The CBIC is preparing for a seamless rollout of the next-generation GST from September 22, 2025, with backend technology upgrades and active industry engagement. CBIC Chairman Sanjay Kumar Agarwal said the department is confident that the transition will be smooth, with no glitches.
In an interview, Sanjay Agarwal emphasized that the new GST structure, approved by the GST Council earlier this week, is based on the classification of goods and services as "merit" and "standard", unlike the 2017 rollout which was guided by revenue neutrality.
Key Highlights of the Reform
- Two-Slab Structure: Tax slabs pruned to 5% and 18%, with a special 40% rate on ultra-luxury and demerit goods.
- Effective Date: New rates apply from September 22, 2025, except for tobacco-related items.
- Technology Upgrade: Industry advised to update ERP systems in advance to integrate new rates.
- Input Tax Credit (ITC): Businesses can continue using accumulated ITC even after the rollout, minimizing disruption.
- White Goods Relief: Items like ACs, washing machines, dishwashers, TVs (above 32 inches), and small cars move from 28% to 18% GST.
- Luxury Cars: Big cars with higher engine capacities placed at 40% tax, down from ~50%.
Agarwal acknowledged industry concerns about ITC accumulation, but clarified that businesses can pay GST dues entirely through ITC claims. While there may be a short-term dip in collections during the transition, he noted that rate rationalization typically boosts consumption, GDP, and long-term revenue growth.
The rollout date, September 22, was chosen strategically to coincide with the festive season starting with Navratri, addressing both industry demand and consumer anticipation of lower rates.
Prime Minister Narendra Modi had earlier promised citizens a "Diwali gift" through lower GST rates, and the rationalization is being seen as a major reform to simplify India's indirect tax regime.
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