GST rate and tariff changes in India are made operative by CBIC through Central, Integrated, UTGST and Compensation Cess Tax (Rate) notifications issued under Section 9 of the Central Goods and Services Tax Act, 2017 (CGST Act), with goods identified by HSN codes drawn from the Customs Tariff Act, 1975. A GST Council recommendation precedes a change, but only the published rate notification — not the Council announcement — alters the law.
TL;DR for businesses: Do not treat a GST Council press release as a rate change. The rate moves only when CBIC issues the implementing rate notification. For the composition scheme specifically, the operative anchors are Notification 14/2019-Central Tax (
CGST_14_2019) — turnover ceiling ₹1.5 crore (₹75 lakh in eight specified states) plus three permanent exclusions — and Notification 50/2020-Central Tax (CGST_50_2020) — the four-tier Rule 7 rate table. If you classify goods, the HSN reading comes from the Customs Tariff Act, 1975 First Schedule, not from informal trade descriptions.
Background — how a GST rate becomes law
The legal mechanism for setting GST rates in India is layered. The GST Council, constituted under Article 279A of the Constitution, recommends rates; CBIC then notifies them. For Central Tax, the rate-fixing power sits in Section 9 of the CGST Act, 2017, with parallel powers in the IGST, UTGST and Compensation Cess Acts. The principal goods-rate instrument is Notification 01/2017-Central Tax (Rate), which arranges goods into six positive schedules plus a nil-rate notification (Notification 02/2017-Central Tax (Rate)).
Every subsequent rate change is a substitution into these principal schedules, issued as a numbered Central Tax (Rate) notification. This is why "the current rate" for any item is never a single document — it is the principal entry as amended by every later notification. The composition-levy regime, by contrast, draws its rate structure from Section 10 of the CGST Act read with Rule 7 of the CGST Rules, 2017, and its rate table is set by separate Central Tax (non-rate) notifications rather than the (Rate) series.
Tracking rate and tariff changes 2019–2025
Between 2019 and 2025, two structural shifts in the composition-levy regime illustrate how rate and threshold tracking works in practice. Both are still in force.
2019 — composition threshold raised and exclusions fixed (`CGST_14_2019`)
Notification 14/2019-Central Tax, effective 15 April 2019, superseded the original Notification 8/2017-Central Tax (G.S.R. 647(E)) and reset the eligibility architecture for the composition levy under Section 10(1) of the CGST Act:
- The aggregate-turnover ceiling for composition eligibility was raised to ₹1.5 crore in the preceding financial year — up from the original ₹1 crore.
- For registered persons in eight specified states — Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand — the reduced ceiling of ₹75 lakh applies.
- Three categories of manufacturers are permanently excluded from composition, irrespective of turnover: ice cream and other edible ice (HSN 2105 00 00), pan masala (HSN 2106 90 20), and all tobacco and manufactured tobacco substitutes (Chapter 24).
The notification expressly incorporates the interpretive rules of the Customs Tariff Act, 1975 First Schedule for reading tariff item, sub-heading and chapter classification. This is the single most important point for classification-driven exclusions: whether a product is "pan masala" or "tobacco substitute" is decided by Customs Tariff classification, not by the trade name on the invoice.
2020 — composition rate table rebuilt (`CGST_50_2020`)
The Central Goods and Services Tax (Seventh Amendment) Rules, 2020 — issued as Notification 50/2020-Central Tax under Section 164 of the CGST Act — substituted the composition rate table in Rule 7 of the CGST Rules, 2017, effective retroactively from 1 April 2020. The revised table prescribes four tiers:
| Composition category | Governing provision | Rate (CGST + SGST combined applies separately) |
|---|---|---|
| Manufacturers (other than those notified by Government) | §10(1)/(2) | 0.5% of State/UT turnover |
| Restaurant / food suppliers (Schedule II, para 6(b)) | §10(1)/(2) | 2.5% of turnover |
| Other composition goods suppliers | §10(1)/(2) | 0.5% of taxable supplies in State/UT |
| Service suppliers under the special category (turnover up to ₹50 lakh) | §10(2A) | 3% of turnover of taxable supplies |
The retroactive 1 April 2020 effective date was deliberate: it aligned Rule 7 with the Finance Act, 2020, which created the new Section 10(2A) category extending composition to service suppliers. Practitioners reading the rate table must therefore first determine which sub-section governs a client — Section 10(1)/(2) for goods, Section 10(2A) for the service-supplier special category — before applying the correct percentage.
What this pattern teaches about tracking
The composition example is a microcosm of the wider rate-notification discipline that applied across 2019–2025: a threshold/eligibility instrument (here CGST_14_2019) is one document, the rate-quantum instrument (here CGST_50_2020) is a separate document, and the classification authority (the Customs Tariff Act, 1975) is a third layer that decides which goods fall where. To state the current position on any item, a practitioner must reconcile all three layers — never read a single notification in isolation.
Practitioner implications
- Reconcile, do not snapshot. The operative rate or threshold for any item is the principal entry plus every substitution to date. For composition, that means reading
CGST_14_2019(eligibility) together withCGST_50_2020(rate) and the latest position on §10(2A) opt-in mechanics. - Classification disputes turn on the Customs Tariff Act, not trade usage. Where an exclusion or a rate hinges on HSN — ice cream, pan masala, tobacco for composition; or any HSN-keyed (Rate) notification entry — the First Schedule to the Customs Tariff Act, 1975 is the binding reference. Build the HSN reasoning into the file before the rate.
- Map the state ceiling. Clients with operations in the eight specified states (NE states plus Uttarakhand) carry the ₹75 lakh composition ceiling, not ₹1.5 crore. A single national turnover view will mis-state eligibility for those registrations.
- Service-supplier composition needs a separate opt-in. The §10(2A) category (3% rate) requires its own opt-in and is filed in GSTR-4; it is not automatic for goods-side composition dealers.
- A Council decision is a watch item, not a compliance trigger. Track Council recommendations, but change your tax codes only when the implementing rate notification publishes in the Gazette.
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Effective dates at a glance
- Notification 14/2019-Central Tax (
CGST_14_2019): composition turnover ceiling ₹1.5 crore (₹75 lakh for eight specified states); three permanent exclusions — effective 15 April 2019. - Notification 50/2020-Central Tax (
CGST_50_2020): four-tier Rule 7 composition rate table (0.5% / 2.5% / 0.5% / 3%) — effective 1 April 2020 (retroactive).
Founder checklist
- Confirm whether each registration's turnover and state fixes it under the ₹1.5 crore or ₹75 lakh composition ceiling.
- Verify your product range does not fall into the three permanently excluded HSN categories (ice cream 2105 00 00, pan masala 2106 90 20, tobacco Chapter 24) — using Customs Tariff classification, not trade descriptions.
- Apply the correct Rule 7 rate tier per the governing sub-section (0.5% manufacturers/other goods, 2.5% restaurants, 3% §10(2A) services).
- Treat GST Council announcements as a watch-list, and update tax codes only on publication of the implementing rate notification.
FAQ
How does CBIC notify a GST rate change in India?
GST rate changes are implemented through CBIC Central Tax (Rate), Integrated Tax (Rate), UTGST (Rate) and Compensation Cess (Rate) notifications, each issued under the rate-fixing power in Section 9 of the Central Goods and Services Tax Act, 2017 (CGST Act). Rate notifications amend the principal Notification 01/2017-Central Tax (Rate) schedules and identify goods by HSN code drawn from the First Schedule to the Customs Tariff Act, 1975. A GST Council recommendation precedes most changes, but the notification — not the Council press release — is the operative law.
What is the current composition-levy turnover threshold under GST?
Under Notification 14/2019-Central Tax (CGST_14_2019), effective 15 April 2019, the aggregate-turnover ceiling for the composition levy under Section 10(1) of the CGST Act is ₹1.5 crore in the preceding financial year, raised from the original ₹1 crore. A reduced ceiling of ₹75 lakh applies to registered persons in eight specified states: Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand.
What are the composition-levy tax rates under CGST Rule 7?
Notification 50/2020-Central Tax (CGST_50_2020), effective 1 April 2020, rebuilt the Rule 7 table into four tiers: manufacturers pay 0.5% of State/UT turnover; restaurant and food suppliers under Schedule II paragraph 6(b) pay 2.5%; other composition goods suppliers under Section 10(1)/(2) pay 0.5% of taxable supplies; and service suppliers opting under the Section 10(2A) category (turnover up to ₹50 lakh) pay 3%. CGST and SGST each apply at these rates, so the combined burden is double the listed figure.
Which goods are excluded from the composition scheme regardless of turnover?
Notification 14/2019-Central Tax (CGST_14_2019) bars manufacturers of three categories from composition even when turnover is below ₹1.5 crore: ice cream and other edible ice (HSN 2105 00 00), pan masala (HSN 2106 90 20), and all tobacco and manufactured tobacco substitutes (Chapter 24). The Customs Tariff Act, 1975 First Schedule supplies the binding HSN classification for these exclusions.
How do I find the operative GST rate for a specific HSN code?
Read the principal rate notification (Notification 01/2017-Central Tax (Rate) for goods) and trace every amending Central Tax (Rate) notification issued since 28 June 2017 against the relevant HSN entry. The rate sits in one of six schedules (nil, 0.25%, 3%, 5%, 12%, 18%, 28%), and the HSN code is read using the Customs Tariff Act, 1975 classification rules. Because entries are amended notification-by-notification, the current rate is the cumulative result of the principal entry plus every substitution to date.
Is a GST Council decision enough to change a tax rate?
No. A GST Council recommendation under Article 279A of the Constitution is a precondition, not the operative instrument. The rate changes only when CBIC issues the implementing rate notification under Section 9 of the CGST Act (and the parallel IGST, UTGST and Compensation Cess Acts). Until that notification is published in the Gazette of India, the existing rate continues to apply, even if the Council has already announced the change.
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Sources
Primary notifications (CBIC):
- Notification 14/2019-Central Tax, effective 15 April 2019 (
CGST_14_2019): https://cbic-gst.gov.in/central-tax-notfns-2019.html - Notification 50/2020-Central Tax — CGST (Seventh Amendment) Rules, 2020, effective 1 April 2020 (
CGST_50_2020): https://cbic-gst.gov.in/central-tax-notfns-2020.html
Parent statute and classification authority:
- Central Goods and Services Tax Act, 2017 — §9 (rate), §10 (composition), §164 (rule-making): https://www.indiacode.nic.in/handle/123456789/2148
- CGST Rules, 2017 — Rule 7 (composition rate table): https://cbic-gst.gov.in/cgst-rules.html
- GST Council (recommendation record): https://gstcouncil.gov.in/
Disclaimer: This explainer summarises CBIC notifications for general guidance and is not legal advice. Verify the current rate, threshold and HSN classification against the operative notification and the Customs Tariff Act, 1975 before acting. Prepared by Veritect Legal Intelligence.