GST Rate Applicability Guide: Understanding the Transition Effective from 22nd September 2025

The Goods and Services Tax (GST) regime in India is dynamic, with changes in rates and rules introduced from time to time. One common area of confusion for businesses and taxpayers arises when GST rates are revised. Questions like “Which rate applies – old or new?” and “What if invoice and payment dates are different?” often lead to compliance challenges.

To address these concerns, the GST law lays down specific provisions for determining the correct rate of tax in case of rate changes. With the upcoming change in GST rates effective from 22nd September 2025, it is crucial for taxpayers to clearly understand the applicability rules.

This blog provides a comprehensive guide to GST rate applicability during this transition, complete with examples, compliance tips, and key notes.

📌 Why GST Rate Transition Rules Matter

Whenever GST rates are revised, businesses must carefully analyze:

  • The date of supply of goods or services.

  • The date of issue of invoice.

  • The date of receipt of payment.

Incorrect application of rates may lead to notices, penalties, or disputes during audits. For seamless compliance, knowing the exact rules saves time, money, and unnecessary litigation.

📋 GST Rate Applicability for Supplies Before 22nd Sept 2025

When goods/services are supplied before the rate change date, the following rules apply:

Invoice DatePayment DateApplicable GST Rate
Before 22.09.2025Before 22.09.2025Old Rate
After 22.09.2025After 22.09.2025New Rate
Before 22.09.2025After 22.09.2025Old Rate
After 22.09.2025Before 22.09.2025Old Rate

✅ Key takeaway: For supplies made before 22nd Sept, in most cases the old rate applies, unless both invoice and payment are after the rate change.

📋 GST Rate Applicability for Supplies After 22nd Sept 2025

When goods/services are supplied after the rate change date, the following rules apply:

Invoice DatePayment DateApplicable GST Rate
Before 22.09.2025Before 22.09.2025Old Rate
After 22.09.2025After 22.09.2025New Rate
Before 22.09.2025After 22.09.2025New Rate
After 22.09.2025Before 22.09.2025New Rate

✅ Key takeaway: For supplies made after 22nd Sept, in most cases the new rate applies, except when both invoice and payment are before the rate change.

📖 Practical Examples

Example 1: Goods supplied before 22nd Sept, invoice issued after

  • Supply date: 20th Sept 2025

  • Invoice date: 25th Sept 2025

  • Payment date: 28th Sept 2025

👉 Supply was before the rate change, but both invoice and payment are after.
Applicable GST Rate = New rate.

Example 2: Services supplied after 22nd Sept, payment received earlier

  • Supply date: 24th Sept 2025

  • Invoice date: 26th Sept 2025

  • Payment date: 18th Sept 2025

👉 Supply is after the rate change, even though payment was made earlier.
Applicable GST Rate = New rate.

Example 3: Goods supplied before rate change, advance payment received

  • Payment date: 15th Sept 2025 (advance)

  • Supply date: 19th Sept 2025

  • Invoice date: 20th Sept 2025

👉 Both supply and payment happened before 22nd Sept.
Applicable GST Rate = Old rate.

⚠️ Important Notes to Remember

  1. Date of Receipt of Payment

    • It is considered as the date on which payment is credited to the supplier’s bank account.

    • If credit takes more than 4 working days from the date of tax rate change, the date of entry in the books of accounts will be taken.

  2. Advance Payments

    • GST is payable on advances for services (and for certain goods categories). Businesses must track advance receipts carefully.

  3. Revised Invoices

    • If incorrect GST rates are charged, suppliers may need to issue credit notes/debit notes to adjust.

  4. Interest & Penalty Risk

    • Applying the wrong rate can lead to demand notices, additional tax, and interest liability @18% per annum.

✅ Compliance Tips for Businesses

  • Always match supply date, invoice date, and payment date while determining GST rate.

  • Maintain proper documentation (contracts, invoices, bank statements) to defend your position during audits.

  • Train your accounting and billing team about the rate transition rules.

  • Use updated GST software that auto-applies the correct rate based on supply/payment date.

  • Consult a professional tax advisor for clarity in complex cases (especially where advance payments, partial supplies, or continuous supply contracts are involved).

📌 Conclusion

GST rate transitions often create confusion for businesses, especially when supply, invoicing, and payments fall across different timelines. With the upcoming GST rate change effective from 22nd September 2025, it is crucial to clearly apply the rules.

In simple terms:

  • If supply is before 22nd Sept, old rate applies in most cases.

  • If supply is after 22nd Sept, new rate applies in most cases.

Proper compliance not only avoids penalties but also builds trust with clients and ensures smooth audits.

📞 Contact us today for expert GST guidance:
+91 7305701454
📧 auditsiva2@gmail.com
🌐 www.taxlaservices.com

#BestAuditorInTamilnadu #GSTCompliance #GSTRates #GSTFilinginChennai #TaxConsultant #TaxlaServices




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