✍️ By Amrut Chitragar | 📅 Published: | Last Updated:
GST 2025: Govt Says “28→18, 12→5” – Here’s What Really Happened
Big promises. Mixed reality. In September 2025, the Government announced a sweeping Next-Gen GST Reform, claiming that most 28% items are now at 18% and many 12% items moved to 5%. But the fine print tells a different story — some 5% items were actually moved up to 12% and the 12% slab still has hundreds of HSN codes. This article separates fact from hype, lists major rate changes with notifications, and explains how to update your ERP or billing software before the next return cycle.
Key Highlights (Quick Read)
- Fresh notifications: 09/2025-CTR (goods) & 09/2025-ITR replace 01/2017 base.
- Rates mostly same: castings, engineering, standard FMCG continue at their usual slabs.
- Major changes: logistics services to 18% (or 5% w/o ITC); fly-ash bricks & related items to 12% IGST; individual life/health insurance → Nil.
- Compliance action: re-map HSN/SAC to new entries in SAP/ERP before 22-Sep-2025.
- GST Council / CBIC — Notifications (2025)
- Goods – New rate list: Notification 09/2025-CTR / 09/2025-ITR
- Construction materials: Notification 14/2025-CTR / 14/2025-ITR
- Logistics & transport: Notification 15/2025-CTR / 15/2025-ITR
- Life & Health Insurance exemption: Notification 16/2025-CTR / 16/2025-ITR
What changed (in simple words)
Government issued a fresh, consolidated GST rate list for goods/services. The old 2017 base notifications are superseded. Rates for many items remain the same but the legal references changed. Update ERP even if % is unchanged.
ERP / SAP update — 5 quick steps
- Export current master
Download item list (HSN + rate) from SAP/Tally/Zoho.
- Mark differences
Compare with new list; flag items as No Change / ↑ / ↓ / Nil.
- Update tax codes
Create/modify condition records (SAP: TAXINN/VK11) with validity = 22-09-2025.
- Test invoices
Try Nil, 5%, 18% cases; confirm CGST/SGST or IGST splits.
- Go-live & communicate
Lock old rates; inform vendors to avoid GSTR-2B mismatch.
Major changed items — Before → After
| Item / HSN (or SAC) | Old GST Rate | New GST Rate (from 22-Sep-2025) | Notification (2025) | Remarks |
|---|---|---|---|---|
| Life Insurance (Individual/Family) — SAC 9971 | 18% | Nil | 16/2025-CTR & 16/2025-ITR | Rate ↓ — Retail (non-group) policies exempt |
| Health Insurance (Individual/Family) — SAC 9971 | 18% | Nil | 16/2025-CTR & 16/2025-ITR | Rate ↓ — Retail (non-group) policies exempt |
| Reinsurance of above policies — SAC 9971 | 18% | Nil | 16/2025-CTR & 16/2025-ITR | Rate ↓ — Aligned exemption |
| Goods transport by rail (non-IR) — SAC 9965/9967 | 12% | 18% or 5% (without ITC) | 15/2025-CTR & 15/2025-ITR | Rate ↑ — Concessional 5% has ITC restriction |
| Multimodal transportation of goods — SAC 9965/9967 | 12% | 18% or 5% (restricted ITC) | 15/2025-CTR & 15/2025-ITR | Rate ↑ — Two-rate option with ITC limits |
| Renting of goods carriage (incl. fuel) — SAC 9966/9967 | 12% | 18% or 5% (without ITC) | 15/2025-CTR & 15/2025-ITR | Rate ↑ — Structure aligned with GTA options |
| Fly-ash bricks/blocks/aggregates — HSN 6815 | 5% (IGST) | 12% (IGST) | 6% + 6% (CGST+SGST) | 14/2025-CTR & 14/2025-ITR | Rate ↑ — Consolidated under new entry |
| Bricks of siliceous earths — HSN 6901 00 10 | 5% (IGST) | 12% (IGST) | 6% + 6% (CGST+SGST) | 14/2025-CTR & 14/2025-ITR | Rate ↑ |
| Building bricks — HSN 6904 10 00 | 5% (IGST) | 12% (IGST) | 6% + 6% (CGST+SGST) | 14/2025-CTR & 14/2025-ITR | Rate ↑ |
| Earthen/roofing tiles — HSN 6905 10 00 | 5% (IGST) | 12% (IGST) | 6% + 6% (CGST+SGST) | 14/2025-CTR & 14/2025-ITR | Rate ↑ |
If an item is not listed in special schedules (I, III, IV, V, VI, VII), it falls under:
- 18% IGST (inter-state), or
- 9% + 9% CGST+SGST (intra-state)
Examples: Castings, engineering parts, most machinery, standard FMCG goods — continue at 18%.
Browse full schedules (expand/collapse + search)
- Type HSN or item name in Search.
- Click a schedule to expand its list.
- Use “Expand All / Collapse All” for quick scanning.
Schedule I — Typically 5% (concessional items)
Schedule II — Standard items (18%) & re-listed entries
Schedule III — Higher / special slab
Schedule IV — 3% category (e.g., precious metals group)
Schedule V — 0.25% category
Schedule VI — 1.5% category
Schedule VII — 28% category
Nil-rated (Exempt) list — Essentials
FAQs — GST Rate Changes (Effective 22-Sep-2025)
-
Did all GST rates change?
No. Most rates are unchanged; the big shift is a fresh, consolidated schedule (2017 base superseded).
-
Do I need to update ERP if the GST % is same?
Yes. Item codes now map to new entries/notifications. Update condition records/tax codes and validity from 22-09-2025 (SAP: TAXINN/VK11).Master remap
-
What about Gold and castings (HSN 7108 / 7325)?
Gold continues at 3% (Schedule IV). Most castings/engineering items stay at the standard 18% unless specifically listed.
-
Old stock purchased earlier: which GST rate applies when I sell now?
The GST rate is based on the time of supply for your outward supply, not when you purchased the stock. Sales made on/after 22-09-2025 follow the new rate/entry (subject to Sec. 14 rate-change rules).Section 14
Your input tax credit on old purchase stays as per old law; no reversal is required just because the sale rate changed.
-
Goods in transit at midnight of 21→22 Sep 2025 — which rate?
Apply the rate per time of supply. If invoice/payment earlier but supply after change, or vice-versa, use the Sec. 14 matrix to determine the applicable rate and tax period.Time of supply
-
Advance received before 22-Sep-2025, goods supplied after — how to tax?
For B2C advances (or wherever advance liable), tax treatment follows Sec. 14: when payment/invoice/supply straddle the change, apply the specific sub-rules to decide the applicable rate.
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Issued invoice before change, supply after change — credit/debit note?
If rate/entry changes, issue a debit/credit note under Sec. 34 to align tax with the correct liability and report in GSTR-1 of the month you issue it.
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How to handle price revisions or post-sale discounts after 22-Sep-2025?
Use credit/debit notes. Ensure commercial agreement exists for post-sale discount to adjust tax; reflect in returns of the period the note is issued.
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Which split to use: IGST vs CGST+SGST after the change?
Place of supply & supplier location decide the split (unchanged). The rate change doesn’t alter interstate/intrastate rules.
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Do I need to regenerate e-invoice (IRN) for the same supply because rate changed?
No for past invoices. For supplies on/after the effective date, generate IRN with the correct new entry/rate.
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GSTR-1/GSTR-3B impact for the cut-over month?
Ensure classification by date: report pre-change invoices under old entry and post-change under new entry in the same return period if applicable.
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HSN-wise GST rates 2025 — where to check?
Use the Changed Items table above. Full HSN master is being updated in our tool.HSN wise
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Insurance GST exemption 2025 (SAC 9971) — does it cover reinsurance?
Yes, retail life/health policies and their reinsurance are exempt under the new notification (from 22-Sep-2025).
-
Logistics/GTA 2025 — 18% vs 5% without ITC?
Two-rate option applies; 5% comes with ITC restriction. Check contract/pricing and recipient liability (if any reverse charge applies).
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