New GST Rates 2025: Step-by-Step Guide to Updating Your Accounting Software

The revised Goods and Services Tax (GST) rates, notified by the GST Council, became effective on September 22, 2025. These changes have been made applicable to the businesses across the sectors; hence, it is the need of the hour that all GST-registered taxpayers immediately update their accounting and enterprise software for compliance.

Why Update One's GST Software?

As the new rate structures come into force, every invoice, ledger, and GST return will need to be prepared with the updated tax slabs. Failure to update may lead to:

• Errors in Input Tax Credit (ITC) claims
• Non-compliance penalties
• Discrepancies in invoicing and reporting

Chartered Accountant Akhil Pachori explained that while the update is simple, it is vital. Nabendu Das, Chief of Engineering and Product at Tally Solutions, added that changes must be applied at the company, ledger, and item group levels for accuracy.

Step-by-Step Guide: Updating GST Rates in Software (Tally Example)

Open GST Rate Setup Report

• Navigate to the GST Rate Setup section in your software.

Select Relevant Masters

• Choose master records (items, item groups, ledgers, or ledger groups).
• These are usually auto-grouped by tax rates.

Update New Tax Rate with Effective Date

• Example: Update from 12% to 5%.
• Set the effective date as September 22, 2025.
• Bulk updates can be applied to multiple items at once.

Transaction Handling

• All invoices generated on or after Sept 22 will reflect the revised rates.
• Backdated entries will continue to apply old rates.

Error Correction

• Mistakes can be corrected using invoice amendments, debit notes, or credit notes.
• For efficiency, update rates at the ledger or stock group level rather than item by item.

Key Details of GST Rate Changes

• Effective Date: September 22, 2025
• Nature of Change: Revised rates for several goods and services to simplify the system.
• Registration Threshold: No change; only rates revised.
• Official Notifications: Available on the CBIC website.

FAQs on GST Rate Change

1. When did the new rates take effect?

From September 22, 2025, as per GST Council recommendations.

2. What if goods were supplied before the rate change but invoiced later?

Supply & payment before Sept 22 → old rate applies.

Supply before but invoice/payment after Sept 22 → new rate applies.

3. How are advances treated?

Advances received before Sept 22 → taxed at old rate.

Advances received on/after Sept 22 → taxed at new rate.

4. Do I need to reissue e-way bills?

No. Existing valid e-way bills remain valid.

5. How will old stock be treated?

Any supply made on/after Sept 22 will attract the new rate, irrespective of purchase date.

6. What about Input Tax Credit (ITC)?

ITC on past purchases remains valid.

No reduction in ITC due to the rate revision.

7. What if a product becomes GST exempt?

Supplies up to Sept 21 → ITC usable.

Supplies after Sept 22 → ITC must be reversed.

8. Refund for inverted duty structure?

No refund is available if the difference is only due to a rate change.

GST Exemptions on Insurance Policies

🔹 Life Insurance: Term plans, endowment policies, ULIPs, and their reinsurance are exempt.

🔹 Health Insurance: Individual health insurance (including family floater and senior citizen plans) and their reinsurance are also exempt.

Final Takeaway

The GST Rate revisions effective September 22, 2025, are some of the major compliance events impacting businesses. Do not fail to program your software for the changes, else you lose out with invoicing errors, ITC disputes, or risks in compliance-the software is one thing that can never be ignored when it comes to trading solutions be it Tally, Zoho Books, QuickBooks, or SAP.

Conducting the aforementioned steps help businesses transit smoothly into the new GST regime without any disturbances.