New GST rate effect in closing stock
This query is : Resolved
22 September 2025
Sir.
We have 28% and 12% GSt items. Most of items are come under 18% and 5%. New GSt rate come effect today. Let's me know .
1. How to adjust input do to change in rate.
2.if there is any chance in closing stock value.
3. If there is sales return old rate. How to update The rate difference in Gst in book of account and Gst portal.
Please advise.
With regards
Binu
We have 28% and 12% GSt items. Most of items are come under 18% and 5%. New GSt rate come effect today. Let's me know .
1. How to adjust input do to change in rate.
2.if there is any chance in closing stock value.
3. If there is sales return old rate. How to update The rate difference in Gst in book of account and Gst portal.
Please advise.
With regards
Binu
22 September 2025
Adjusting Input Due to Rate Change
Input Tax Credit (ITC) claimed at the time of purchase, when the earlier GST rates applied, remains fully valid in the GST ledger, provided the purchase and tax invoice were correctly recorded at that time.
There is no requirement to recalculate or reduce already claimed ITC even if supplies of those goods occur at the new lower GST rate.
If a product has now become exempt or has a nil GST rate, ITC related to those goods cannot be used from the date of exemption and must be reversed in the GST returns.
Input Tax Credit (ITC) claimed at the time of purchase, when the earlier GST rates applied, remains fully valid in the GST ledger, provided the purchase and tax invoice were correctly recorded at that time.
There is no requirement to recalculate or reduce already claimed ITC even if supplies of those goods occur at the new lower GST rate.
If a product has now become exempt or has a nil GST rate, ITC related to those goods cannot be used from the date of exemption and must be reversed in the GST returns.
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22 September 2025
Impact on Closing Stock Value
Closing stock on hand as of the GST rate change is valued at cost, inclusive of the input GST paid earlier.
The value of closing stock itself does not change due to the change in GST rate; however, price tags may be revised for unsold stock to reflect the new MRP adjusted for new GST rates. Both the old and revised MRP must remain visible on packages, and the revision in price should at least match the change in tax rate.
Businesses may need to declare details of stock held on the transition date if required by the CBIC notifications.
Closing stock on hand as of the GST rate change is valued at cost, inclusive of the input GST paid earlier.
The value of closing stock itself does not change due to the change in GST rate; however, price tags may be revised for unsold stock to reflect the new MRP adjusted for new GST rates. Both the old and revised MRP must remain visible on packages, and the revision in price should at least match the change in tax rate.
Businesses may need to declare details of stock held on the transition date if required by the CBIC notifications.
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22 September 2025
Handling Sales Return at Old Rate & Updating Rate Difference
If a sales return occurs for an invoice issued before the GST rate change, the return should be processed at the original invoice rate and value.
Any GST liability or ITC adjustment for the sales return must be made according to the GST rate applicable at the time of the original supply—not the new rate—even if the return is received after the change.
In the books of account, update the sales return entry using the rate and value as per the original transaction. Adjust ITC or GST liability in the same GST period on the GST portal using the appropriate tables for credit/debit notes reflecting the old rate and invoice reference. The GSTN portal allows such adjustments based on the date of the original supply.
For inward supplies returned after the rate change, the recipient issues a debit note to the supplier, and the supplier adjusts output tax accordingly using old rates.
If a sales return occurs for an invoice issued before the GST rate change, the return should be processed at the original invoice rate and value.
Any GST liability or ITC adjustment for the sales return must be made according to the GST rate applicable at the time of the original supply—not the new rate—even if the return is received after the change.
In the books of account, update the sales return entry using the rate and value as per the original transaction. Adjust ITC or GST liability in the same GST period on the GST portal using the appropriate tables for credit/debit notes reflecting the old rate and invoice reference. The GSTN portal allows such adjustments based on the date of the original supply.
For inward supplies returned after the rate change, the recipient issues a debit note to the supplier, and the supplier adjusts output tax accordingly using old rates.
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22 September 2025
General Rule for Existing ITC
If input goods or services were purchased before the rate change and GST was properly paid, the full corresponding ITC can be claimed, regardless of any later change in the applicable GST rate.
The change in GST rate does not reduce or alter credit already available in the ledger, and businesses can continue to utilize the existing ITC against output liability as per the new rates.
Supply After Rate Change
GST is charged according to the rate applicable on the date of supply—not the purchase date. If stock purchased at an old rate is supplied after a rate change, output tax must be calculated at the new rate, while ITC remains the same as originally claimed.
There’s no need to re-compute old ITC merely because the supply or sale is at a new rate.
If input goods or services were purchased before the rate change and GST was properly paid, the full corresponding ITC can be claimed, regardless of any later change in the applicable GST rate.
The change in GST rate does not reduce or alter credit already available in the ledger, and businesses can continue to utilize the existing ITC against output liability as per the new rates.
Supply After Rate Change
GST is charged according to the rate applicable on the date of supply—not the purchase date. If stock purchased at an old rate is supplied after a rate change, output tax must be calculated at the new rate, while ITC remains the same as originally claimed.
There’s no need to re-compute old ITC merely because the supply or sale is at a new rate.
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23 September 2025
sir.
Thank you for your valuable advise
Thank you for your valuable advise
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23 September 2025
You are welcome.
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