The CBIC has released a set of major notifications on 17 September 2025, following the 56th GST Council meeting. These are a part of the government’s GST 2.0 push, aiming for simpler tax structures, clearer exemptions, and stronger compliance. Here’s what businesses need to know — and act on — immediately.
What’s Changing & When
Most changes become effective 22 September 2025 unless otherwise noted. Some rules are retrospective (from 1 April 2025), and others kick in from 1 October.
Rate Revisions & Exemptions
| Notification No. | Goods / Services Category | What’s New / Key Conditions |
|---|---|---|
| 9/2025 | Broad goods categorization | CGST Rate Schedule I: essential/low-value goods – 2.5% Schedule II: intermediate goods – 9% Schedule III: luxury goods – 20% Schedule IV–VI: low-rate items – 1.5%, 0.125%, 0.75% Schedule VII: Pan masala and tobacco-related products – 14% |
| 10/2025 | Exemption items | Agricultural, food, health & education items, some drugs, musical instruments are exempt (Nil CGST) |
| 11/2025 | Imported goods (related to petroleum operations) | CGST rate of 9%. Impacts landed cost, accounting for imports. |
| 12/2025 | Schedule Mapping | Items previously under old Schedules mapped into the new ones. Helps reduce ambiguity. |
| 13/2025 | Handicrafts, Artware, etc. | Handicraft candles, bags, wood décor, pottery, carpets, imitation jewellery etc. will have rates between 1.5-2.5 % CGST. |
| 14/2025 | Building Materials | Items like fly-ash bricks, roofing tiles, etc. taxed at ~6% CGST. Standard schemes mostly unaffected. |
| 15/2025 | Services – transport, job work, etc. | Concessional CGST rates (2.5-9%) apply where ITC is not claimed. If ITC claimed, then standard rates apply. |
| 16/2025 | Insurance, Local Delivery & Related Services | Life/health insurance for individuals are Nil CGST; certain delivery services get standard rates. |
| 17/2025 | Local Delivery Services (non-e-commerce) | These will be under standard rates unless specific exemptions apply. Affects independent service providers heavily. |
Procedural & Compliance Updates
Apart from rate changes, the following updates require attention:
- Third Amendment Rules, 2025 (CGST Rules) (Notification 13/2025):
- Rule 31A (2): Revised valuation multiplier for lottery, betting, gambling (now 140).
- Rule 39(1A): Input Service Distributors can distribute IGST (reverse charge) from 1 April 2025.
- Rule 91(2): Refund orders (Form RFD-04) must be issued within 7 days of acknowledgment.
- GSTR-9 enhancements: Better reporting of prior year ITCs, reversals, deferred ITC etc., for greater reconciliation.
- Appeals procedure simplified: New forms, single-member benches for certain appeals up to ₹50 lakh, acceptance of self-attested documents etc.
- Refund Restrictions (Notification 14/2025):
Starting 1 October 2025, provisional refunds are blocked for certain goods unless Aadhaar authentication and other verification requirements are met. Also affects suppliers of tobacco / essential oils etc. - Annual Return Filing (Notification 15/2025):
Businesses with turnover up to ₹2 crore are now exempt from filing annual returns for FY 2024-25 onward. - Finance Act-related Compliance (Effective 1 October 2025) (Notification 16/2025):
New enforcement for stricter documentation rules, timelines for ITC claims, penalty & anti-evasion measures being activated.
What Businesses Must Do Now
To stay compliant and avoid disruptions, GSTZen suggests the following action items:
- Update Your GST System & Processes
- HSN/SAC code re-mapping according to new schedules.
- Invoices, billing, pricing aligned to revised CGST/SGST/IGST rates and exemptions.
- Review Input Tax Credit Items Carefully
- Especially for areas where things have moved from taxable to exempt, or where concessional rates depend on not claiming ITC.
- Keep track of reversal obligations or restrictions.
- Ensure Refund Compliance
- Aadhaar authentication completed.
- Stay ready with documentation & verification processes, especially for categories facing refund limits.
- Monitor & Train Staff / Finance Teams
- Spread awareness of new rules (valuation, refund timelines, appeal process etc.).
- Ensure accounting/ERP systems are updated before the effective dates.
- Revise Contracts, Pricing, Pass-Through Impacts
- Where you have long-term supply/service contracts, update terms for revised GST rates or exemptions.
- Reassess margins if input costs change.
- Stay Informed
- With Finance Act provisions, penalty / enforcement risk goes up. Keep tabs on official notifications, circulars, and guidance.
Why These Changes Matter
These updates under GST 2.0 are not just tweaks — they mark a shift toward:
- Reducing complexity in rate schedules and exemptions.
- Increasing clarity around what is taxable, what is exempt, and when ITC can or cannot be claimed.
- Faster, more predictable procedures (e.g. refund timelines, appeal processes).
- Stronger compliance and enforcement, to reduce leakages or misuse.