diff --git a/feature/bgp/policybase/otg_tests/community_test/README.md b/feature/bgp/policybase/otg_tests/community_test/README.md
index a068367488f..ab82eed2d49 100644
--- a/feature/bgp/policybase/otg_tests/community_test/README.md
+++ b/feature/bgp/policybase/otg_tests/community_test/README.md
@@ -54,6 +54,21 @@ BGP policy configuration for Community Sets
     * Verify traffic is received on ATE port 1 for accepted prefixes.
     * Verify traffic is not received on ATE port 1 for rejected prefixes.
 
+* RT-7.2.3 - Update community set and validate
+  1. Configure a community-set named `update_comm_set` with "100:1" as member.
+
+  2. Create a `policy-definition` named 'community-match' with the following `statements`
+    * statement[name='accept_update_comm_set']/
+      * conditions/bgp-conditions/match-community-set/config/community-set = 'update_comm_set'
+      * conditions/bgp-conditions/match-community-set/config/match-set-options = INVERT
+      * actions/config/policy-result = ACCEPT_ROUTE
+
+  3. Send traffic from ATE port-2 to all prefix-sets.
+    * Verify traffic is received on ATE port 1 for accepted prefixes.
+    * Verify traffic is not received on ATE port 1 for rejected prefixes.
+
+  4. Update the community-set named `update_comm_set` with "200:2" as member and repeat Step-2 and Step-3.
+
 ### Expected community matches
 
 | prefix-set   | any_my_3_comms | all_3_comms | no_3_comms | any_my_regex_comms |
@@ -155,4 +170,4 @@ rpcs:
   gnmi:
     gNMI.Set:
     gNMI.Subscribe:
-```
\ No newline at end of file
+```
diff --git a/feature/bgp/policybase/otg_tests/community_test/community_test.go b/feature/bgp/policybase/otg_tests/community_test/community_test.go
index 3d545c83c8b..c5164592725 100644
--- a/feature/bgp/policybase/otg_tests/community_test/community_test.go
+++ b/feature/bgp/policybase/otg_tests/community_test/community_test.go
@@ -225,32 +225,7 @@ type testCase struct {
 }
 
 func TestCommunitySet(t *testing.T) {
-	bs := cfgplugins.NewBGPSession(t, cfgplugins.PortCount2, nil)
-	bs.WithEBGP(t, []oc.E_BgpTypes_AFI_SAFI_TYPE{oc.BgpTypes_AFI_SAFI_TYPE_IPV4_UNICAST, oc.BgpTypes_AFI_SAFI_TYPE_IPV6_UNICAST}, []string{"port2"}, true, true)
-
-	var communityMembers = [][][]int{
-		{
-			{100, 1}, {200, 2}, {300, 3},
-		},
-		{
-			{100, 1}, {101, 1}, {200, 2},
-		},
-		{
-			{107, 1}, {108, 1}, {109, 1},
-		},
-		{
-			{400, 1}, {500, 1}, {600, 1},
-		},
-	}
-
-	configureOTG(t, bs, prefixesV4, prefixesV6, communityMembers)
-	bs.PushAndStart(t)
-
-	t.Log("Verify DUT BGP sessions up")
-	cfgplugins.VerifyDUTBGPEstablished(t, bs.DUT)
-	t.Log("Verify OTG BGP sessions up")
-	cfgplugins.VerifyOTGBGPEstablished(t, bs.ATE)
-
+	bs := testSetup(t)
 	ipv4 := bs.ATETop.Devices().Items()[1].Ethernets().Items()[0].Ipv4Addresses().Items()[0].Address()
 	ipv6 := bs.ATETop.Devices().Items()[1].Ethernets().Items()[0].Ipv6Addresses().Items()[0].Address()
 
@@ -319,3 +294,79 @@ func TestCommunitySet(t *testing.T) {
 		})
 	}
 }
+
+func testSetup(t *testing.T) *cfgplugins.BGPSession {
+	t.Helper()
+
+	bs := cfgplugins.NewBGPSession(t, cfgplugins.PortCount2, nil)
+	bs.WithEBGP(t, []oc.E_BgpTypes_AFI_SAFI_TYPE{oc.BgpTypes_AFI_SAFI_TYPE_IPV4_UNICAST, oc.BgpTypes_AFI_SAFI_TYPE_IPV6_UNICAST}, []string{"port2"}, true, true)
+
+	var communityMembers = [][][]int{
+		{
+			{100, 1}, {200, 2}, {300, 3},
+		},
+		{
+			{100, 1}, {101, 1}, {200, 2},
+		},
+		{
+			{107, 1}, {108, 1}, {109, 1},
+		},
+		{
+			{400, 1}, {500, 1}, {600, 1},
+		},
+	}
+
+	configureOTG(t, bs, prefixesV4, prefixesV6, communityMembers)
+	bs.PushAndStart(t)
+
+	t.Log("Verify DUT BGP sessions up")
+	cfgplugins.VerifyDUTBGPEstablished(t, bs.DUT)
+	t.Log("Verify OTG BGP sessions up")
+	cfgplugins.VerifyOTGBGPEstablished(t, bs.ATE)
+
+	return bs
+}
+
+func TestCommunitySetUpdate(t *testing.T) {
+	bs := testSetup(t)
+	ipv4 := bs.ATETop.Devices().Items()[1].Ethernets().Items()[0].Ipv4Addresses().Items()[0].Address()
+	ipv6 := bs.ATETop.Devices().Items()[1].Ethernets().Items()[0].Ipv6Addresses().Items()[0].Address()
+
+	commMatch := [3]string{"100:1"}
+	configureImportBGPPolicy(t, bs.DUT, ipv4, ipv6, "update_comm_set", commMatch, oc.BgpPolicy_MatchSetOptionsType_INVERT)
+	validateCommunitySetUpdateTraffic(t, bs)
+
+	// change community match set
+	commMatch = [3]string{"200:2"}
+	configureImportBGPPolicy(t, bs.DUT, ipv4, ipv6, "update_comm_set", commMatch, oc.BgpPolicy_MatchSetOptionsType_INVERT)
+	validateCommunitySetUpdateTraffic(t, bs)
+}
+
+func validateCommunitySetUpdateTraffic(t *testing.T, bs *cfgplugins.BGPSession) {
+	t.Helper()
+
+	sleepTime := time.Duration(totalPackets/trafficPps) + 2
+	bs.ATETop.Flows().Clear()
+	for index, prefixPairV4 := range prefixesV4 {
+		configureFlow(t, bs, prefixPairV4, "ipv4", index)
+		configureFlow(t, bs, prefixesV6[index], "ipv6", index)
+	}
+	bs.PushAndStartATE(t)
+
+	// Verify BGP session after its reset with OTG push config & start
+	cfgplugins.VerifyDUTBGPEstablished(t, bs.DUT)
+
+	t.Logf("Starting traffic for IPv4 and v6")
+	bs.ATE.OTG().StartTraffic(t)
+	time.Sleep(sleepTime * time.Second)
+	bs.ATE.OTG().StopTraffic(t)
+	otgutils.LogFlowMetrics(t, bs.ATE.OTG(), bs.ATETop)
+
+	testResults := [4]bool{false, false, true, true}
+	for index, prefixPairV4 := range prefixesV4 {
+		t.Logf("Validating traffic test for IPv4 prefixes: [%s, %s]. Expected Result: [%t]", prefixPairV4[0], prefixPairV4[1], testResults[index])
+		verifyTraffic(t, bs.ATE, "ipv4", testResults[index], index)
+		t.Logf("Validating traffic test for IPv6 prefixes: [%s, %s]. Expected Result: [%t]", prefixesV6[index][0], prefixesV6[index][1], testResults[index])
+		verifyTraffic(t, bs.ATE, "ipv6", testResults[index], index)
+	}
+}