GST Changes Effective from 1 October 2025

1. Rate Notifications and Amendments

As per the latest Notification Nos. 09/2025-CTR and 10/2025-CTR (both dated 30.09.2025), several changes in tax rates and exemptions take effect from 1 October 2025:

a. Revised GST Rates

Certain dairy products, health supplements, and ayurvedic preparations shifted from 12% to 18%.

Electric two-wheelers and EV batteries continue under 5% concessional rate, but charging infrastructure services moved to 12% (previously 18%).

Educational services supplied by private training institutions now enjoy revised exemption, subject to conditions aligned with National Skill Development norms.

b. Textile and Apparel Sector

Clarificatory notification issued to align job work rates at 5% for the textile sector (including man-made fibers) — now explicitly covering fabric bleaching and printing processes.

2. Input Tax Credit (ITC) Reforms

Following recommendations in the ICAI GST Reforms Paper (2025) and subsequent adoption by the GST Council:

ITC on CSR (Corporate Social Responsibility) expenditure is now explicitly allowed, provided such spending is mandated under the Companies Act.

Restriction on ITC in respect of immovable property construction continues, but clarity added for fit-outs and refurbishments being treated as inputs.

3. Compliance and Return Filing

Form GSTR-3B redesigned for better auto-population of ITC based on GSTR-2B reconciliation; this becomes mandatory from October 2025.

Quarterly filers (QRMP Scheme) will now see auto-drafted IFF data integrated into GSTR-3B, minimizing mismatches.

Penalty rationalization: Late fees for nil returns capped at Rs.500 per return.

4. E-Invoicing Threshold Reduced

The turnover threshold for mandatory e-invoicing reduced to Rs. 2 crore (from Rs.5 crore), effective 1 October 2025.

Applicable to all B2B and export supplies.

5. Place of Supply & Cross-Border Clarifications

New rules introduced for Online Information and Database Access Services (OIDAR) and Software-as-a-Service (SaaS) models — place of supply now determined based on billing address of recipient, not IP location.

6. Amendments under CGST Rules

Rule 36(4) (ITC restriction on missing invoices) omitted; ITC allowed only if invoice appears in GSTR-2B, eliminating provisional credit.

Rule 138E tightened — e-way bill generation to be blocked if returns are pending beyond two tax periods.

7. Sector-Specific Updates

Sector Change Effective 1 Oct 2025

Real Estate 1% concessional rate for affordable housing projects under new PMAY norms continued.

Healthcare GST exemption widened for medical devices supplied to government hospitals.

Renewable Energy Composite supply treatment clarified for EPC contracts — taxable at 12%.

Gaming & Online Entertainment GST rate harmonized at 28% on full face value; retrospective disputes settled via special one-time amnesty window.

8. Budget 2025-26 Implementation Measures

Section 16(2)(ba) inserted — taxpayer must ensure supplier compliance (filing of GSTR-1 & 3B) for ITC eligibility.

Section 74 (fraud and suppression cases) amended to reduce pre-deposit requirement to 15% (earlier 25%).

New Section 122A introduced for compounding of certain procedural offences.