Short Notes For Retailers/Shopkeepers For Clarification After Changes In GST Rates From 22-09-2025
Summary: Effective September 22, 2025, changes in GST rates require retailers and shopkeepers to address several compliance queries, primarily based on the principle that GST is levied on the date of supply. For existing stock, the new, revised GST rate must be applied to all outward supplies made on or after the effective date. While there is no explicit rule mandating a change to the printed Maximum Retail Price (MRP), the author suggests that shopkeepers can avoid potential loss by offering a discount equal to the reduced tax component. Crucially, if a retailer’s outward supplies become wholly exempt under the new schedule, the business must reverse the entire Input Tax Credit (ITC) held in its electronic credit ledger related to inputs, semi-finished goods, finished goods, and capital goods on the date immediately preceding the exemption date, leading to the lapse of the remaining balance. Conversely, if the GST rate on outward supply is merely reduced, any existing ITC accrued at the higher rate can continue to be utilized to discharge the new output tax liability. However, businesses whose output and input are affected but still constitute an inverted duty structure will not be allowed a refund of the accumulated credit after the rate change.
In this small write-up the clarifications have been given on basis of GST Law and FAQ issued by the GST Council
| S.No. | Query | Clarification |
| 1 | Whether MRP rate should be revised on the stock lying with the Retailers/ Shopkeepers/Whole sellers | There is no specific answer in this respect available in FAQ issued by the GST. In my opinion the printed MRP rate is not required to be revised by affixing revised rate sticker by the Shopkeeper. But if the Shopkeeper gives discount on such supply there will be no loss to the Shopkeeper. The discount amount may be the proportionate amount of tax which has been reduced. As per my calculation there is no loss to the shopkeeper if the discount is given. See the illustration no. 1. |
| 2 | My outward supply is exempt under new rate schedule. But I already have ITC of GST paid in my ledger. Will I need to reverse ITC? | Ans. By FAQ – The ITC can be utilized to discharge outward liability for supplies of goods/services or both made till 21st September, 2025. However, for supplies made on or after i.e. 22nd September, 2025 when the rate change is effected, ITC will have to be reversed as per provisions of CGST Act, 2017.
The section 18(4) CGST requires …… where the goods or services or both supplied by him become wholly exempt, he (registered person) shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock and on capital goods, reduced by such percentage points as may be prescribed, on the day immediately preceding the date of exercising of such option or, as the case may be, the date of such exemption: Provided that after payment of such amount, the balance of input tax credit, if any, lying in his electronic credit ledger shall lapse. See the illustration no. 2 – How much amount of ITC to be reversed. |
| 3 | The GST rate has been reduced on my outward supply of goods/services made on or after 22nd September, 2025 but I already have ITC of GST in ledger that accrued on account of higher rate. Can I continue to use such credit? | The input tax credit once duly availed in e-credit ledger can be used for discharge of any output tax liability in terms of provisions of CGST Act and rules made thereunder. |
| 4 | Will I be allowed to take refund of accumulated credit arising out of inverted duty structure for supplies effected upto the date of effect of revised rate as notified? | The input and output being the same in such cases, though attracting different tax rates at different points in time, do not get covered under the provisions of clause (ii) of the first proviso to sub-section (3) of section 54 of the CGST Act.
No refund will be allowed. |
| 5 | If I already have stock on the date when rate changes come into effect, should I apply the revised rate? | GST is levied on supply. Therefore, on goods supplied on or after the revised GST rates are notified, the new GST rates will be applicable on the outward supplies of goods/services or both. |
Illustration No. 1
| S.No. | MRP | Cost to Shopkeeper | ITC | Old Tax Rate | Selling Price Old | Profit of supply upto 21-09-25 | |
| 1 | 2 | 3 | 4 | 5 | 6 | 7
(6-3) |
|
| 315 | 222 | 40 | 18 | 267 | 45 | ||
| Calculation from 22-09-2025 after giving discount i.e. difference in rate of tax | |||||||
| S.No. | MRP | Cost to Shopkeeper | ITC | New Tax Rate | Selling Price Old | Discount from 22-09-25 on old stocks | Selling Price (including tax) from 22-09-2025 after giving discount |
| 8 | 9 | 10 | 11 | 12 | 13 | 14
(267*13% (old rate -new rate) |
15
(9-14) |
| 315 | 222 | 40 | 5 | 267 | 35 | 280 | |
| Selling Price (excluding Tax) from 22-09-25 | Output Tax from 22-09-25 | Profit from 22-09-2025 | Difference in Profit upto 21-09-2025 and Profit from 22-09-2025 | ||||
| 16 | 17 | 18
(16-10) |
11
(7-18) |
||||
| 267 | 13 | 45 | 0 | ||||
Illustration No. 2 –
Rate of Tax 18% changed to 0 (Exempt Supply) from 22-09-2025 – Amount of ITC to be reversed
| S.No. | MRP | Cost to Shopkeeper | ITC | Old Tax Rate | New Rate of Tax | ITC to be Reversed |
| 1 | 2 | 3 | 4 | 5 | 6 | 7 |
| 315 | 222 | 40 | 18 | 0 | 40 |
*****
Disclaimer: This article is based on my own understanding and for knowledge purpose only without taking any liability and responsibility. The reader must verify GST Law or any other Law before relying upon the contents of this article.
Author Bio
