GST Updates – September 2025
29 Sept 2025
GST Updates – September 2025
September 2025 has been one of the most eventful months in the evolution of the Goods and Services Tax (GST) regime since its introduction in 2017. The 56th GST Council Meeting, held on 3rd September 2025, has paved the way for a structural transformation of the GST framework, including major changes in the tax rate structure, sector-specific concessions, and compliance tightening measures. Alongside, the Government has issued a series of Rate Notifications (09–17/2025), Central Tax Notifications (13–16/2025), and several system advisories from GSTN, which collectively redefine both the policy and operational landscape for taxpayers. The snapshot of timeline is presented below:
03 September 2025 - 56th GST Council Meeting
Dual-rate structure (5%, 18%, 40%), reduced rates (autos, stationery, insurance, beauty services, job-work), post-sale discount rules (Sec 15 & 34), omission of Sec 13(8)(b) (intermediary POS), GSTAT by Dec 2025.17 September 2025 - Rate Notifications
Rate Notifications 09–17/2025 (CT/IGST/UTGST): Revised HSN schedules, expanded exemptions, petroleum @18%, used vehicles alignment, handicrafts concessional rates (5%/3%), bricks/tiles @12%, services overhaul (18%, 5%, 1.5%), insurance exemptions, RCM on ECO local delivery.17 September 2025 - Other Central Tax Notifications
Other Central Tax Notifications: 13/2025 – Amendment Rules (refund timelines, appellate forms); 14/2025 – Provisional refund restricted (Aadhaar auth, notified goods); 15/2025 – Annual return exemption (< ₹2 Cr) + service revisions; 16/2025 – Finance Act provisions (new definitions, exemptions).23 September 2025 - GSTN Advisory – IMS Changes
GSTN Advisory – IMS Changes: Pending records (one tax period), ITC reduction declaration, option to save remarks (visible in GSTR-2B and supplier dashboard). Effective October 2025.26 September 2025 - GSTN Update – GSTR-7 Invoice-wise Reporting
GSTN Update – GSTR-7 Invoice-wise Reporting live: Deductors must furnish invoice- level details from September tax period onwards (due 10 Oct 2025).Immediate Action Points
- Update ERP/HSN masters with new schedules & rates (from 22-Sep-2025).
- Review contracts & ITC policies for post-sale discounts.
- Ensure timely filing of returns (3-year cap introduced).
- For refund claimants → complete Aadhaar authentication; avoid restricted goods.
- If turnover ≤ ₹2 Cr → confirm annual return exemption.
- Real estate/automobile/insurance sectors → update pricing & invoices with new rates/exemptions.
- ECOs → account for RCM liability on local delivery services.
- Deductors → prepare for GSTR-7 invoice-wise filing by 10 Oct 2025.
- All taxpayers → prepare for IMS changes in Oct 2025; ITC matching becomes stricter.
Key Changes in Return Filing & ITC - (from 1-Oct-2025)
- Auto-population of ITC ends: ITC will no longer auto-populate from GSTR-2B into GSTR- 3B.
- Manual generation of GSTR-2B: Accept/reject invoices in IMS, then generate 2B; only then will data flow to 3B.
- Credit notes: If the recipient rejects a supplier’s CN in IMS, the supplier’s liability won’t reduce unless the recipient reverses ITC (amended Section 34).
- 2B mandatory before filing 3B: GSTR-3B cannot be filed unless GSTR-2B is generated (amended Section 39(1)).
- IMS “Pending” window: You may keep specified records pending for one tax period (month/quarter).
- Declare ITC actually availed: IMS lets you declare and reverse ITC fully/partially (no reversal if ITC wasn’t availed). (IMS changes apply prospectively; remarks on actions will reflect in GSTR-2B and the supplier dashboard)
56th GST Council Meeting - 03 September 2025
The 56th GST Council meeting was one of the most impactful since GST’s rollout. It approved structural reforms, rate rationalisations, and compliance tightening.
1. GST Rate Structure Overhaul
• Shift towards a dual-rate system:
o 5% (Merit Rate): Essentials (food, medicines, healthcare, education, renewable energy).
o 18% (Standard Rate): Most goods and services.
• 40% rate retained for specified demerit goods (luxury cars, soft drinks, gambling, etc.).
• Intermediate slabs merged into the above framework.
2. Sector-Specific Rate Rationalisations
• Automobiles: Reduced GST for EVs, hybrid cars, and small vehicles.
• Insurance: No GST on life and health insurance premiums - individual policies.
• Real Estate: Reduction in GST rates on construction services (esp. affordable housing, building materials like bricks/tiles).
• Stationery & Education: Rate cuts on notebooks, pens, pencils, and teaching aids.
• Beauty & Wellness & Job-work: Lower GST for specified services.
• Handicrafts & Artisans: Concessional rates of 5% and 3% extended.
3. Legal & Policy Changes
• Intermediary Services (Sec. 13(8)(b)): Omitted → Place of supply now location of recipient, enabling zero-rating.
• Post-Sale Discounts: Supplier’s liability won’t reduce unless ITC reversed by recipient (Sec. 15 & 34 amended).
• Refunds: Refund orders to be issued within 7 days (Rule 91); timelines strengthened.
• GST Appellate Tribunal (GSTAT): To be operational by Dec 2025.
4. Compliance & Administration
• Return Filing Restriction: No return filing allowed beyond 3 years from due date.
• ITC Tightening: Auto-population from GSTR-2B ends (from Oct 2025); taxpayers must reconcile in IMS and generate 2B before filing 3B.
• Technology Push: Greater automation for refunds, ITC matching, and appeals.
The 56th GST Council meeting was one of the most impactful since GST’s rollout. It approved structural reforms, rate rationalisations, and compliance tightening.
1. GST Rate Structure Overhaul
• Shift towards a dual-rate system:
o 5% (Merit Rate): Essentials (food, medicines, healthcare, education, renewable energy).
o 18% (Standard Rate): Most goods and services.
• 40% rate retained for specified demerit goods (luxury cars, soft drinks, gambling, etc.).
• Intermediate slabs merged into the above framework.
2. Sector-Specific Rate Rationalisations
• Automobiles: Reduced GST for EVs, hybrid cars, and small vehicles.
• Insurance: No GST on life and health insurance premiums - individual policies.
• Real Estate: Reduction in GST rates on construction services (esp. affordable housing, building materials like bricks/tiles).
• Stationery & Education: Rate cuts on notebooks, pens, pencils, and teaching aids.
• Beauty & Wellness & Job-work: Lower GST for specified services.
• Handicrafts & Artisans: Concessional rates of 5% and 3% extended.
3. Legal & Policy Changes
• Intermediary Services (Sec. 13(8)(b)): Omitted → Place of supply now location of recipient, enabling zero-rating.
• Post-Sale Discounts: Supplier’s liability won’t reduce unless ITC reversed by recipient (Sec. 15 & 34 amended).
• Refunds: Refund orders to be issued within 7 days (Rule 91); timelines strengthened.
• GST Appellate Tribunal (GSTAT): To be operational by Dec 2025.
4. Compliance & Administration
• Return Filing Restriction: No return filing allowed beyond 3 years from due date.
• ITC Tightening: Auto-population from GSTR-2B ends (from Oct 2025); taxpayers must reconcile in IMS and generate 2B before filing 3B.
• Technology Push: Greater automation for refunds, ITC matching, and appeals.
Key Action Points
- Dual-rate structure (5% / 18%): Businesses must re-map items and update ERP/HSN masters
- Post-sale discounts: Supplier cannot reduce liability unless recipient reverses ITC (Sec. 15 & 34). Contracts and ITC policies must be revisited.
- Intermediary services: Place of supply now = recipient location. Exporters/intermediaries can avail zero-rating benefits.
- Return filing restriction: No GST return can be filed after 3 years from its due date. Ensure timely filing.
(09/2025–17/2025 CT Rate, IGST Rate & UTGST Rate)
Following the recommendations of the 56th GST Council Meeting, the Government issued a comprehensive set of GST (Rate) Notifications on 17th September 2025 covering both goods and services.
Summary
| Notification No. | Subject / Change | Key Impacted Areas | Compliance Action |
| 09/2025-CT/IGST | Revised rate schedules | All goods sectors | Update HSN masters & billing rates |
| 10/2025-CT/IGST | Exemption list revised | Agri, food, health, education | Reassess exemption claims |
| 11/2025-CT/IGST | Petroleum/CBM to 18% | Oil & gas E&P | Revise contracts & ITC workings |
| 12/2025-CT/IGST | Used vehicles reclassified | Auto dealers, financiers | Update margin scheme logic |
| 13/2025-CT/IGST | Handicraft concessional 5%/3% | Artisans, MSMEs, exporters | Apply concessional rates |
| 14/2025-CT/IGST | Bricks/tiles @12% | Real estate, construction | Update supply contracts |
| 15/2025-CT/IGST | Service rate overhaul | Transport, ECO, services | Revise SAC invoicing & ITC checks |
| 16/2025-CT/IGST | Insurance exemptions | Insurers, ECOs | Reclassify exempt services |
| 17/2025-CT/IGST | RCM on ECO delivery | E-commerce operators | Enable RCM in ERP |
| UTGST (Rate) | Mirrors CT changes | UT-registered suppliers | Update UTGST codes in returns |
Notification No: 09/2025-CT (Rate) / 09/2025-IGST (Rate)
Description: Revised tax rates and schedules (comprehensive restructuring)
Description: Revised tax rates and schedules (comprehensive restructuring)
- Supersedes the original 01/2017/-CTR/IGST
- Introduces a new consolidated HSN-wise schedule system with seven schedules:
o Schedule I (5%): Essentials (food grains, dairy, pulses, medicines, renewable energy items).
o Schedule II (18%): Processed/manufactured goods (processed foods, cement, ores, toys, art, sports goods, etc.).
o Schedule III (40%): Demerit goods (soft drinks, luxury vehicles, yachts, aircraft, gambling).
o Schedule IV (3%): Precious metal items & handicrafts (gold, silver coins, idols, platinum, semi-precious gems, handmade crafts).
o Schedule V (0.25%) & VI (1.5%): Rough diamonds, industrial diamonds, uncut gemstones.
o Schedule VII (28%): Sin goods (pan masala, tobacco, cigarettes).
o Schedule II (18%): Processed/manufactured goods (processed foods, cement, ores, toys, art, sports goods, etc.).
o Schedule III (40%): Demerit goods (soft drinks, luxury vehicles, yachts, aircraft, gambling).
o Schedule IV (3%): Precious metal items & handicrafts (gold, silver coins, idols, platinum, semi-precious gems, handmade crafts).
o Schedule V (0.25%) & VI (1.5%): Rough diamonds, industrial diamonds, uncut gemstones.
o Schedule VII (28%): Sin goods (pan masala, tobacco, cigarettes).
Notification No: 10/2025-CT (Rate)/10/2025-IGST (Rate)
Description: Revised exemption list for goods
Description: Revised exemption list for goods
• Supersedes 02/2017-CTR/IGST.
• Expands exemptions in agriculture, food, health, and education sectors.
• Provides definitions for “pre-packaged & labelled” and “unit container.”
• Clarifies scope of exemptions in Annexures I & II (covering drugs, educational supplies, musical instruments).
• Expands exemptions in agriculture, food, health, and education sectors.
• Provides definitions for “pre-packaged & labelled” and “unit container.”
• Clarifies scope of exemptions in Annexures I & II (covering drugs, educational supplies, musical instruments).
Notification No: 11/2025-CT (Rate)/11/2025-IGST (Rate)
Description: Petroleum & coal bed methane operations
• Amends earlier notifications to revise GST rate for petroleum exploration & production services.
• GST rate increased from 12% to 18%.
Description: Petroleum & coal bed methane operations
• Amends earlier notifications to revise GST rate for petroleum exploration & production services.
• GST rate increased from 12% to 18%.
Notification No: 12/2025-CT (Rate) / 12/2025-IGST (Rate)
Description: Used motor vehicles
• Updates references for used motor vehicles (petrol, diesel, SUVs, etc.).
• Shifts classification from old Schedule IV of 01/2017 to new Schedules II/III under 09/2025
Notification No: 13/2025-CT (Rate) / 13/2025-IGST (Rate)Description: Used motor vehicles
• Updates references for used motor vehicles (petrol, diesel, SUVs, etc.).
• Shifts classification from old Schedule IV of 01/2017 to new Schedules II/III under 09/2025
Description: Handicrafts & handmade items
• Substitutes the older 21/2018-CTR/IGST.
• Prescribes concessional rates:
- 5% for broad handicrafts (woodcraft, pottery, glassware, embroidery, bamboo & cane crafts, paintings, sculptures, coir products).
- 3% for silver filigree work, handmade imitation jewellery, natural seed/bead jewellery.
• Prescribes concessional rates:
- 5% for broad handicrafts (woodcraft, pottery, glassware, embroidery, bamboo & cane crafts, paintings, sculptures, coir products).
- 3% for silver filigree work, handmade imitation jewellery, natural seed/bead jewellery.
Notification No: 14/2025-CT (Rate) / 14/2025-IGST (Rate)
Description: Bricks & tiles
Description: Bricks & tiles
• Notifies uniform 12% GST on fly ash bricks, building bricks, fossil bricks, and earthen/roofing tiles.
• Clarifies HSN classification coverage.Notification No: 15/2025-CT (Rate) / 15/2025-IGST (Rate)
Description: Comprehensive service rate changes
Description: Comprehensive service rate changes
• Amends the principal 11/2017-CTR/IGST (services).
• Introduces revised rates:
- 18%: Transport (non-rail containers, multimodal), courier, postal, ECO delivery, professional/business services, manufacturing job work.
- 5%: Tailoring, job work for food/textiles, printing of educational materials, brick manufacturing, handicrafts, beauty and cleaning services.
- 1.5%: Job work on diamonds.
• Clarification: For renting of premises for hotel accommodation, “premises” means the place where services are supplied – effective 1 April 2025.
- 18%: Transport (non-rail containers, multimodal), courier, postal, ECO delivery, professional/business services, manufacturing job work.
- 5%: Tailoring, job work for food/textiles, printing of educational materials, brick manufacturing, handicrafts, beauty and cleaning services.
- 1.5%: Job work on diamonds.
• Clarification: For renting of premises for hotel accommodation, “premises” means the place where services are supplied – effective 1 April 2025.
Notification No: 16/2025-CT (Rate) / 16/2025-IGST (Rate)
Description: Service exemptions
• Amends the principal 12/2017-CTR/IGST.
• Introduces new service exemptions:
- Individual life insurance & health insurance (and reinsurance thereof).
- Clarifies exclusions for local delivery services by/through ECO.
• Provides definitions of “group” and “health insurance business.”
Notification No: 17/2025-CT (Rate) / 17/2025-IGST (Rate)
Description: Reverse charge on ECO local delivery
• Amends the principal 17/2017-CTR/IGST.
• Specifies that E-commerce operators (ECOs) shall pay GST under RCM on local delivery services.
• Exception: Where the person supplying services via ECO is mandatorily registered under section 22(1).
• Exception: Where the person supplying services via ECO is mandatorily registered under section 22(1).
UTGST (Rate) Notifications
• Mirrors all CGST Rate Notifications (09–17/2025) for Union Territories.• Rates, exemptions, and service changes apply equally with CGST–UTGST split.
- HSN remapping required: Revised schedules → Essentials (5%), Standard (18%), Demerit (40%), Precious/Handicrafts (3%), Diamonds (0.25%/1.5%), Sin Goods (28%).
- Petroleum/E&P services: GST increased from 12% → 18%.
- Handicrafts: Concessional 5%/3% rates extended.
- Bricks & tiles: Uniform 12% GST → impacts real estate & builders.
- Services:
- 5%: tailoring, food/textile job-work, printing, handicrafts, beauty, cleaning.
- 1.5%: diamond job-work.
- Insurance: Life & health insurance (individual policies) now exempt.
- ECO Deliveries: ECOs liable under RCM for local delivery.
(Notification No. 13–16/2025)
Alongside the GST (Rate) Notifications, the Government also issued a set of important Central Tax Notifications on 17th September 2025 that focus on procedural, compliance, and administrative aspects of GST.
Summary
| Notification No. | Subject | Key Highlights |
| 13/2025 – Central Tax | CGST (Third Amendment) Rules, 2025 | • Lottery valuation factor revised 128 → 140 • Clarifies reverse charge references (effective 1 Apr-2025) • Provisional refund RFD-04 within 7 days (effective 1-Oct- 2025) • New appellate forms (APL-02A, APL-04A), single-member benches (≤ ₹50L) • GSTR-9: New ITC rows, reclaimed ITC clarity • GSTR-9C: New disclosures for s.9(5) supplies, fee alignment |
| 14/2025 – Central Tax | Persons not eligible for provisional refund u/s 54(6) | • Provisional refund denied to: (i) Taxpayers without Aadhaar authentication (ii) Suppliers of specified goods – Areca nuts, Pan Masala, Tobacco, Essential Oils |
| 15/2025 – Central Tax | Annual return exemption | • Taxpayers with turnover ≤ ₹2 Cr exempt from filing GSTR-9 • Applies from FY 2024-25 onwards |
| 16/2025 – Central Tax | Finance Act, 2025 provisions | • Brings into force clauses (ii), (iii) of s.121, and s.122–124, 126–134 • Covers appeals, GSTAT, penalties, adjudication procedures |
Subject: Central Goods and Services Tax (Third Amendment) Rules, 2025
• Rule 31A(2): Valuation factor for lottery changed from 128 → 140.
• Rule 39(1A): Clarifies reverse-charge references to CGST s.9 and IGST s.5(3)/(4) (effective 1-Apr-2025).
• Rule 91(2): FORM GST RFD-04 (provisional refund) to be issued within 7 days based on risk profile; officer may skip provisional refund and proceed under Rule 92; no revalidation of RFD-04 (effective 1-Oct-2025).
• Appeals:
- Rule 110 – new FORM GST APL-02A.
- Rule 110A – single-member bench where no question of law involved (≤ ₹50 lakh under s.109(8)).
- Rule 111 aligned; Rule 113(2) introduces summary order FORM GST APL-04A.
• Annual return (GSTR-9): New ITC rows (A1, A2, H1, etc.); clearer reclaimed ITC reporting referencing Rules 37, 37A, 38, 39, 42, 43; revised Part V from FY 2024-25 onwards.
• Reconciliation statement (GSTR-9C): Adds fields for s.9(5) supplies; late fee aligned to s.47(2); clarifies “payable” vs “paid.”
• Commencement: 22-Sep-2025, unless otherwise stated above.
Notification No: 14/2025 – Central Tax
Subject: Persons not eligible for provisional refund under section 54(6) of CGST Act
• Provisional refund under s.54(6) not allowed to:
1. Registered persons without Aadhaar authentication per Rule 10B.
2. Suppliers of specified goods:
- Areca nuts (0802 80)
- Pan masala (2106 90 20)
- Tobacco & manufactured tobacco substitutes (Chapter 24)
- Essential oils (3301)
• Effective Date: 1-Oct-2025.
Notification No: 15/2025 – Central Tax
Subject: Exemption from annual return filing for small taxpayers
• Taxpayers with annual turnover ≤ ₹2 crore are exempt from filing annual return (Form GSTR-9).
• Applies from FY 2024-25 onwards.
• Notification issued 17-Sep-2025.
Notification No: 16/2025 – Central Tax
Subject: Bringing into force provisions of the Finance Act, 2025
• Appoints 1-Oct-2025 as commencement date for:
- Clauses (ii), (iii) of section 121
- Sections 122 to 124
- Sections 126 to 134
• These relate to appeals, GSTAT, penalties, and adjudication procedures.
Key Action Points
Refunds:
-Provisional refund (RFD-04) within 7 days; officer may skip provisional stage→faster but stricter scrutiny.
-Provisional refunds denied if Aadhaar not authenticated or if supplying notifiedgoods (areca nuts, pan masala, tobacco, essential oils).
Annual Return (GSTR-9): Small taxpayers (≤ ₹2 Cr turnover) exempt fromfiling.
Appeals & GSTAT: New forms (APL-02A, APL-04A) and single-member benches notified.
GSTR-9 & 9C: New ITC rows, reconciliations (esp. for Section 9(5) supplies).
-Provisional refund (RFD-04) within 7 days; officer may skip provisional stage→faster but stricter scrutiny.
-Provisional refunds denied if Aadhaar not authenticated or if supplying notifiedgoods (areca nuts, pan masala, tobacco, essential oils).
Annual Return (GSTR-9): Small taxpayers (≤ ₹2 Cr turnover) exempt fromfiling.
Appeals & GSTAT: New forms (APL-02A, APL-04A) and single-member benches notified.
GSTR-9 & 9C: New ITC rows, reconciliations (esp. for Section 9(5) supplies).
Advisory: IMS Changes (w.e.f. October 2025)
GSTN has introduced key updates in the Invoice Management System(IMS) to simplify compliance:
- Pending Records: Taxpayers can now keep certain records pending for one tax period(month/quarter) – e.g., credit notes, amendments to invoices/debit notes, ECO-document corrections.
- ITC Reversal: New facility to declare ITC actually availed and reverse fully/partially, onlywhere applicable. No reversal needed if ITC not availed.
- Save Remarks: Taxpayers can add optional remarks when rejecting/keeping recordspending. Remarks will show in GSTR-2B and supplier’s dashboard.
- Effective: From October 2025 tax period, applicable prospectively to supplier-filed records.
Advisory: Invoice-wise Reporting in Form GSTR-7
- As per Notification No. 09/2025 – Central Tax (dated 11.02.2025), Form GSTR-7has been amended to capture invoice-level reporting of TDS.
- GSTN has now enabled this functionality on the portal.
- Effective from September 2025 tax period, all TDS deductors must furnish invoice-wise details of tax deducted while filing Form GSTR-7.
- Due Date: Filing of September 2025 GSTR-7 is due by 10th October 2025.
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