What changed on 22 September 2025?
The 56th GST Council meeting on 3 Sept 2025 replaced the old four-rate structure (5%, 12%, 18%, 28%) with:
| Rate | For |
|---|---|
| 5% | The merit rate: everyday goods, most food, clothing and footwear up to ₹2,500 |
| 18% | The standard rate: most other goods |
| 40% | The de-merit rate: a short list of luxury and sin goods |
Special low rates for gold, silver and diamonds continue, and a few tobacco products stay on their old rates for now. The new rates took effect on 22 Sept 2025 through Notification 9/2025-Central Tax (Rate), a single new rate schedule replacing the 2017 one.
What moved for online brands?
From the Council's own tables:
| Goods | Before | From 22 Sept 2025 |
|---|---|---|
| Clothing and made-ups, up to ₹2,500 a piece | 5% up to ₹1,000, 12% above | 5% |
| Clothing and made-ups, above ₹2,500 a piece | 12% | 18% |
| Footwear, up to ₹2,500 a pair | 12% up to ₹1,000, 18% above | 5% |
| Hair oil, shampoo, toothpaste, talcum and face powder, shaving cream, toilet soap bars, toothbrushes | 18% | 5% |
| Candles, combs and hair accessories, cotton and jute handbags, wooden, ceramic and metal tableware and kitchenware, baby diapers | 12% | 5% |
| Packaged namkeen and bhujia, sauces, pasta, instant noodles, chocolates, coffee, cornflakes, butter, ghee | 12% or 18% | 5% |
| Handicrafts, toys and sports goods | 12% | 5% |
| Air conditioners, all televisions, dishwashers | 28% | 18% |
| Cartons, boxes and cases of paper or paperboard | 12% | 5% |
Not everything fell. Make-up and other beauty preparations not named above stay at 18%, and a few goods rose, such as garments above ₹2,500 a piece.
What did brands have to do?
- Update rates in Shopify (tax overrides or the invoice app's rates by HSN code) to take effect from 22 Sept 2025.
- Re-check the ₹2,500 line for clothing and footwear: it is per piece, before GST, after any discount on the invoice.
- Leave old invoices alone. An invoice dated before 22 Sept 2025 keeps the old rate, and so does a credit note against it.
- Watch orders that straddle the date. Where payment came before the change and the invoice after, or the other way round, section 14 of the CGST Act decides the rate. Ask your CA if you had many such orders.
What about input tax credit?
A brand that sells at 5% but buys services and some materials at 18% builds up credit it cannot use against its sales tax. For goods, a refund of unused credit caused by such an inverted rate structure can be claimed under section 54(3) of the CGST Act, using the formula in Rule 89(5). The packaging change helps here: corrugated and paperboard boxes bought at 5% instead of 12% shrink the gap.
How do I find my product's new rate?
By its HSN code. Find the code (chapter, heading, subheading), then the entry in the rate schedule. CBIC's GST rate finder and the Council's notification list both work; for apparel and footwear, apply the ₹2,500 line on top.