Change in GST Rate explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
When a GST rate changes, some supplies have one event on each side of the date: the service is done before it, the invoice after it, or the payment lands in between. Section 14 of the CGST Act says which event fixes the time of supply, and so which rate applies. This matters for any business that invoiced or collected around the GST 2.0 changes effective 22 September 2025.
Section 14 overrides sections 12 and 13 when the rate changes. There are eight combinations of supply, invoice and payment. If all three events fall on one side of the change, section 14 does not apply and the normal rules decide. In the mixed cases, the time of supply is the invoice date or the payment date as laid down in section 14, with one twist: a bank credit more than four working days after the change date counts as the receipt date.
When section 14 applies
Tax needs three events: the supply of goods or services, the issue of the invoice and the payment. When the rate changes between these events, section 14 settles the time of supply "notwithstanding anything contained in section 12 or section 13". If supply, invoice and payment are all before the change, or all after, the section is not needed.
The Background Material sets out the result in a chart. "Date of receipt of payment" means the date the payment is entered in the supplier's books or credited to his bank account, whichever is earlier.
| Supply | Invoice | Payment | Time of supply under section 14 |
|---|---|---|---|
| Before change | Before | Before | Not governed by section 14 |
| Before | Before | After | Date of invoice |
| Before | After | Before | Date of receipt of payment |
| Before | After | After | Earlier of receipt of payment and invoice |
| After | After | After | Not governed by section 14 |
| After | After | Before | Date of invoice |
| After | Before | After | Date of receipt of payment |
| After | Before | Before | Earlier of receipt of payment and invoice |
The rows with "earlier" reflect section 14(a)(i) and 14(b)(ii). The practical reading is that the earlier event locks in the rate in force on that date.
Do your contracts say who bears a rate change? See who keeps the rate cut under GST 2.0 and the companion piece on section 14 and GST 2.0 invoices.
Worked example (illustration)
Assume a rate falls from 18% to 5% on 22 September 2025. This is an illustration of the mechanics only and not a statement of the rate on any particular product. A service of Rs. 1,00,000 is performed on 15 September 2025.
| Case | Invoice | Payment | Time of supply | Rate | GST |
|---|---|---|---|---|---|
| A | 18 September | 5 October | 18 September (invoice, row 2) | 18% | Rs. 18,000 |
| B | 25 September | 10 September | 10 September (payment, row 3) | 18% | Rs. 18,000 |
| C | 25 September | 5 October | Earlier of payment and invoice: 25 September | 5% | Rs. 5,000 |
In Case A the early invoice locks the old rate even though payment came later. In Case B the early advance locks the old rate even though the invoice is after the change. In Case C neither event precedes the change, so the new rate applies.
The four-working-day proviso
Section 14 has a proviso: the date of receipt of payment is the date of credit in the bank account if that credit is after four working days from the date of the rate change.
Illustration: the rate changes on 22 September 2025. A customer's payment is entered in the supplier's books on 20 September, but the bank credit shows on 30 September, more than four working days after the change. The date of receipt is 30 September, not 20 September, so the payment is treated as received after the change. A book entry that runs ahead of the bank cannot be used on its own to lock the old rate.
Advances for goods
For goods, the relaxation in Notification No. 66/2017-CT means no GST is payable on advances received. The Background Material says the date of receipt of an advance would then not be relevant for the rate in a section 14 situation for goods. It reads the goods case as ascertained on the invoice date and the date of supply only, and adds that section 12 fixes the time of supply while section 14 fixes the rate point where the events straddle the change. Because advances for services remain taxable on receipt, the payment leg in the table above matters most for services. If you need to revisit an advance, see no GST on advances for goods.
Two cautions
- Delayed invoices. The Background Material says section 14 operates in normal circumstances and cannot be pressed into service where invoicing is deliberately delayed. If an invoice is held back to fall after a rate cut, the date the invoice ought to have been issued governs. Time of supply cannot be shifted at will.
- Supplies before supply. The time of supply can arise before the actual supply because supply is defined in section 7(1)(a) as "made or agreed to be made", and section 9 levies tax on such supply.
The provision operates mainly for services, since goods invoices usually travel with the goods, but it can also arise for goods in the situations dealt with in Rule 55 of the CGST Rules.
Checklist around a rate change
- List every open contract and unbilled job on the change date.
- For each, note the date of supply, invoice and payment, and whether the bank credit fell after the four-working-day window.
- Use the table above to fix the time of supply, then the rate in force on that date.
- Raise credit or debit notes only where the law allows; do not re-issue invoices to shift dates.
- Reflect the decisions in GSTR-1 and GSTR-3B for the right period. For a check of past tax periods, see a GST health check.
Need help with GST rate-change transitions?
If you billed or collected close to a rate change, the rate used on each invoice can be tested against these rules. A GST health check looks at the invoices, payment dates and returns for the period and flags where the wrong rate may have been used, and our GSTR-3B filing support can then correct the return.
Key takeaways
- Section 14 applies only when supply, invoice and payment straddle the rate change.
- Invoice and payment dates lock the rate; in the mixed cases the table decides.
- Bank credit after four working days from the change is treated as the receipt date.
- For goods, advance payment dates do not decide the rate; invoice and supply dates do.
- Deliberately delayed invoices do not shift the time of supply.
Read next
- Time of supply of services: invoice, advance and payment
- GST on vouchers after Finance Act 2025
- GST 2.0: the two-rate structure and what replaced the old slabs
- GST on advance payments
Disclaimer: Positions stated as on 30 September 2026, based on the CGST and IGST Acts and Rules as amended, the Finance Act 2026, and the ICAI Background Material on GST (14th Edition, July 2026). Verify current notifications before acting.