The GST Council initiated “GST 2” reforms on September 3, 2025, primarily focusing on rate rationalization and trade facilitation, with rate changes effective from September 22, 2025. Rate rationalization aims to establish two primary GST rates, 5% and 18%, shifting most goods previously at 12% to the lower 5% slab. To determine the correct applicable rate during this change, the Time of Supply (TOS) rules under Section 14 of the CGST Act are crucial, with the applicable rate depending on whether the date of supply, invoice, or payment occurred before or after September 22, 2025. For trade facilitation, new measures include a 90% provisional refund for exporters starting November 1, 2025, and a simplified, optional GST registration process for small and low-risk businesses. Other reforms include amending the place of supply for intermediary services to benefit Indian exporters, accepting credit notes for post-sale discounts without a prior agreement, and the planned operationalization of the GST Appellate Tribunal (GSTAT) by September 2025 to streamline dispute resolution.
GST – 2 Next Generation GST Reforms
In its meeting on 3.9.25, the GST Council decided to implement the next generation GST Reforms, popularly called as GST 2 A major part of these reforms consists of GST Rate Rationalisation and trade facilitation measures Rate changes mainly aim at keeping only 2 prime rates of GST for most of the Goods and Services, namely 5% and 18% Most of the goods falling under 12% rate earlier, are now shifted to 5% rate Rate changes have been made effective from 22.9.25
Different Scenarios for Deciding on the Rate of GST
Since the GST rates have been changed effective from 22.9.25, it becomes imperative to know correct rate of GST to be applied for goods or services or both supplied in borderline periods Accordingly relevant provisions of CGST Act that deal with Time of Supply of Goods or Services or both become relevant
Time of Supply under GST
Scenarios and Provisions (Rate Change on 22.09.2025)
Introduction
- Section 14 of CGST Act, 2017 deals with Time of Supply of Goods or Services or Both when there is a change in GST rate.
- Determination of time of supply depends on dates of supply, invoice, and payment.
- The following slides explain key scenarios with references
Scenario 1
Supply before 22.09.25 | Invoice before | Payment before
- Supply: 15.09.2025
- Invoice: 15.09.2025
- Payment: 16.09.2025
Rule: Section 12/13 (Normal Rules) → Earlier of Invoice or Payment.
Result: 15.09.2025 → Old GST Rate applies.
Scenario 2
Supply before 22.09.25 | Invoice after | Payment after
- Supply: 20.09.2025
- Invoice: 25.09.2025
- Payment: 27.09.2025
Rule: Section 14(a)(i) → Time of Supply = Earlier of Invoice or Payment.
Result: 25.09.2025 → New GST Rate applies.
Scenario 3
Supply before 22.09.25 | Invoice before | Payment after
- Supply: 20.09.2025
- Invoice: 21.09.2025
- Payment: 27.09.2025
Rule: Section 14(a)(ii) → Time of Supply = Date of Invoice Result: 21.09.2025 → Old GST Rate applies
Scenario 4
- Supply: 20.09.2025
- Invoice: 25.09.2025
- Payment: 21.09.2025
Rule: Section 14(a)(iii) → Time of Supply = Date of Payment.
Result: 21.09.2025 → Old GST Rate applies.
Scenario 5
Supply on or after 22.09.25 | Invoice before | Payment before
- Supply: 23.09.2025
- Invoice: 21.09.2025
- Payment: 21.09.2025
Rule: Section 14(b)(ii) → Time of Supply = Date of Invoice or Payment whichever is earlier.
Result: 21.09.2025 → Old GST Rate applies.
Scenario 6
Supply on or after 22.09.25 | Invoice before | Payment after
- Supply: 24.09.2025
- Invoice: 21.09.2025
- Payment: 25.09.2025
Rule: Section 14(b)(i) → Time of Supply = Date of Payment.
Result: 25.09.2025 → New GST Rate applies.
Scenario 7
Supply on or after 22.09.25 | Invoice after | Payment before
- Supply: 24.09.2025
- Invoice: 25.09.2025
- Payment: 21.09.2025
Rule: Section 14(b)(iii) → Time of Supply = Date of Invoice.
Result: 25.09.2025 → New GST Rate applies.
Scenario 8
Supply after 22.09.25 | Invoice after | Payment after
- Supply: 24.09.2025
- Invoice: 25.09.2025
- Payment: 27.09.2025
Rule: Section 12/13 (Normal Rules) → Earlier of Invoice or Payment.
Result: 25.09.2025 → New GST Rate applies.
Time of Supply of Services (Section 13, CGST Act)
Rules for Determining Time of Supply of Services:
- Section 13 of CGST Act, 2017 applies to services.
- General Rule: Time of supply = Earlier of Date of Invoice or Date of Payment.
- If Invoice not issued within prescribed time (30 days from supply): Time of supply = Date of provision of service or Date of payment, whichever is earlier.
- Continuous Supply of Services: Time of supply is linked to due date of payment as per contract or actual payment date.
Time of Supply of Services (Section 13, CGST Act)
- In case of change in rate of tax: Apply provisions of Section 14 (similar to goods).
- For Reverse Charge: Time of supply = Earlier of (a) Date of payment, or (b) 60 days from invoice date. If neither, then entry date in recipient’s books.
- Vouchers: Time of supply = Date of issue of voucher if supply identifiable, otherwise date of redemption.
- Residual cases: Time of supply determined as per rules prescribed.
Introduction
- Section 14 of CGST Act, 2017 deals with Time of Supply when there is a change in GST rate.
- GST rate change effective from 22nd September 2025
- Determination of time of supply depends on dates of supply, invoice, and payment.
- The following slides explain key scenarios with references.
Measures for Trade Facilitation
Trade Facilitation & Ease of Doing Business (56th Meeting, 03.09.2025)
Faster GST Refunds
- 90% provisional refund for exporters and inverted duty structure.
- Risk-based identification by GSTN.
- Exceptions: Certain registered persons (to be notified).
- Effective from 1st Nov 2025.
- Removal of Rs. 1000 threshold for export refunds – helps small exporters.
Refund Process – Visual Summary
Step Details
1. Exporter / Supplier files refund claim.
2. GSTN system evaluates risk profile.
3. 90% refund sanctioned provisionally (if low risk).
4. Detailed scrutiny only for exceptions.
5. Balance refund processed after verification.
Simplified GST Registration
- Optional simplified registration for small & low-risk businesses.
- Automated approval within 3 working days.
- Applicable if liability ≤ Rs. 2.5 lakh/month.
- Effective from 1st Nov 2025.
- Multi-State suppliers through e-commerce to get simplified registration.
Intermediary Services Export Benefit
- Amendment: Place of supply for intermediary services = location of recipient.
- Allows Indian service exporters to claim export benefits.
- Helps with ITC refund including RCM paid.
Post-Sale Discounts
- Credit Notes under Section 34 accepted without prior agreement.
- ITC reversal by recipient where supply value reduced. Notification yet to be issued
Operationalisation of GSTAT
- GST Appellate Tribunal (GSTAT) operational by Sept 2025.
- Hearings to start by Dec 2025.
- Principal Bench will also act as National Appellate Authority for Advance Ruling.
- Backlog appeals to be filed by 30.06.2026.
- Strengthens dispute resolution and consistency in rulings.
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