This page summarises how the new GST rates interact with invoice and payment dates, and the resulting treatment of Input Tax Credit (ITC).
Quick Overview
When GST rates change, the applicable rate and ITC treatment depend on three dates:
Time of supply (when goods/services were supplied)
Invoice issue date
Payment date
Where outward supplies move to a NIL-rated category, reversal of ITC for stock held on the transition date (22 Sept 2025) may be required under Section 17(2) and Rule 42.
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Transition Scenarios
1. Supply Before 22nd September 2025, Invoice & Payment on/after 22nd September
The new GST rate will apply. ITC is available but may need reversal for stock lying on 22nd September if the outward supply becomes NIL-rated.
2. Supply Before 22nd September 2025, Invoice & Payment before 22nd September
The old GST rate will apply. ITC available as per existing rules.
3. Supply Before 22nd September 2025, Invoice before 22nd September but Payment on/after 22nd September
The old rate applies. ITC remains available as per earlier provisions.
4. Supply On/after 22nd September 2025, Invoice & Payment before 22nd September
The old rate applies. ITC will be available as per old rules.
5. Supply On/after 22nd September 2025, Invoice on/after 22nd September but Payment before 22nd September
The new GST rate applies. ITC is allowed, but subject to reversal if supply becomes NIL-rated.
6. Supply On/after 22nd September 2025, Invoice & Payment before 22nd September
The new rate applies. ITC is subject to reversal where outward supply has become NIL-rated.
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Action Points for Businesses
Review stock on hand as of 22 Sept 2025 and identify items that may become NIL-rated.
Reconcile invoices and payment dates to correctly determine applicable rates.
Prepare ITC reversal calculations under Sec.17(2) and Rule 42, where required.
Maintain proper documentation: invoices, payment receipts and stock registers for audit trail.
GST 2.0 Update – New Tax Structure Effective from Navratri 2025
GST Council’s 56th Meeting: Major GST Rate Changes (3rd September 2025)
DisclamerThis content is for general information on GST changes effective 22nd Sept 2025. It does not constitute professional advice. Please consult your tax advisor or GST consultant before making business or compliance decisions.