are now asking the most crucial question —
“From which date do the new GST rates apply?”
Let’s decode the timeline, transition rules, and implications for businesses and consumers.

📅 Timeline of GST Rate Applicability

Date/Event Change	Applicable Rate Structure
Before 22 September 2025 (inclusive)	Pre-reform regime under old GST slabs; Old rates: 5%, 12%, 18%, and 28%
From 22 September 2025 onwards	New GST 2.0 slabs notified; New rates: 0%, 5%, 18%, and 40% (for sin/luxury goods)
From 1 October 2025	Finance Act 2025 procedural amendments take effect; Changes in ITC, registration, and appeal provisions

🧾 Understanding the Applicability Rule
Under the GST law, the date of supply is the key factor that decides which rate applies — not merely the invoice or payment date.

• If the supply is completed on or before 22 September 2025, the old GST rates apply.
• If the supply is completed on or after 22 September 2025, the new GST 2.0 rates are applicable.
• This ensures a clear and consistent transition between the two systems.

GST Rate Applicability Guide (From Image Reference)

Goods/Services supplied before 22.09.2025

Invoice	Payment	GST Rate Applicability
Before 22.09.2025	Before 22.09.2025	Old Rate
After 22.09.2025	After 22.09.2025	New Rate
Before 22.09.2025	After 22.09.2025	Old Rate
After 22.09.2025	Before 22.09.2025	Old Rate

Goods/Services supplied After 22.09.2025

Invoice	Payment	GST Rate Applicability
Before 22.09.2025	Before 22.09.2025	Old Rate
After 22.09.2025	After 22.09.2025	New Rate
Before 22.09.2025	After 22.09.2025	New Rate
After 22.09.2025	Before 22.09.2025	New Rate

Important Note:

• The date of receipt of payment shall be the date of credit in the bank account if such credit in the bank account is after four working days from the date of change in the rate of tax.
• “The date of receipt of payment” shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier.

💡 Practical Scenarios

• Advance Payment Received Before 22 September 2025: If an advance was received before the new rates took effect, but the actual supply happens later, GST will apply at the old rate for the advance portion and new rate for the remaining value.
• Invoices Raised in Transition Period: For invoices issued before 22 September but goods/services supplied later, the transaction will follow the new rate applicable on the date of supply.
• Tobacco, Cigarettes, and Sin Goods: These items are subject to a 40% slab under the new regime, though a few transitional exceptions continue under specific notifications until further orders.

⚙️ Procedural & Compliance Changes from 1 October 2025
Beyond rate changes, several compliance updates take effect from 1 October 2025, including:

• Simplified Input Tax Credit (ITC) reconciliation.
• New return format with AI-enabled invoice matching.
• Revised appeal and adjudication process.
  These procedural reforms aim to make compliance easier and reduce litigation under GST 2.0.

🧮 Key Takeaways

• Old rates apply up to 22 September 2025.
• New GST 2.0 rates apply from 22 September 2025 onwards.
• Procedural changes under the Finance Act, 2025 are effective from 1 October 2025.
• Businesses should update their billing software and ERP systems accordingly to prevent rate mismatches.

FAQs

1. From which date are the new GST rates applicable?
   The new GST 2.0 rates are applicable from 22 September 2025 onwards for supplies made on or after this date. Supplies completed before or on 22 September 2025 will attract the old GST rates.
2. What are the new GST rate slabs introduced in 2025?
   The GST slabs have been simplified to two main rates: 5% and 18%. Additionally, a special 40% slab applies to luxury and sin goods such as tobacco, pan masala, and high-end cars.
3. Which GST rates apply if the invoice is raised before 22 September but payment is received after?
   For goods/services supplied before 22 September 2025, old rates apply if payment is before 22 September. If payment is after 22 September, the old rate still applies. For supplies after 22 September, the new rates apply regardless of invoice or payment date.
4. How is the date of receipt of payment determined for GST rate applicability?
   The date of receipt of payment is either the date the payment is credited to the supplier’s bank account or entered in the supplier’s books of account, whichever is earlier. If credit in the bank account occurs after four working days from the rate change date, the payment date for GST purposes will be the date of credit.
5. What happens if goods/services are supplied after 22 September but payment is made before?
   For goods/services supplied after 22 September 2025, the new GST rates apply even if payment occurs before 22 September.
6. Will the GST return filing and ITC processes change?
   Yes, procedural changes under the Finance Act 2025 will take effect from 1 October 2025. These include simplified Input Tax Credit reconciliation, new return formats with AI-enabled invoice matching, and faster refunds.
7. Are there any exceptions to the new GST rate slabs?
   Yes, certain sin goods like cigarettes, unmanufactured tobacco, and beedi continue with existing rates and compensation cess until further notification.
8. How should businesses update their billing and ERP systems?
   Businesses are advised to update their software to accommodate the new slabs and compliance processes effective from 22 September 2025 to avoid rate mismatch errors.
9. If advance payment was received before 22 September but the supply happens later, which rate will apply?
   The GST rate for the advance payment portion will be the old rate, and the remaining supply value will attract the new GST rate applicable on the date of supply.
10. What is the impact of the new GST rates on consumers?
    The GST 2.0 reforms reduce GST rates on essential items, making them cheaper, while luxury and sin goods face higher taxes, aiming for fairness and growth stimulation.

✍️ Conclusion
The shift from the old GST rates to the new GST 2.0 structure marks a milestone in India’s indirect taxation. Businesses must pay close attention to supply dates and software updates to ensure smooth compliance during this transition. Staying informed will help avoid errors, penalties, and confusion in the upcoming tax periods.