FinoPulse #004 · MAY 26, 2026
India Tax & Compliance Update #4
finoscape.com
Imagine you’re running a small business, and suddenly, the GST rates change. What does this mean for you? The GST Council has announced new rates for certain goods and services, effective May 1, 2026. This move is expected to impact various industries and consumers.
The Central Goods and Services Tax Act, 2017, has been amended to include the new GST rates.
The new GST rates will affect your business’s pricing strategy and profitability. You need to reassess your costs and adjust your pricing accordingly.
For example, if you’re a manufacturer of textiles, the new GST rate of 12% will increase your costs. You may need to pass on this increase to your customers or absorb it yourself.
Let’s say you’re the owner of a textile manufacturing business, Kumar Textiles, in Ahmedabad. Your business has an annual turnover of Rs 50 lakhs. With the new GST rate, your costs will increase by Rs 2 lakhs. You need to decide whether to pass on this increase to your customers or absorb it yourself.
Our expert, CA Rohan, advises that you should reassess your pricing strategy and consider passing on the increase to your customers. However, you should also consider the competitive landscape and the potential impact on your sales.
- Reassess your pricing strategy
- Consider passing on the increase to your customers
- Absorb the increase yourself, if possible
The GST Council has announced new rates for certain goods and services. This means that your business will need to adjust to the new rates. When it applies, you’ll need to reassess your pricing strategy and consider passing on the increase to your customers. Three common mistakes to avoid are: not reassessing your pricing strategy, not considering the competitive landscape, and not communicating the changes to your customers.
The GST Council has announced the removal of exemptions on certain services, including healthcare and education. This move is expected to increase revenue for the government. Your business will need to adjust to the new rates and consider passing on the increase to your customers.
A large pharmaceutical company in Ahmedabad had been claiming full ITC on its manufacturing expenses. However, the company was required to reverse a portion of the ITC due to the changes in the GST rates. Your business will need to ensure that it is complying with the ITC reversal rules to avoid any penalties.
Every month, thousands of businesses across India claim input tax credit (ITC) based on their GSTR-2B returns. However, many businesses are skipping the reconciliation step, which can lead to errors and penalties. Your business should ensure that it is reconciling its GSTR-2B returns to avoid any issues.
What is the main purpose of the GST Council’s announcement of new rates for certain goods and services?
India’s Tax Intelligence Hub