What GST 2.0 changed on your invoices
From 22 September 2025 the main GST rates are 5% and 18%, plus 40% for a short list of luxury and sin goods. Most 12% items moved to 5% and most 28% items to 18%. For supplies that straddled the change, section 14 of the CGST Act decides the rate.
The rate change that took effect on 22 September 2025 was the largest since GST began in 2017. It is now more than a year old, and a surprising number of small businesses still have 12% or 28% sitting in their item master, their price list, or the template they built in a spreadsheet in 2019.
If your invoice for an ordinary item dated after 22 September 2025 shows 12% or 28%, it is almost certainly wrong. This guide covers what changed, how to update, and the rule that decides which rate applies to supplies that straddled the change.
What changed
The 56th GST Council meeting replaced the four-slab structure with two main rates.
| Before 22 Sep 2025 | From 22 Sep 2025 |
|---|---|
| 5% | 5% |
| 12% | Most items moved to 5% |
| 18% | 18% |
| 28% | Most items moved to 18% |
| — | 40% for a short list of luxury and sin goods |
A few special rates survived: 3% on gold, silver and jewellery, 0.25% on rough precious stones, and 0.1% on specified supplies to merchant exporters among them. A small number of goods remain at 12%. Specified tobacco products continue at their earlier rates and cess until the compensation cess borrowings are repaid. For almost everything else, the answer is now 5% or 18%.
The compensation cess on most goods ended with the change, which is why many items that carried 28% plus cess landed at 40% rather than 18%.
Changes worth knowing by trade
These are the ones that affect the trades covered on this site.
- Readymade garments. 5% up to ₹2,500 a piece, 18% above it. The earlier threshold was ₹1,000, with 12% above it. One invoice can legitimately carry both rates. See the garment retailer format.
- Goods transport agencies. 5% without input tax credit, or 18% with it. The 18% option replaced the old 12% one. See the transporter format.
- Budget hotel accommodation. Moved from 12% to 5% without input tax credit.
- Beauty and wellness. Salons and gyms moved to 5% without input tax credit.
- Job work. Several categories, including textiles, printing and leather, moved to 5%. Residual job work that had been at 12% moved to 18%.
Every one of these comes with conditions. The rate is right only if your supply falls inside the entry, so check the notification entry against your actual supply rather than the headline.
What to update
Your item master. Every product or service you have saved with a rate needs checking against its HSN or SAC entry. This is the step that gets missed, because the item was “set up” years ago and nobody looks at it again.
Tax-inclusive price lists. If you quote prices that include GST, your taxable value changed when the rate did. A product priced at ₹1,120 inclusive at 12% had a taxable value of ₹1,000. At 5% the same ₹1,120 has a taxable value of ₹1,066.67. Decide deliberately whether you kept the price, kept the margin, or passed on the reduction, and make your invoices consistent with that decision.
Templates and spreadsheets. A rate typed into a formula is still there. If you built an invoice template with =B4*0.12 in it, it will keep charging 12% forever.
Credit notes for older invoices. A credit note adjusts the tax on the invoice it relates to, so it follows the rate on that original invoice, not today’s rate.
Which rate applies across the change
Section 14 of the CGST Act decides this for supplies where the goods or services, the invoice and the payment do not all fall on the same side of 22 September 2025. It reads as six cases. They reduce to one rule: look at the three events — supply, invoice, payment — and whichever side two of them fall on decides the rate.
| Supply | Invoice | Payment | Rate |
|---|---|---|---|
| Before | Before | After | Old |
| Before | After | Before | Old |
| Before | After | After | New |
| After | Before | Before | Old |
| After | Before | After | New |
| After | After | Before | New |
One detail catches people out. For this purpose, if the payment is credited to your bank account more than four working days after the date of the rate change, the date of payment is the date of credit, not the date the cheque or transfer was made.
Most businesses will rarely meet this table now that the change is a year old. It matters for long-running contracts, advances received in September 2025, and any rate change that comes after this one, because the same section governs every future revision.
What did not change
The particulars a tax invoice must carry under Rule 46 are the same. The place of supply rules are the same, so the choice between CGST plus SGST and IGST works exactly as before. Your invoice numbering does not restart because the rates changed; it restarts at the beginning of the financial year, as it always did.
Checking your own invoices
The quickest audit is to open the last ten invoices you issued and look at the rate column. If any line dated after 22 September 2025 shows 12% or 28%, pull up its HSN or SAC entry and check it against the current notification. The GST calculator and invoice generator on this site offer only the rates in force, with the special rates labelled, so they will not hand you an abolished slab by default.
This guide explains how the change works. It is not tax advice, and the entry that governs your specific supply is a question for your accountant.
Sources
- Press release and recommendations of the 56th GST Council meeting, 3 September 2025.
- Notifications 9/2025 to 17/2025 Central Tax (Rate), effective 22 September 2025.
- Central Goods and Services Tax Act 2017, section 14, on change in rate of tax.
- Central Goods and Services Tax Act 2017, section 34, on credit notes.