The GST Rate Change of 22 September 2025, One Year On: Section 14, Credit, and the First GSTR-9 Across the Rate Change

A year ago this week, shopkeepers across India spent a long weekend changing price tags. From 22 September 2025, toothpaste and shampoo came down to 5% from 18%, cement and televisions from 28% to 18%, and the old four-slab structure gave way to two main rates and one for "de-merit" goods.

For the shopper, it was over by Monday. For the accountant, it is only arriving now. The annual return for financial year 2025-26 is due on 31 December 2026, and it is the first GSTR-9 to straddle the 2025 rate restructuring, with one year holding two rate tables.

What changed, and when

The GST Council's 56th meeting on 3 September 2025 recommended "a 2 rate structure with a Standard Rate of 18% and a Merit Rate of 5%; a special de-merit rate of 40% for a select few goods and services". The Government notified it on 17 September in Notification No. 9/2025-Central Tax (Rate) and its integrated tax twin, in force from 22 September 2025.

There was one exception. Pan masala, cigarettes, bidis and other tobacco products stayed at their old rates and compensation cess. They moved on 1 February 2026, when Notification No. 19/2025-Central Tax (Rate) placed them in the 40% schedule, or the 18% schedule for bidis, and removed the 28% schedule altogether. So a trader in those goods has a third date inside the same year.

Old rate or new? Section 14 decides

A rate change never falls neatly between two transactions. Goods go out on the 20th, the invoice follows on the 23rd, and payment arrives in October. Section 14 of the CGST Act sorts out every combination, through the time of supply.

The section lists six cases, and they follow a simple pattern: the rate follows the side of 22 September on which two of the three events fall, those being the supply, the invoice and the payment. Goods supplied and invoiced before the change but paid for after take the old rate. Goods supplied before the change but invoiced and paid for after take the new one.

One proviso matters for payments that straddle the date. If a payment is entered in the books before the change but reaches the bank more than four working days after it, the date of credit in the bank account counts as the date of payment.

Credit already taken, and credit that has to go back

The Government's FAQ of 3 September 2025 answered the three questions most businesses asked.

• When the output rate falls, credit already in the ledger stays. It "can be used for discharge of any output tax liability", under section 49(4). No reversal is needed just because the rate came down.
• When the output becomes exempt, credit on stock has to go back. Section 18(4) requires an amount equal to the credit on inputs held in stock, in semi-finished and finished goods, and on capital goods, to be paid on the day before the exemption. Any balance left in the ledger then lapses.
• A rate cut doesn't create an inverted duty refund by itself. Relying on Circular No. 135/05/2020-GST, the FAQ says that where inputs and outputs are the same goods taxed at different rates at different times, there is no refund under section 54(3).

Price cuts, credit notes and profiteering

Section 171(1) still says that any reduction in rate "shall be passed on to the recipient by way of commensurate reduction in prices". What changed in 2024 is who can be asked to look. Under Notification No. 19/2024-Central Tax, no new request for examination has been accepted since 1 April 2025. The duty is still in the Act. The route for a new complaint is not.

Credit notes issued to pass on a price reduction are now also subject to the proviso added to section 34 from 1 October 2025: the supplier's output tax is not reduced unless the recipient has reversed the matching credit, where the recipient is registered. Circular No. 251/08/2025-GST separately confirms that financial or commercial credit notes, which do not change the original transaction value, need no credit reversal by the recipient.

The law asked for the benefit to be passed on. The year's credit notes are where an auditor will see whether it was.

What this does to GSTR-9 for 2025-26

• Due date. 31 December 2026, under rule 80(1). A taxpayer whose aggregate turnover is up to ₹2 crore is exempt from filing, under Notification No. 15/2025-Central Tax. GSTR-9C applies above ₹5 crore.
• Table 17, the HSN summary of outward supplies, has a rate column. For 2025-26, the same HSN code will usually appear twice, once at the old rate and once at the new. A summary built on HSN alone won't reconcile.
• Table 18, the HSN summary of inward supplies. The notified instructions let taxpayers leave it blank for 2021-22 to 2024-25. On the text as it stands, that option does not extend to 2025-26. That could still change before December, so check the latest notification and GSTN advisory before filing.

Before the return

• Split every HSN's sales at 22 September 2025, and at 1 February 2026 for tobacco lines, and check each part against GSTR-1.
• List the invoices that straddle the change and test each against section 14.
• Pull the credit notes issued after 22 September and check the section 34 proviso on every one that reduced output tax.
• Where any output became exempt, find the section 18(4) reversal in the books.

Where this comes from

The rates and dates are from the 56th GST Council's press release of 3 September 2025 and Notifications No. 9/2025 and 19/2025-Central Tax (Rate). The transition answers are from the Government's FAQ of the same date. The law is sections 14, 18(4), 34 and 171 of the CGST Act, 2017, rule 80 of the CGST Rules, and the GSTR-9 instructions as amended up to Notification No. 13/2025-Central Tax. As at 19 September 2026 we could find no GSTN advisory specific to 2025-26, so read the latest one before filing. For Tables 8 to 13 of the same return, see GSTR-9 and 9C, tables 8 to 13.