04-Sep-2025 🏛️ Recommendations of 56th Meeting of the GST Council held at New Delhi, 03.09.2025
#gstcouncil #gstreforms #indiaeconomy #taxupdatesThe 56th GST Council Meeting (03.09.2025, New Delhi) approved major reforms: a simplified 2-rate GST structure (18% & 5%) with 40% on demerit goods, rate cuts for essentials, healthcare, agriculture, auto, textiles, and hospitality, and higher tax on luxury items. Trade facilitation includes faster refunds, easier GST registration for small and e-commerce businesses, and export refund relief. Legal changes cover place of supply for intermediaries, post-sale discount rules, and RSP-based valuation for tobacco products. Overall, the focus is on lowering tax burden, easing compliance, and supporting growth.
✨ The 56th GST Council Meeting has marked a pivotal step in India’s tax reforms, introducing:
- 📊 Simplification of GST structure
- 🛒 Rate rationalisation on essential commodities
- 🌾 Relief for farmers & labour-intensive sectors
- 💊 Exemptions for healthcare & life-saving medicines
- ⚖️ Strengthened dispute resolution through GSTAT
🔎 These reforms are aimed at reducing tax burden, enhancing compliance ease, and ensuring a citizen-centric GST framework that supports both common taxpayers and businesses.
The 56th GST Council Meeting has approved next-generation GST reforms with a strong focus on rate rationalisation and ease of doing business. The key decisions include moving from a 4-tier rate structure to a simplified 2-rate structure (18% Standard Rate & 5% Merit Rate), while introducing a 40% rate for select demerit goods. Major reductions in GST rates have been announced for essential FMCG products (hair oil, soaps, shampoos, toothpaste, packaged foods), dairy products, Indian breads, and namkeens, which will benefit the common man. Critical healthcare items such as life-saving drugs, medical devices, and consumables have been made cheaper through exemptions and reduced rates. Agriculture and farmer-related inputs including tractors, machinery, and fertilizers see GST reduction to 5%, supporting the rural economy. The automobile sector witnesses a rationalisation with reduced rates on small cars, motorcycles, buses, trucks, and auto parts, while luxury vehicles face higher taxes. Additionally, construction (cement), renewable energy equipment, textiles, and handicrafts benefit from lower GST, boosting these industries. Hospitality and wellness services (hotels, gyms, salons) have also seen reduced rates.
📖 This advisory is prepared on the basis of the Press Release and the FAQs issued by CBIC.
General Rate Changes
Notifications: Revised rates will be notified by CBIC
A. CHANGES IN GST RATES OF GOODS AND SERVICES
| Sr No | Category | Sector | Item/Service | From | To |
| 1 | Goods | FOODS | Ultra-High Temperature (UHT) milk | 5% | Nil |
| Pizza bread | 5% | Nil | |||
| Khakhra, chapathi or roti | 5% | Nil | |||
| Other non-alcoholic beverages | 18% | 40% | |||
| Pan masala,Caffeinated Beverages,Carbonated Beverages of Fruit Drink or Carbonated Beverages with Fruit Juic | 28% | 40% | |||
| 2 | Goods | AGRICULTURE , FERTILIZER & COAL | Composting Machines | 12% | 5% |
| Sprinklers; drip irrigation system including laterals; mechanical sprayers | 12% | 5% | |||
| Tractors (except road tractors for semi-trailers of engine capacity more than 1800 cc | 12% | 5% | |||
| Sulphuric acid,Nitric acid,Ammonia | 18% | 5% | |||
| Gibberellic acid, Bio-pesticides | 12% | 5% | |||
| Hydraulic Pumps for Tractors | 18% | 5% | |||
| Road wheels and parts and accessories thereof for tractors | 18% | 5% | |||
| Coal; briquettes, ovoids and similar solid fuels manufactured from coal | 5% | 18% | |||
| Peat (including peat litter), whether or not agglomerated | 5% | 18% | |||
| 3 | Goods | RENEWABLE ENERGY | Solar cookers , Solar water heater and system,renewable energy devices and parts for their manufacture: | 12% | 5% |
| 4 | Goods | TEXTILE | Sewing thread of manmade filaments, whether or not put up for retail sale | 12% | 5% |
| Yarn of manmade staple fibres | 12% | 5% | |||
| Products wholly made of quilted textile material not exceeding Rs. 2500 per piece | 12% | 5% | |||
| Articles of apparel and clothing accessories, knitted or crocheted, of sale value exceeding Rs. 2500 per piec | 12% | 18% | |||
| Articles of apparel and clothing accessories, not knitted or crocheted, of sale value exceeding Rs. 2500 per piece | 12% | 18% | |||
| Other made up textile articles, sets of sale value exceeding Rs.2500 per piece [other than Worn clothing and other worn articles; rags] | 12% | 18% | |||
| Products wholly made of quilted textile material exceeding Rs. 2500 per piece | 12% | 18% | |||
| All Goods (HSN 5402,5403,5404,5405,5406) | 18% | 5% | |||
| 5 | Goods | HEALTH SECTOR | Agalsidase Beta,Imiglucerase,Eptacog alfa activated recombinant coagulation factor VIIa | 5% | Nil |
| Polatuzumab vedotin, Agalsidase Alfa,Laronidase,Idursulphatase,Miglustat,etc… | 12% | Nil | |||
| Anaesthetics,Steam, Medical grade oxygen,etc.. | 12% | 5% | |||
| All Drugs and medicines including: i. Fluticasone Furoate + Umeclidinium + Vilanterol FF/UMEC/VI ii. Brentuximab Vedotin iii. Ocrelizumab iv Pertuzumab v. Pertuzumab + trastuzumab vi Faricimab | 12% | 5% | |||
| All diagnostic kits and reagents | 12% | 5% | |||
| Surgical rubber gloves or medical examination rubber gloves | 12% | 5% | |||
| Instruments and appliances used in medical, surgical, dental or veterinary sciences, including scintigraphic apparatus, other electro-medical apparatus and sight-testing instruments | 12% | 5% | |||
| Thermometers for medical, surgical, dental or veterinary usage | 18% | 5% | |||
| Instruments and apparatus for medical, surgical, dental or veterinary uses for physical or chemical analysis | 18% | 5% | |||
| 6 | Goods | EDUCATION | Erasers | 5% | Nil |
| Maps and hydrographic or similar charts of all kinds, including atlases, wall maps, topographical plans and globes, printed | 12% | Nil | |||
| Pencil sharpener,Exercise book, graph book, & laboratory note book and notebook | 12% | Nil | |||
| Mathematical boxes, geometry boxes and colour boxe | 12% | 5% | |||
| 7 | Goods | COMMON MAN ITEM | Tooth powder | 12% | 5% |
| Hand bags and shopping bags, of cotton,Umbrellas and sun umbrellas (including walking-stick umbrellas, garden umbrellas and similar umbrellas | 12% | 5% | |||
| Bicycles and other cycles (including delivery tricycles), not motorised | 12% | 5% | |||
| Furniture wholly made of bamboo, cane or rattan | 12% | 5% | |||
| Talcum powder, Face powder | 18% | 5% | |||
| Toilet Soap (other than industrial soap) in the form of bars, cakes, moulded pieces or shapes | 18% | 5% | |||
| Tooth brushes including dental-plate brushes | 18% | 5% | |||
| Footwear of sale value not exceeding Rs.2500 per pair | 12% | 5% | |||
| 8 | Goods | CONSUMER ELECTRONICS | Air-conditioning machines, comprising a motor driven fan and elements for changing the temperature and humidity, including those machines in which the humidity cannot be separately regulated | 28% | 18% |
| Television sets (including LCD and LED television); Monitors and projectors, not incorporating television reception apparatus; reception apparatus for television, whether or not incorporating radio-broadcast receiver or sound or video recording or reproducing apparatus, set top box for television and Television set (including LCD and LED television). | 28% | 18% | |||
| 9 | Goods | PAPER SECTOR | Uncoated paper and paperboard used for exercise book, graph book, laboratory notebook and notebooks | 12% | Nil |
| Boxes, pouches, wallets and writing compendiums, of paper or paperboard, containing an assortment of paper stationery | 12% | 5% | |||
| Cartons, boxes and cases of, a. Corrugated paper or paper boards; or b. Non-corrugated paper or paper boar | 12% | 5% | |||
| 10 | Goods | TRANSPORTATION SECTOR | Motor vehicles for the transport of ten or more persons, including the driver [other than buses for use in public transport, which exclusively run on Bio-fuels] | 28% | 18% |
| Three wheeled vehicle | 28% | 18% | |||
| Petrol, Liquefied petroleum gases (LPG) or compressed natural gas (CNG) driven motor vehicles of engine capacity not exceeding 1200cc and of length not exceeding 4000 mm. | 28% | 18% | |||
| Diesel driven motor vehicles of engine capacity not exceeding 1500 cc and of length not exceeding 4000 mm | 28% | 18% | |||
| Bodies (including cabs), for the motor vehicles of headings 8701 to 8705 | 28% | 18% | |||
| Motorcycles of engine capacity (including mopeds) and cycles fitted with an auxiliary motor, with or without side-cars, of an engine capacity not exceeding 350cc; side cars | 28% | 18% | |||
| Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars, other than those mentioned at Sr. Nos.4,5,6,7,8 and 9 of above table [wherein 28% to 18% is mentioned] | 28% | 40% | |||
| Motor cycles of engine capacity exceeding 350 cc | 28% | 18% | |||
| 11 | Goods | WOOD SECTOR | Wood wool; wood flour,Bamboo wood building joinery | 12% | 5% |
| Bamboo wood building joinery | 12% | 5% | |||
| 12 | Goods | MISCELLANEOUS ITEM | Granite blocks,Marble and travertine block | 12% | 5% |
| Revolvers and pistols, other than those of heading 9303 or 9304 | 28% | 40% | |||
| 13 | Goods | CONSTRUCTION SECTOR | Sand lime bricks or Stone inlay work | 12% | 5% |
| Portland cement, aluminous cement, slag cement, super sulphate cement and similar hydraulic cements, whether or not coloured or in the form of clinkers | 28% | 18% | |||
| 14 | Services | TRANSPORTATION SECTOR | Supply of Air transport of passengers in other than economy class | 12% with ITC | 18% with ITC |
| Supply of Passenger transport by any motor vehicle where fuel cost is included | 5% with ITC of input services (in the same line of business) | 5% with ITC of input services (in the same line of business) | |||
| 12% with ITC | 18% with ITC | ||||
| Supply of transport of goods in containers by rail by any person other than Indian Railways | 12% with ITC | 5% without ITC | |||
| 18% with ITC | |||||
| Supply of Transport of goods by GTA | 5% without ITC (RCM/FCM) | 5% without ITC (RCM/FCM) | |||
| 12% with ITC | 18% with ITC | ||||
| Supply of Renting of any motor vehicle (with operator) of any motor vehicle designed to carry passengers where the cost of fuel is included in consideration | 5% with ITC of input services (in the same line of business) | 5% with ITC of input services (in the same line of business) | |||
| 12% with ITC | 18% with ITC | ||||
| Supply of Renting of goods carriage (with operator) where fuel cost is included in consideration | 12% with ITC | 5% with ITC of input services (in the same line of business) | |||
| 18% with ITC | |||||
| 15 | Services | JOB WORK SECTOR | Supply of services by way of job work in relation to umbrella | 12% with ITC | 5% with ITC |
| Supply of job work services or any treatment or process in relation to printing of all goods falling under Chapter 48 or 49, which attract GST @(12%) 5% | 12% with ITC | 5% with ITC | |||
| Supply of job work in relation to bricks which attract GST at the rate of 5% | 12% with ITC | 5% with ITC | |||
| Supply of job-work services in relation goods falling under Chapter 30 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975) (pharmaceutical products) | 12% with ITC | 5% with ITC | |||
| Supply of job-work services in relation to Hides, skins and leather falling under Chapter 41 in the First Schedule to the Customs Tariff Act, 1975 | 12% with ITC | 5% with ITC | |||
| Supply of job-work not elsewhere covered (residual entry) | 12% with ITC | 18% with ITC | |||
| 16 | Services | CONSTRUCTION SECTOR | Composite supply of works contract and associated services, in respect of offshore works contract relating to oil and gas exploration and production in offshore area | 12% with ITC | 18% with ITC |
| Composite supply of works contract involving predominantly earth work (that is, constituting more than 75per cent. of the value of the works contract) provided to Government | 12% with ITC | 18% with ITC | |||
| Composite supply of works contract provided by a sub-contractor to the main contractor providing services at Sl. No. 2 above to Government | 12% with ITC | 18% with ITC | |||
| 17 | Services | Other services | Supply of “hotel accommodation” having value of supply of a unit of accommodation less than or equal to seven thousand five hundred rupees per unit per day or equivalent | 12% with ITC | 5% with ITC |
| (i) Services by way of admission to exhibition of cinematograph films where price of admission ticket is one hundred rupees or less | 12% with ITC | 5% with ITC | |||
| (ii) Admission to casinos, race clubs, any place having casinos or race clubs, or sporting events like the IPL. | 28% With ITC | 40% With ITC | |||
| Beauty and physical well-being services falling under group 99972 [This service is currently taxed at the rate of 18% with ITC as this is covered under SAC 9997] | 18% with ITC | 5% without ITC | |||
| Specified Actionable Claims (betting, casinos, gambling, horse racing, lottery, online money gaming) defined as goods | 28% With ITC | 40% with ITC | |||
| 18 | Services | LIFE AND HEALTH INSURANCE | (i) All individual health insurance, along with reinsurance thereof | 18% with ITC | Exemption |
| (ii) All individual life insurance, along with reinsurance thereof | 18% with ITC | Exemption |
B-MEASURES FOR FACILITATION OF TRADE
- 1. Sanction of risk-based provisional refund to facilitate refund claims on account of zero-rated supply of goods or services or both (i.e. export of goods or services or both or supply to a Special Economic Zone developer/unit for authorised operations.):
- a)The Council recommended amendment in rule 61(2) of CGST Rules,2017 to provide for sanctionof 60% of refund claimedas provisional refund by the proper officer on the basis of identification and evaluation of risk by the system.
- b) However, in exceptional cases, the proper officer may for reasons to be recorded in writing,instead of grantingrefund on provisional basis proceed with the detailed scrutiny of the refundclaim.
- c) This provision shall be operationalised from 1st November, 2025.
2. Proposal for Risk-Based Provision Sanction of refunds arising out of inverted duty structure (IDS):
a) The Council recommended amending section 54(6) of the CGST Act, 2017, to provide for sanction of 60% of refund claimed on provisional basis, in cases arising outof inverted duty structure, on similar lines as is presently available for refund in respect of zero-rated supply.
b) This shall be operationalized from 1 November, 2025.
3. Amendment in CGST Act to provide for GST Refunds in respect of low value export consignments:
a) The Council recommended amendment to section54(14) of the CGST Act, 2017 so as to remove the threshold limit for refunds arising out of exports made with payment of tax.
b) This will particularly help small exporters making exports through courier, postal mode etc.
4. Simplified GST Registration Scheme for Small and Low-Risk Businesses:
a) In order to simplify the registration process, the Council has recommended the introduction of an optional simplified GST registration scheme wherein registration shall be granted on an automated basis within three working days from the date of submission of application in case of low risk applicants
b)Applicable to applicants based on their own assessment who determine that their output tax liability on supplies to registered persons will not exceed Rs. 2.5 lakh per month(inclusive of CGST, SGST/UTGST and IGST).
c) The scheme will provide for voluntary optinginto and withdrawal from the scheme.
d) This shall be operationalized from 1stNovember, 2025.
5. Introduction of Simplified Registration Scheme for small suppliers supplying through electronic commerce operators:
a) The Council approved in-principle, the concept of a simplified GST registration mechanismfor small suppliers making supplies through e-commerce operators (ECOs) across multiple States facing challengesin maintaining principal place of business in each State as currently required under the GST framework. The detailedmodalities for operationalizing the said scheme will be placed before GST Council.
6. Amendment in place of supply provisions for intermediary services under section 13(8) of the IGST Act:
a) The Council recommended omission of clause (b) of section 13(8) of IGST Act 2017. Accordingly, after the said amendment, the place of supply for “intermediary services” will be determined as per the default provision undersection 13(2)of the IGST Act, 2017 i.e. the location of the recipient of such services.
- Amendment of section15 and section 34 of CGST Act, 2017 in respect of Post Sale Discount:
The Council has recommended :
i) To omit section 15(3)(b)(i) of CGST Act, 2017 thereby omitting the requirement of establishing the discount in termsof an agreement entered into before or at the time of such supply and specifically linking of the same with relevant invoices,
ii) To amend section 15(3)(b) of CGST Act, 2017 to provide that discount should be granted through a credit note issue under section 34 of the CGST Act and to correspondingly amend section 34 to include a reference to section 15(3)(b), so as to provide for reversal of Input tax credit by the recipient in case where a post-sale discount is given and value of supply is reduced through GST Credit note.
iii) To rescind circular No.212/6/2024-GST dated 26 th June 2024 which provided a mechanism ensuring compliance of conditions of Section 15(3)(b)(ii) of the CGST Act, 2017 by the suppliers.
- Issuance of circular on certain issues pertaining to Post Sale Discount:
The Council recommended to provide clarification on certain issues pertaining to Post Sale Discount namely,
i) non-reversal of Input Tax Credit on account of post-sale discount through financial/commercial credit note;
ii) treatment of the post-sale discount provided by manufacturer to the dealer as additional consideration, in the transaction between dealer and end-customer;
iii) treatment of post-sale discount as consideration lieu of promotional activities etc. performed by the dealer.
C. OTHER MEASURES PERTAINING TO LAW G PROCEDURE
The Council recommended retail sale price-based valuation under GST for Pan Masala, Cigarettes, Gutkha, Chewing Tobacco, Zarda, Scented tobacco and Unmanufactured Tobacco.
Note: The recommendations of the GST Council have been presented in this release containing major item of decisions in simple language for information of the stakeholders. The same would be given effect through the relevant circulars/ notifications/ law amendments which alone shall have the force of law.