Govt notifies revised GST rates, industries brace for transition
The government on Monday formally notified the revised goods and services tax (GST) rates, thereby, paving the way for implementation of the GST reforms to be effective from September 22. Individual states are expected to issue corresponding notifications for state GST in the coming days.
“The GST rate reduction notifications, in line with the GST Council announcements, would reduce prices of goods, boost consumption, reduce complexity and classification disputes, which would go a long way to make GST a good and simple tax,” said Abhishek Jain, Partner & National Head, Indirect Tax at KPMG in India.
To prepare businesses for the transition, the Ministry of Finance had issued FAQs and engaged with industry bodies over the past fortnight. The ministry has also assured that most changes will take effect from September 22, with only a few reforms requiring amendments in existing regulations and that will happen post-budget.
“Stakeholders were kept informed throughout the process, and there are no deviations from what was previously shared. This step ensures that all formalities are now complete, allowing business to focus purely on execution,” added Adarsh Somani, partner, Economic Laws Practice.
While companies are updating systems and their respective supply chains, concerns remain for sectors facing potential inverted duty structures such as pharmaceuticals and fast-moving consumer goods. Industry players have also sought clarity on treatment of existing inventories, particularly where rates have been cut on finished products but inputs remain taxed at higher slabs.
According to Mahesh Jaising, Partner & Indirect Tax Leader, Deloitte India, the government’s timely notification has provided critical clarity. “The clear announcement for new rates effective September 22 along with product-wise details and HSN gave businesses the clarity and lead time needed to assess system updates, undertake credit evaluations, and make necessary supply chain adjustments,” he said.
Industry experts say the rate cuts are expected to spur demand ahead of the festive season, but smooth execution will depend on how quickly refund and compliance processes adapt to the revised structure.
Under GST rate rationalization, most of the goods and services will be taxed at either 5% or 18%, with sin items like tobacco products, cigarettes, pan masala put under 40% slab.