Part 3: Update on 56th GST Council Meeting dated 3rd Sep'25 - Rate Changes.
- Kuldeep Lodha
- Sep 6
- 1 min read
Our Hon’ble FinanceMinister has emphasized that the benefit of GST rate cuts must reach consumers, and she will be personally monitoring its implementation. Beyond the GST framework (where officials can issue notices), businesses should also be mindful of Section 2(47) of the ConsumerProtection Act, 2019, which deals with Unfair Trade Practices. Non-passing of such benefits could lead to action under this Act, including penalties that may extend up to ₹10 lakhs or more in specific cases.
Key Considerations for Businesses / MSMEs (retailers, manufacturers, or anyone in the supply chain directly serving consumers, though it applies to everyone):
a. Prudent to maintain accurate stock details as on the date before the rate change becomes effective.
b. Prepare workings to quantify the benefit that needs to be passed on.
c. Ensure proper documentation of the benefit actually passed on, with product-wise evidence.
While the rate cut benefits consumers, it places huge operational and compliance burdens on businesses. Some important deliberation points :
- Treatment of Input Tax Credit (ITC) already lying in the credit ledger for existing stock.?
- If a product is moved to NIL/Exempt, whether ITC on existing stock is to be reversed, absorbed as cost or pass that cost to consumers?
- For high-value items such ACs, TwoWheelers, or ThreeWheelers, businesses may consider whether the Sale on Approval model could mitigate risks, if not already in practice.
This change in GST rate is going to be a major transition issue and has to dealt very cautiously to remain compliant and avoid unnecessary trouble in future.
So Assess, Quantify & document the change/impact.
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