04-Sep-2025 🏛️ Recommendation of 56th Meeting of the GST Council held at New Delhi, 03.09.2025
#gstcouncil #gstreforms #indiaeconomy #businessgrowthThe 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.
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 Juice 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
coal5% 18% Peat (including peat litter), whether or not agglomerated 5% 18%