What’s actually slowing this PC down?
Pick the symptom - the matching free tool is one click away.
India’s “GST 2.0” rate changes and its changes to criminal prosecution rules are separate reforms. Most revised GST rates took effect on 22 September 2025; the limited decriminalisation changes came through the Finance Act 2023. One changes the tax rate on supplies, while the other changes which conduct can trigger prosecution and how prosecution exposure may be compounded.
What does “GST 2.0” change?
The 56th GST Council meeting on 3 September 2025 recommended rationalising the earlier four-tier rate structure around two main rates, with a higher special rate for selected supplies. The Council described the framework as a “Simple Tax” structure. These are headline rates, not a shortcut for deciding the rate on a particular product or service: the relevant notification and its schedules determine the applicable classification and rate.
| Announced rate | How the Council described it | What to check |
|---|---|---|
| 5% | Merit rate | Whether the specific supply is listed at this rate in the applicable notification. |
| 18% | Standard rate | Whether the specific supply is listed at this rate in the applicable notification. |
| 40% | Special de-merit rate for selected goods and services | Whether the supply is among the selected items covered by the notification. |
The rates and descriptions above reflect the GST Council’s 3 September 2025 announcement; they do not establish the rate for every tariff item. The announcement also referred to sectoral reductions and exemptions, but a product- or policy-level answer depends on the relevant notification and exact scope.
When did the revised GST rates come into force?
The Ministry of Finance’s FAQ on the 56th GST Council decisions, dated 3 September 2025, said that the changes for goods and services generally took effect on 22 September 2025. It excluded cigarettes, chewing tobacco products such as zarda, unmanufactured tobacco, and beedi from that start date: the FAQ said their existing GST and compensation cess would continue until a later date to be notified after repayment of the related compensation-cess loan and interest. Because that date is notification-dependent, check the latest notification before applying a rate to one of those products.
Which notification provides the revised rates for goods?
For goods, the Ministry of Finance’s FAQ-3, dated 18 September 2025, identifies Notification No. 9/2025-Central Tax (Rate), dated 17 September 2025. It superseded Notification No. 1/2017-Central Tax (Rate). Check the notification schedules for the particular good; the Council’s high-level announcement alone does not settle tariff classification or the rate for an individual item.
What happens if the supply and invoice fall on different sides of the change date?
Do not choose the rate solely by looking at the invoice date. The Ministry of Finance’s FAQ on the 56th Council decisions directs readers to section 14 of the CGST Act for a change in rate. The applicable result depends on the timing of the supply, invoice, and payment. For example, where a supply occurs before the rate change and the invoice is issued afterward, the payment date and the order in which relevant events occur affect the time-of-supply analysis. Apply section 14 to the actual transaction facts rather than assuming one rate applies to every invoice dated after 22 September 2025.
What did the Finance Act 2023 change about GST prosecutions?
The 2023 changes concern prosecution and compounding under the Central Goods and Services Tax Act (CGST Act), not the 2025 rate structure. The Union Budget 2023–24 described three adjustments: removing three specified types of conduct from section 132(1), increasing the general minimum tax amount for launching prosecution, and narrowing the permitted compounding range.
Which conduct was removed from the specified section 132 offences?
The GST Council’s Finance Bill 2023 explainer identifies clauses (g), (j), and (k) of section 132(1) as the provisions removed. They covered:
Free tools Windows power users keep installed
One-click scans. No signup required.
Rank #3
- Obstructing or preventing an officer from discharging duties.
- Deliberately tampering with material evidence.
- Failing to provide information required by the Act or rules, or providing false information.
The Lok Sabha answer to Unstarred Question No. 3210, dated 20 March 2023, also lists these acts. The change is limited to these specified conduct categories; it does not remove section 132 as a whole.
How did the prosecution threshold and compounding range change?
| Rule | Before the 2023 change | Change described in the Union Budget 2023–24 |
|---|---|---|
| General minimum tax amount for launching prosecution | ₹1 crore | Raised to ₹2 crore, except for issuing an invoice without a corresponding supply. |
| Permitted compounding amount | 50%–150% of the tax amount | Reduced to 25%–100% of the tax amount. |
These are prosecution and compounding rules, not a statement that conduct below the general threshold is lawful or free from every consequence. The invoice-without-supply exception also means the general ₹2 crore threshold should not be applied to that offence. Compounding is a statutory way to settle prosecution exposure where the law permits it; it does not make the underlying conduct lawful.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Does “decriminalisation” mean GST offences no longer carry criminal liability?
No. Section 132 continues to provide for criminal punishment for other listed offences, including specified tax evasion, fraudulent input tax credit, and fraudulent refunds. The Central Board of Indirect Taxes and Customs’ section 132 text remains the relevant reference for the offences and punishments in the Act. The 2023 reform removed three specified types of conduct and adjusted the threshold and compounding rules; it did not repeal the section or end GST prosecutions.
Quick Recap
How to tell the two reforms apart
| Question | 2025 GST rate changes | 2023 prosecution changes |
|---|---|---|
| What is affected? | The rate payable on a supply. | Criminal prosecution exposure and compounding under the CGST Act. |
| What should be checked? | The current rate notification, its schedules, classification, and transaction dates. | The current section 132 provisions and the facts of the alleged conduct and amount. |
| Who is most directly concerned? | Businesses classifying supplies and preparing prices and invoices, and customers checking applicable prices. | People or businesses assessing potential prosecution or compounding exposure. |
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
The Tool Desk
Outbyte PC Repair FREERepair Windows errors before they cause bigger problemsFix Now →Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →
