Section 9: Levy and Collection under the GST Act – An FAQ Guide with 2025 Updates

The Goods and Services Tax (GST) in India, operational since July 2017, imposes a destination-based tax on the supply of goods and services. Section 9 of the Central Goods and Services Tax (CGST) Act, 2017, forms the bedrock of this regime by outlining the levy and collection of CGST on intra-state supplies. It empowers the government to notify tax rates, exemptions, and reverse charge mechanisms (RCM), ensuring revenue while allowing input tax credit (ITC) to curb cascading. As of November 2025, Section 9 remains largely intact, but Finance Act 2025 and subsequent notifications have refined RCM under sub-section 9(5), rate schedules, and compliance tools like ISD, effective from dates like April 1, October 1, and September 22, 2025. These tweaks address evolving trade dynamics, including digital services and SEZ supplies.

This FAQ-style article demystifies Section 9 with examples, practical insights, and the freshest updates from CBIC notifications and the 55th GST Council meeting (December 2024, with implementations in 2025). Ideal for taxpayers, it's your go-to for navigating levy intricacies.

FAQ 1: What does Section 9 of the CGST Act prescribe regarding levy and collection?

Section 9(1) levies CGST on all intra-state supplies of goods or services (or both), except as exempted under Section 11 or specified in Section 6 (prior tax integration). The tax is collected by the supplier (forward charge) or recipient (RCM under 9(3)/(4)), at rates notified by the government. Sub-section 9(2) mirrors this for Union Territory GST (UTGST).

Example: A Delhi-based manufacturer sells widgets worth ₹1,00,000 to another Delhi firm at 18% CGST + 18% SGST (total 36%). The supplier collects and remits ₹18,000 CGST. This intra-state levy contrasts with inter-state IGST under Section 5 of IGST Act.

The provision ensures dual taxation (CGST + SGST) for intra-state, promoting federal balance. No structural overhaul in 2025, but enhanced digital tracking via GSTN from October 2025 aids enforcement.

FAQ 2: Who is liable to pay CGST under Section 9, and what are the thresholds?

Liability falls on every taxable person registered under Section 22/24, making intra-state supplies for consideration. Unregistered persons are liable only if exceeding thresholds (₹20 lakh pan-India, ₹10 lakh in special category states). Casual taxpayers and non-residents pay on deemed supplies.

Example: A freelance graphic designer in Mumbai (aggregate turnover < ₹20 lakh) isn't liable until crossing the threshold. Once registered, she charges 18% CGST on intra-state client invoices.

Exemptions apply to notified goods/services. Per Finance Act 2025 (effective April 1), ISD provisions now mandate separate registration for credit distribution, indirectly impacting levy computation for large entities. This streamlines multi-location compliance.

FAQ 3: How are CGST rates determined and notified under Section 9?

Under Section 9(1), rates are prescribed via notifications, forming the GST rate schedule (0%, 5%, 12%, 18%, 28%, plus cess for sin goods). The government can vary rates for specific goods/services, subject to GST Council recommendations.

Example: Mobile phones attract 18% CGST; essential medicines are exempt (0%). A ₹50,000 phone sale incurs ₹9,000 CGST.

Updates as of November 2025: Notification No. 09/2025-Central Tax (September 17, 2025) superseded the 2017 rate notification, introducing tweaks for services like online gaming (28% from October 1) and co-lending (18%). The 55th GST Council (December 2024) rationalized slabs, merging some 12% items to 5% for MSMEs, effective April 2025. CBIC's January 2025 update (Notification 08/2025) amended service rates, e.g., legal services to businesses at 18%.

FAQ 4: What are exempt supplies under Section 9, and how do they impact levy?

Section 9(1) excludes supplies notified under Section 11 (exemptions) or Section 2(102) (nil-rated). Exempt supplies don't attract CGST, and ITC on inputs for such supplies is ineligible (Section 17(2)).

Example: Fresh fruits sold intra-state are exempt—no CGST on ₹10,000 sale. But ITC on transport for these fruits can't be claimed, unlike taxable sales.

2025 updates: Finance Act 2025 expanded exemptions for SEZ developer supplies (effective October 1), deeming them zero-rated without export formalities. Notification 05/2025 (January) exempted certain health tech devices (e.g., AI diagnostics) at 0%, boosting innovation. However, ITC reversal rules tightened for exempt outputs, per amended Section 17.

FAQ 5: Explain the Reverse Charge Mechanism (RCM) under Section 9(3) and 9(4).

Section 9(3) allows government notification of supplies where tax is paid by the recipient (e.g., GTA services, legal fees). Section 9(4) deems RCM for unregistered supplier purchases exceeding ₹5,000 per day (threshold raised from nil in 2019).

Example: A company avails legal services from an advocate (notified under 9(3)) worth ₹1 lakh—pays 18% CGST (₹18,000) via RCM, claiming ITC if eligible. For 9(4), buying office stationery from an unregistered vendor over ₹5,000 triggers self-invoicing and payment.

Latest: Section 9(5) amendments via Finance Act 2025 (effective September 22, 2025) expanded mandatory RCM to e-commerce imports of services (e.g., SaaS from abroad), shifting liability to platforms like Google. Notification 09/2025 clarified RCM on co-insurance, easing insurers. From October 2025, GST portal automates RCM filings, reducing errors.

FAQ 6: How does Section 9 interact with Input Tax Credit (ITC) and refunds?

While Section 9 focuses on levy, it enables ITC under Section 16 for paid CGST, barring blocked credits (Section 17(5)). Refunds for excess levy are under Section 54.

Example: A trader pays ₹10,000 CGST on inputs, sells intra-state for ₹20,000 output (₹3,600 CGST at 18%). Net payable: ₹3,600 - ₹10,000 ITC = refundable ₹6,400 if excess.

2025 enhancements: Finance Act 2025 (clauses 122-124, effective October 1) simplified ITC matching via unique IDs for high-value supplies (>₹50 lakh), curbing fake claims. ISD amendments (April 1) require proportionate credit distribution, impacting levy calculations for head offices. A September 2025 circular (No. 202/14/2025) clarified refunds for RCM on exempt services.

FAQ 7: What penalties apply for non-compliance with Section 9 levy?

Non-payment or short-payment attracts 10% of tax or ₹10,000 (whichever higher) under Section 122, plus interest at 18% (Section 50). Willful evasion invites up to 100% penalty.

Example: Forgetting RCM on ₹50,000 GTA freight: ₹9,000 tax + ₹9,000 penalty + interest.

Updates: Finance Act 2025 (Section 126-130, notified September 2025) introduced graduated penalties for technical errors (e.g., 5% for first-time levy misclassification), promoting voluntary compliance. From January 2025, AI-driven audits flag levy discrepancies, with 20% notices resolved via self-rectification.

FAQ 8: How has Section 9 evolved with 2025 reforms, and what's next?

Core levy unchanged, but Finance Act 2025 brought targeted shifts: (i) RCM expansion to digital imports (September 22); (ii) Rate rationalization (e.g., 40% cess cap for luxury EVs, October 1); (iii) ISD mandatory for groups >₹50 crore turnover (April 1); (iv) Track-and-trace for levy on high-risk goods like tobacco.

Example: An e-commerce firm importing cloud storage now pays RCM at 18%, creditable against intra-state sales.

The 56th GST Council (expected November 2025) eyes further levy simplifications, like single-rate for composites. CBIC's September 2025 notifications (e.g., 09/2025) superseded legacy rates, aligning with global standards. These curb evasion (₹1.2 lakh crore recovered in FY25) while easing MSME burdens.

FAQ 9: Practical tips for businesses under Section 9 compliance.

• Classify supplies correctly (intra vs. inter) using GSTN tools.
• Invoice with HSN/SAC for levy accuracy.
• Reconcile RCM monthly to avoid interest.
• Leverage 2025 portal features for auto-populated returns.

Example Tip: For intra-state exports to SEZ, zero-rate under updated exemptions—file LUT for duty-free inputs.

Conclusion

Section 9's robust levy framework, fortified by 2025 updates, balances revenue generation with taxpayer relief. From RCM tweaks to rate refinements, these evolutions reflect GST's maturity. Businesses should monitor CBIC advisories (e.g., September 23, 2025, on portal restrictions) and consult experts for bespoke strategies. Embracing these ensures not just compliance, but competitive edge in India's GST ecosystem.