New Delhi: The government has made a big change in the Goods and Services Tax (GST) structure. In its 56th meeting held on Wednesday, the GST Council, chaired by Finance Minister Nirmala Sitharaman, approved the rationalisation of tax rates. The 12 per cent and 28 per cent slabs have been scrapped, and now a two-tier GST structure will be in place — with rates of 5 per cent and 18 per cent, along with a new 40 per cent slab for sin and luxury goods.
Sitharaman announced that the new rates will come into effect from September 22, 2025, which also marks the beginning of Navratri.
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The revised GST rates will apply from 22nd September 2025 for most goods and services. However, for items like cigarettes, chewing tobacco, zarda, unmanufactured tobacco, and beedis, the existing rates will continue until further notice. The new rates on these items will be implemented later, once loans and interest liabilities linked to the compensation cess are cleared.
As per Section 14 of the CGST Act, 2017:
If payment is received after the rate change, the time of supply will be either the invoice date or payment date, whichever is earlier. If payment was received before the rate change, the time of supply will be the date of payment.
Yes. Any ITC already availed in your e-credit ledger can still be used to pay future tax liabilities as per Section 49(4) of the CGST Act.
GST is levied on supply. So, if the goods are supplied after the new rates are notified, the revised rates will apply — even if the stock was purchased earlier.
Earlier, all dairy milk (except UHT milk) was exempt from GST. Now UHT milk has also been exempted for uniformity. For plant-based milk drinks:
– Other plant-based milk drinks (except soya) earlier attracted 18% GST.
– Soya milk drink had 12% GST.
Now, both categories have been reduced to 5% GST.
The idea behind the new structure is to avoid confusion and disputes by keeping similar goods under the same tax rate. This principle has been applied to non-alcoholic beverages as well, leading to the 40% slab for such products.
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