GST Rationalisation One Year On: What It Means for Shopify Pricing in India

GST rationalisation took effect on 22 September 2025. One year on, a practical review for Shopify stores in India: the rates, the ₹2,500 apparel line, tax overrides, invoices and price-sorted collections.

GST rationalisation, often called GST 2.0, took effect on 22 September 2025, which makes this week its first anniversary. For Shopify stores in India, the change was more than a new number in the tax settings. It moved some product categories from one rate to another, created a sharp price line at ₹2,500 for apparel and footwear, and gave many brands a reason to reprice. A year on, it is worth checking that your store's tax settings, invoices, prices and price-sorted collections all reflect what actually changed, because a surprising number of stores fixed the urgent parts in September 2025 and never came back to the rest.

This post is a practical review for store owners and e-commerce managers. It sets out the rate changes as reported from the GST Council's 56th meeting, how Shopify handles GST, and the pricing and merchandising questions the change raised. It is not tax advice. Your chartered accountant decides how the rules apply to your products; this post helps you know what to ask and where in Shopify to look.

GST rationalisation: what changed on 22 September 2025

The GST Council's 56th meeting on 3 September 2025 recommended replacing the four main rates, 5, 12, 18 and 28 percent, with a simpler structure: a merit rate of 5 percent, a standard rate of 18 percent, and a special rate of 40 percent for a small set of luxury and demerit goods. The Central Board of Indirect Taxes and Customs notified the changes on 17 September 2025, and most took effect on 22 September 2025. Tobacco products were the main exception and stayed on their existing rate for the time being.

The changes most relevant to the categories Indian D2C brands sell, as reported from the Council's recommendations, were these:

• Apparel and footwear: the 5 percent rate now applies up to ₹2,500 per piece, up from ₹1,000. Above ₹2,500 per piece, the rate is 18 percent, where it used to be 12 percent above ₹1,000.
• Personal care: hair oil, shampoo, toothpaste, toilet soap bars and shaving cream moved from 18 percent to 5 percent.
• Consumer electronics: televisions, air conditioners, monitors, projectors and dishwashers moved from 28 percent to 18 percent.
• Gold and silver jewellery: unchanged, at 3 percent on the value of the metal and 5 percent on making charges.

Rates are set by HSN code, and the details within a category can differ from the headline. If your catalogue spans several product types, go back to the notifications, or to your CA, for each HSN code you sell rather than relying on a summary, including this one.

The ₹2,500 line: the change that matters most for fashion

For fashion and footwear brands, the headline was not the rate cut. It was the new threshold. Items up to ₹2,500 per piece now attract 5 percent, and items above it attract 18 percent. Under the old structure, the gap between the two rates either side of ₹1,000 was 7 percentage points. Now it is 13 points, at a price point where many D2C fashion brands sell their core range.

That creates a cliff. A kurta just above the threshold carries far more tax than one just below it, which puts real pressure on how products around ₹2,500 are priced. Some brands responded by bringing selected products under the line. Others kept their prices and absorbed or passed on the difference. There is no single right answer, but there are a few questions every fashion brand should have answered by now.

• Which products sit within a few hundred rupees of the threshold, on either side?
• How exactly is the ₹2,500 measured for your prices, and how do discounts, coupons and tax-inclusive pricing affect which side of the line a sale falls on? This is the question to put to your CA, with examples from your own catalogue.
• Are bundles, sets and multi-packs priced per piece in a way your invoices can show?
• If you sell the same product on marketplaces, does the marketplace calculate tax the same way your store does?

What did not change

It helps to be clear about what stayed the same, because a lot of the confusion in September 2025 came from assuming everything had moved. The basic mechanics of GST for an online store did not change. Sales within your own state still carry CGST and SGST, and sales to other states still carry IGST. Registration rules did not change with the rate rationalisation: Shopify's GST guide still describes mandatory registration above ₹20 lakh of turnover, or ₹10 lakh in the North Eastern and hill states, and for businesses that make inter-state supplies or sell through online marketplaces, among other cases.

Some categories did not move at all. Gold and silver jewellery, for example, stayed at 3 percent on the metal. And the principle that the rate is set by the HSN code of the product, not by what the store calls it, is unchanged. A product tagged as a gift set in your store still takes the rate of what it actually is.

Category by category: what to check a year on

The rate changes landed differently depending on what you sell. These are the checks we would prioritise for the categories most common among Indian D2C brands on Shopify.

• Fashion and footwear: the ₹2,500 threshold, discount behaviour near it, and variants priced on both sides of it. This is the category with the most room for error.
• Beauty and personal care: products such as shampoo, hair oil, toothpaste and soap moved to 5 percent, while other cosmetics may not have. A mixed catalogue needs at least two tax collections, and products need to be sorted into the right one by HSN code.
• Electronics and appliances: televisions, air conditioners, monitors and dishwashers moved from 28 to 18 percent. Accessories sold alongside them may sit under different codes, so check each one.
• Jewellery: rates on gold and silver jewellery did not change, but check that making charges are treated the way your CA expects on invoices, since Shopify's product price is usually one number.
• Mixed catalogues and gift sets: a set combining products from different categories is where tax classification gets hardest. Take advice on sets specifically.

Festive offers near the threshold

The festive season is when the ₹2,500 line matters most in practice, because discounts are everywhere. A product listed at ₹2,799 and sold with a 15 percent coupon ends up on the other side of the threshold. Whether that changes the rate that should apply to the sale, and how your checkout and invoicing app handle it, is a question to settle with your CA before your festive offers go live, not after the returns start.

The simplest protection is to know which of your products sit within discount range of the threshold and to test an order for each type of offer you plan to run: a percentage discount, a flat discount, a buy-two offer and a free gift. Check the tax on the order in Shopify and on the invoice from your invoicing app. If they disagree, fix it before the traffic arrives.

How Shopify handles GST in India

Shopify's help centre has a GST in India guide, which Shopify updated for the 22 September 2025 change. A few points from it are worth knowing before you check your settings.

• Shopify separates CGST and SGST for sales within your state from IGST for sales to other states.
• Shopify sets default rates for India, and its guide says those defaults must be reviewed and updated for your own business.
• To charge different rates for different products, Shopify recommends creating a hidden collection for each tax category and applying a tax override to each collection.
• HSN codes can be stored in the HS tariff code field in the Shipping section of each product, which requires at least six digits. Shorter codes can be kept in metafields or tags.
• Shopify says it does not create a GST-compliant bill, so stores use a third-party invoicing service or an app for GST invoices.

The guide also recommends consulting a local tax professional, and that is good advice. The settings are only as right as the rates and categories you give them.

One year on: audit your tax overrides

Because Shopify's recommended approach uses collections to carry tax rates, the rate change was, in practice, a collections job. Stores had to change the rate on some override collections, move products between collections, and in some cases create new ones. That work was often done in a hurry in the week before 22 September 2025. It is worth checking it again now.

1. 1List your tax override collections and the rate each one applies, in Settings, under Taxes and duties, for India.
2. 2For each collection, check that the rate matches the current rate for the products in it, by HSN code.
3. 3Look for products in no tax collection at all. These fall back to the default rate, which may be wrong for them.
4. 4Look for products in more than one tax collection. Check with your developer or Shopify support how overlapping overrides are applied, rather than assuming.
5. 5Check that new products added since September 2025 were put into the right tax collection. This is the most common gap, because the step is easy to forget when launching a product.

The price-threshold problem in automated tax collections

For apparel and footwear, the rate now depends on price, which makes a price-based automated collection a tempting way to hold the 5 percent products: a collection with a condition that price is less than or equal to ₹2,500. It can work, but there are two catches worth checking with care.

First, Shopify's help centre says that when a collection's conditions look at products, a condition matches if any variant of the product matches. A product whose variants are priced on both sides of ₹2,500, such as a size or fabric that costs more, may therefore be included in the 5 percent collection as a whole. Second, the collection looks at the listed price, not the price after a discount code or the taxable value your CA uses. A sale can move the actual transaction to the other side of the line without the collection knowing.

Neither catch makes a price-based collection wrong. They mean it needs checking against your real catalogue, and the products near the line may be better handled by hand, with a manual tax collection you maintain deliberately.

Invoices and HSN codes

Since Shopify does not issue GST-compliant invoices, your invoicing app or service is where the rate change has to be right on paper. Three checks are worth doing a year on.

• Rates on invoices match the rates charged at checkout. If your invoicing app calculates tax itself, it may disagree with Shopify's calculation for products near the ₹2,500 threshold.
• HSN codes are present and correct on every product. An invoicing app can only print the code that is on the product.
• Invoices for orders placed before 22 September 2025 and returned afterwards are handled the way your CA expects. Returns and exchanges across a rate change are a common source of confusion.

Pricing: what stores did, and what to review now

When rates fell, the government presented the change as relief for consumers, in PIB's words a relief for the common man, and brands in the categories that were cut were expected to pass the lower tax on in their tax-inclusive prices. When the apparel rate rose above ₹2,500, brands had to decide whether to raise prices or absorb the difference. A year later, the useful question is not what you decided then, but whether your prices still make sense now.

• Price endings: if prices were recalculated mechanically, you may have odd numbers like ₹1,187 where ₹1,199 was the intention. Tidy them.
• Compare-at prices: if you set a compare-at price to show the old, higher price after the cut, check whether that is still accurate a year later, and be careful that any compare-at price reflects a price you genuinely charged.
• Price bands: if your store has price-based collections or filters, such as Under ₹999 or Under ₹2,499, check that their products still belong after repricing.
• Marketplace parity: if marketplaces and your own store price the same product differently after the change, decide whether that is intentional.

Price-sorted collections after a rate change

This is the part most stores miss. When prices change, any collection sorted by price changes with them. A collection sorted Price, low to high will reorder itself after a repricing, and the new order may not be the one you would have chosen.

Two effects are worth looking for. The first is that products brought under the ₹2,500 line will cluster together in a price-sorted collection, which can put a long run of similar products side by side. The second concerns products with several variants. Check which price your price sort uses for such a product, and compare it with the price your theme shows on the product card, which depending on the theme may be the lowest variant, the selected default or the first available one. When the variants of one product sit on both sides of a repricing, the card and the sort can tell different stories, and a shopper who sorted low to high sees a product that looks out of place.

Price sorts also ignore everything except price: stock, conversion and newness. A price-sorted collection page shows the cheapest products first whether or not they are in stock or selling. For a store's main category pages, a performance-based order with price as a filter or a slot is usually a better experience than a raw price sort.

Merchandising around the ₹2,500 line

The threshold also created a merchandising opportunity. For shoppers, products at or under ₹2,500 in apparel and footwear are now meaningfully cheaper than they would be just above it, and many will look for them. A few ways to use that:

• A dedicated collection for products at or under ₹2,500, clearly named, especially for gifting during the festive season.
• A price band slot on main category pages, so that the first rows include a mix of price points rather than only the most expensive or cheapest products.
• Price filters that match the threshold, so shoppers can find the range directly.
• Clear pricing on product cards, so the shopper sees the price they will pay, including tax.

Whatever you do, avoid making tax the headline of your marketing. Talk about the price and the product. The tax is your accountant's business, not your customer's.

Profit, not just price, after the change

A rate change shifts margins even when the price on the page does not move. If you absorbed an increase on products above ₹2,500, your margin on them fell. If you kept a price after a cut, your margin rose. Either way, the products that make you the most money may have changed, and a collection ordered by revenue alone will not show it.

That is why we built profit-aware ranking into SellRank. With cost per item filled in on your products, SellRank can rank a collection by margin or estimated profit, on its Scale plan and up, so the first row reflects what you actually earn after the change. Where cost is missing, profit reads zero rather than a guessed number, which is itself a useful prompt to fill it in.

Questions to take to your chartered accountant

A software company cannot tell you which rate applies to your products, but it can help you ask better questions. These are the ones we would bring to a CA a year after the change, ideally with a sample of real orders from your store.

• For each HSN code we sell, what is the current rate, and has anything changed since September 2025?
• For apparel and footwear, how is the ₹2,500 per piece measured for our tax-inclusive prices, and what happens when a discount moves a sale across it?
• How should sets, bundles and free gifts be treated, especially where they combine products at different rates?
• How should returns and exchanges of orders placed before 22 September 2025 be handled, if any are still coming back?
• Do our invoices show everything they should, including HSN codes, rates and the split between CGST, SGST and IGST?
• Is the way we record making charges, packaging or shipping on invoices correct for our category?

Bring the answers back to whoever manages your Shopify settings and your invoicing app, and write them into a short internal note. The next time a product is launched or a rate changes, that note is what stops the same questions from being answered differently by different people.

A one-year GST checklist for Shopify stores

1. 1Confirm the current rate for each HSN code you sell with your CA, especially apparel and footwear near ₹2,500.
2. 2Audit your tax override collections: rates, membership, products in none and products in more than one.
3. 3Check any price-based tax collection against products whose variants cross the threshold.
4. 4Check that every product has an HSN code and that your invoicing app prints it with the right rate.
5. 5Review price endings, compare-at prices and price-band collections after last year's repricing.
6. 6Look at every collection sorted by price and decide whether a price sort is still the right order.
7. 7Fill in cost per item so that margin after the change is visible.
8. 8Write the checks into your product launch process, so new products get the right tax collection from day one.

Most of these take minutes, and together they close the gaps that a rushed change in September 2025 tends to leave. If you want a collection order that follows performance and profit rather than a raw price sort, SellRank is free on one collection and writes its order into Shopify's own sort, with no theme changes.