Govt notifies new GST rates ahead of pan-India rollout from 22 September
India had on 4 September announced new GST rates in biggest indirect tax reforms since 2017. That was a result of GST rationalisation to just two slabs.
The Narendra Modi government has made GST reforms official by issuing an official notification on new GST rates, effective 22 September 2025.
This notification supersedes Notification No. 1/2017-Central Tax (Rate) dated 28 June 2017. Now, states will have to follow suit, as GST revenues are shared equally between the central government and the states.
“This strategic alignment is critical to ensure a smooth implementation and, crucially, to guarantee that the benefits of GST rationalisation are effectively passed on to the end consumer,” Saurabh Agarwal, tax partner at EY India, told Hindustan Times over WhatsApp.
“It is now imperative for industries to align their ERP (enterprise resource planning) systems, pricing decisions and supply chain.”
On 4 September, the government announced GST rate cuts on hundreds of items—from soaps to small cars—in India's biggest indirect tax reforms since goods and services tax first came into effect on 1 July 2017. That was a result of GST rationalisation, wherein the structure was simplified to two tax slabs (5% and 18%) from four (5%, 12%, 18% and 28%) earlier.
A new 40% slab has been introduced for tobacco products and luxury goods, while compensation cess has been scrapped altogether.
{{/usCountry}}A new 40% slab has been introduced for tobacco products and luxury goods, while compensation cess has been scrapped altogether.
{{/usCountry}}The onus is now on trade and industry to pass on the benefits.
{{/usCountry}}The onus is now on trade and industry to pass on the benefits.
{{/usCountry}}“With this clarity in place, the ball is now in the industry's court,” AMRG & Associates Senior Partner Rajat Mohan told PTI. “Businesses must promptly update their systems, revise pricing, and ensure smooth implementation of the new rates across supply chains.”
{{/usCountry}}“With this clarity in place, the ball is now in the industry's court,” AMRG & Associates Senior Partner Rajat Mohan told PTI. “Businesses must promptly update their systems, revise pricing, and ensure smooth implementation of the new rates across supply chains.”
{{/usCountry}}EY's Agarwal believes there's scope for more GST reforms.
{{/usCountry}}EY's Agarwal believes there's scope for more GST reforms.
{{/usCountry}}“The next logical and crucial reform would be to bring key commodities such as electricity, aviation turbine fuel, and natural gas under GST framework,” he said. “This would be a pivotal step toward creating a truly unified and efficient indirect tax system, which is essential for India's economic growth.”
{{/usCountry}}“The next logical and crucial reform would be to bring key commodities such as electricity, aviation turbine fuel, and natural gas under GST framework,” he said. “This would be a pivotal step toward creating a truly unified and efficient indirect tax system, which is essential for India's economic growth.”
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