The Finance Ministry will soon issue rules on how to handle goods already stocked under higher Goods and Services Tax (GST) slabs, as the new rates come into effect from September 22, 2025. Commerce Minister Piyush Goyal said this step will help traders and dealers who are uncertain about Input Tax Credit (ITC) on older stock.
Smooth Transition for Businesses
Goyal explained that transitional arrangements will ensure dealers can shift to the new tax system without facing difficulties. He assured that the government will make sure the benefits of GST rate cuts are fully passed on to consumers.
From September 22, most goods will come under a simplified GST structure. The new system has two main slabs – 18% (standard rate) and 5% (merit rate). A higher 40% “de-merit” rate will apply to products like pan masala, gutkha, cigarettes, zarda, unmanufactured tobacco, and bidis.
The minister clarified that the GST rate cut decision has nothing to do with international developments or upcoming state elections. He stressed that states and the Centre had been working on this reform for over a year.
No Link to US Tariffs
Recently, the United States increased tariffs on Indian goods, doubling them to 50% from August 27. When asked, Goyal said India’s GST changes were unrelated to these global developments. “These reforms are the result of long-term planning, not short-term events,” he added.
Refunds and Compliance Ease
The Central Board of Indirect Taxes and Customs (CBIC) will soon begin administrative measures to ease compliance. This includes granting 90% of provisional refunds under the inverted duty structure, using data analysis and risk evaluation.
The GST Council approved this “Simple Tax” system on September 3, calling it a major step to make indirect taxation easier. By cutting rates on most goods, the government expects to boost demand, improve compliance, and reduce disputes.
For now, traders are awaiting the Finance Ministry’s detailed notification, which will provide clarity on how to manage old stock under the higher GST slabs.
