Invoices Still Raised at Old GST Rates a Year After the 2025 Rate Change: Finding and Fixing Them
Since 22 September 2025, most items moved to 5% or 18%, with 40% for a few. Invoices still at 12% or 28% usually come from an old item master. Overcharged tax is corrected with a credit note, which the registered buyer must accept; undercharged tax with a debit note and interest.
A year after the biggest GST rate change since 2017, auditors are still finding invoices at 12% and 28%. Usually an old item master was never updated, or a branch kept using a printed rate card. Each wrong invoice either overcharges your customer or underpays the government.
What changed on 22 September 2025
The GST Council moved most items to two main rates, 5% and 18%, with a special rate of 40% for a short list such as tobacco products, sugar-sweetened drinks and luxury cars. Most items at 28% moved to 18%, and most items at 12% moved to 5%. Compensation cess was folded into the 40% rate for most goods, though it continues for some tobacco products.
Which rate applies in transition cases
Section 14 of the CGST Act decides the rate when the supply, the invoice and the payment fall on different sides of the change date:
| Supply | Invoice | Payment | Rate |
|---|---|---|---|
| Before 22 Sep | Before 22 Sep | After 22 Sep | Old rate |
| Before 22 Sep | After 22 Sep | Before 22 Sep | Old rate |
| Before 22 Sep | After 22 Sep | After 22 Sep | New rate |
| After 22 Sep | Before 22 Sep | Before 22 Sep | Old rate |
| After 22 Sep | Any | Any (two of three after) | New rate |
The rule is that two of the three events decide it. An invoice raised in October 2026 for goods delivered in October 2026 is always at the new rate.
How to find wrong invoices
- Export all sales invoices since 22 September 2025 with HSN or SAC code, rate and tax.
- Map each HSN code to its current rate from the rate notifications, and flag every line that differs.
- Look for 12% and 28%. Very few items still use them, so any line at those rates deserves a look.
- Check the item master and price lists in your billing software, and every branch's printed rate cards.
- Check purchase invoices too. A supplier charging the wrong rate affects your credit.
How to correct them
| Problem | Correction |
|---|---|
| You charged too much tax (for example 12% instead of 5%) | Issue a credit note for the excess tax. Since 1 October 2025, a registered buyer must reverse the matching credit for your tax to go down |
| You charged too little tax (for example 5% instead of 18%) | Issue a debit note or supplementary invoice for the difference and pay it with interest |
| Wrong rate in GSTR-1, GSTR-3B not yet filed | Correct it through GSTR-1A for the same month |
| Customer is unregistered | Refund the excess and report a credit note; there is no credit to reverse |
For credit notes on FY 2025-26 supplies, the deadline is 30 November 2026.
A worked example
An Agra footwear maker kept billing a range of shoes at 12% after the change, though it had moved to 5%. Over eight months it raised ₹40 lakh of such invoices to registered dealers and collected ₹2,80,000 more tax than it should have. It issued credit notes for ₹2,80,000, the dealers accepted them in IMS and reversed the credit, and the maker's tax was reduced. Without the credit notes, the overcharged tax would have stayed with the government.
Frequently asked questions
Do I have to pass on the rate cut to customers?
The new rate must be charged from the change date. Whether the price before tax changes is a commercial decision, but customers will see the tax line.
What about stock bought at the old rate?
Credit taken on purchases at the old rate stays valid. The rate on your sale is the rate on the date of supply.
Do we need new HSN codes?
No. The codes did not change, only the rates attached to many of them.
Sources
- ✓GST Council FAQ on the rate changes, September 2025
- ✓GST Council rate rationalisation alert, EY
- ✓New GST rates from 22 September 2025, Tally
This is a summary, not legal advice. Confirm with your chartered accountant before you rely on it.
Written by
Founder, Airwix Technologies (Sleet)
Vatsal Sutariya is the founder of Airwix Technologies in Ahmedabad, the company that builds Sleet: SleetHR for HR and payroll, and Sleet Accounting for GST billing and books. He writes about GST, invoicing, business tax and choosing software for Indian businesses, and checks each rule against the official notification before it is published.
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