For most goods and services covered by the 56th GST Council rate decisions, the revised GST rates took effect on 22 September 2025. The main exception in the official FAQ was specified tobacco: cigarettes, chewing tobacco products such as zarda, unmanufactured tobacco and beedi continued under their existing GST rates and compensation cess until a later date was notified.
For a transaction around the change date, do not decide the rate from the inventory purchase date or invoice date alone. Check the supply date, invoice date and payment-receipt date under section 14 of the Central Goods and Services Tax Act, 2017, then confirm any product-specific notification. Recommendations from the 57th Council meeting on 8 October 2026 apply only when implemented through a circular, notification or law amendment.
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What changed, and when did the new GST rates start?
The Ministry of Finance FAQ on the 56th GST Council decisions states that the broad rate changes for covered goods and services applied from 22 September 2025. That date is not a universal answer for every product or service. A classification-specific notification can create a different treatment, and the FAQ expressly carved out several tobacco products.
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For cigarettes, chewing tobacco products such as zarda, unmanufactured tobacco and beedi, the existing GST rates and compensation cess continued until a later implementation date was notified. A business selling one of these products should therefore identify the exact tariff or service classification and read the applicable notification rather than applying 22 September 2025 mechanically.
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Recommendations are not the same as operative law
The Press Information Bureau release on the 57th GST Council meeting, held on 8 October 2026, describes recommendations on process and clarification. It also makes clear that the recommendations take effect through the relevant circulars, notifications or amendments to law. Until one of those instruments is issued, a recommendation by itself does not change the rate shown on an invoice.
Does the new rate apply to stock bought before 22 September 2025?
Usually, yes, if the outward supply occurred on or after the revised rate became effective and the product is covered by that change. The official FAQ states the governing principle plainly: GST is levied on supply.
The date on which the supplier purchased or received the inventory is not, by itself, the tax point for the later outward sale.
Example: old purchase, new-rate sale
A wholesaler bought taxable goods in August 2025, held them in a warehouse and supplied them on 25 September 2025. If the goods fall within a category whose revised rate began on 22 September, the 25 September supply is tested at the revised rate. The earlier purchase date does not preserve the old outward rate.
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What to record for inventory
- Keep the purchase invoice and the date the goods came into stock.
- Record the actual outward supply date, not just the date an order was accepted.
- Map the product to the notification or classification that changed its rate.
- Retain evidence supporting the rate used on the sale invoice.
These records help separate the input transaction from the later taxable supply when accounts are reconciled.
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How section 14 decides a transaction that crosses the rate-change date
Section 14 applies when the supply, invoice and payment occur on different sides of a rate change. It does not reduce the analysis to “the invoice date decides.” For payment, the date of receipt is generally the earlier of the date the amount is entered in the supplier’s books or the date it is credited to the supplier’s bank account.
Section 14 practical matrix
| When the supply happened | Invoice and payment timing | Time-of-supply date |
|---|---|---|
| Before the rate change | Invoice and payment both after the change | Earlier of payment receipt or invoice issue |
| Before the rate change | Invoice before the change; payment after | Invoice issue date |
| Before the rate change | Payment before the change; invoice after | Payment-receipt date |
| After the rate change | Invoice before the change; payment after | Payment-receipt date |
| After the rate change | Invoice and payment both before the change | Earlier of payment receipt or invoice issue |
| After the rate change | Invoice after the change; payment before | Invoice issue date |
The four-working-day bank-credit proviso
Section 14 contains a special proviso for the payment event. If the amount is credited to the supplier’s bank account more than four working days after the rate-change date, the relevant payment date is substituted according to the statutory wording. Check the calendar dates, book-entry date and bank-credit date together; do not rely on a payment advice or an informal promise to pay.
A practical decision sequence
- Identify the exact goods or service and the notification that changed its rate.
- Fix the actual supply date using the contract, delivery, completion or acceptance evidence relevant to that supply.
- Note the invoice issue date and whether the invoice was issued before or after the change.
- Determine the statutory payment-receipt date from the books and bank credit, including the four-working-day rule where it applies.
- Use the matching section 14 row and preserve the documents that show why that row applies.
How should an advance be treated?
An advance does not create a shortcut around section 14. The official FAQ says that where the supply is incomplete or the invoice has not yet been issued, the rate for the advance is determined under the time-of-supply provisions in section 14. The advance must therefore be considered together with the supply date, invoice date and payment-receipt facts.
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For example, a deposit received before 22 September 2025 does not automatically settle the rate for every later delivery. Determine which statutory scenario fits the transaction, document the date the advance was received, and test the remaining events under section 14. If the facts are unusual—such as staged performance, a partial supply or a later change in classification—obtain a transaction-specific review instead of applying a blanket “advance means old rate” rule.
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Is every invoice issued after a rate change a revised invoice?
No. A rate change alone does not make every later invoice a technical “revised invoice.” Tax-invoice rules require the applicable rate and tax amount, and the rules also contain particulars for revised invoices and for credit or debit notes. However, the reviewed revised-invoice provision is specifically framed for supplies made during the period between the retrospective effectiveness of a supplier’s registration and the issue of the registration certificate. That is a different situation from an ordinary rate change.
What to do with an invoice already issued at the wrong rate
- Reconstruct the supply, invoice and payment dates and apply section 14.
- Verify whether a product-specific exception or later notification changes the result.
- Check the invoice, credit-note, debit-note and return provisions that apply to that exact error.
- Confirm the permitted correction document and filing treatment before changing the customer’s tax position.
The available transition material does not establish one universal correction document or deadline for every rate-change mistake. An already-issued invoice therefore needs a case-specific review against the relevant notification and current correction provisions; do not label it “revised” solely because it was issued after 22 September 2025.
What happens to input tax credit (ITC)?
The official FAQ says a registered person may claim input tax charged at the rate in force when the inward supply took place, subject to the statutory conditions and restrictions. A later reduction in the rate on the person’s outward supply does not, by itself, erase ITC that was correctly charged and validly availed.
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Using credit already in the electronic ledger
Credit duly availed in the electronic credit ledger can be used against output-tax liability under section 49(4), subject to the normal legal restrictions. Keep the inward-supply invoice, eligibility records and reconciliation supporting the credit.
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When an outward supply becomes exempt
If a rate change makes an outward supply exempt from the effective date, the FAQ says ITC must be reversed for supplies from that date as required by the Act. The reversal analysis is linked to the exempt outward supplies and the statutory rules; it is not a general cancellation of all historical credit. Separate taxable and exempt turnover, identify the effective date and calculate the required reversal using the applicable provisions.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Do goods in transit need a new e-way bill?
No mandatory cancellation and fresh generation is required solely because the GST rate changes while goods are in transit. Existing e-way bills remain valid for their original validity period. Continue to comply with the ordinary e-way-bill requirements, including the validity period and the accuracy of the consignment details.
A transaction-review checklist for accounts and tax teams
- Classify first: Confirm the HSN or service classification and look for a product-specific notification, especially for tobacco.
- Mark the legal date: Use 22 September 2025 only for goods and services covered by the broad 56th Council change.
- Separate inward and outward events: The purchase date of old stock does not determine the rate on its later outward supply.
- Build the three-date file: Preserve supply, invoice and payment-receipt dates, including book entry and bank-credit evidence.
- Apply section 14: Select the correct matrix row and document the reasoning.
- Handle advances with the same discipline: Test the advance with the supply and invoice facts; never use a standalone advance rule.
- Review documents before correcting them: Do not call a normal post-change invoice a revised invoice without checking the specific rule and transaction facts.
- Reconcile ITC: Confirm inward-supply eligibility, ledger credit and any reversal required when output becomes exempt.
- Leave valid e-way bills alone: A rate change by itself does not require replacement.
- Check current law: For changes discussed after the 57th Council meeting, locate the operative circular, notification or amendment before changing billing logic.
Common mistakes and how to avoid them
Using the inventory purchase date
This confuses the inward supply with the later outward supply. Use the date on which the goods are supplied and then apply the transition rule.
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Section 14 expressly combines supply, invoice and payment events. A payment received before the change or a supply made after it can alter the result.
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Treating a recommendation as a notification
Council recommendations require implementation through the legally operative instrument. Wait for the relevant circular, notification or amendment before treating a proposed process change as binding.
Assuming every rate reduction requires ITC clawback
Correctly availed ITC remains governed by the inward supply and statutory conditions. A specific reversal issue arises when the outward supply becomes exempt, not merely because its tax rate was reduced.
Replacing e-way bills unnecessarily
The official FAQ says a rate change during transit does not, by itself, invalidate an existing e-way bill or require a new one.
What businesses should verify before filing or invoicing
Before finalising a return or issuing a correction, verify the current rate notification for the exact classification, the legal effective date, the section 14 time-of-supply result, and the applicable invoice or note provisions. Keep the supporting contract, delivery evidence, invoice, payment records, stock movement and ITC reconciliation together. Where those facts do not fit a single matrix row, obtain professional advice based on the complete transaction file rather than relying on a general FAQ.
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