Key Outcomes of the 56th GST Council Meeting
The 56th GST Council meeting, held on September 3, 2025, in New Delhi, introduced significant reforms, including a simplified two-tier GST rate structure of 5% and 18%, replacing the previous 12% and 28% slabs. Several goods and services saw rate adjustments, with some daily essentials and healthcare items becoming cheaper, while certain demerit goods experienced hikes. Key outcomes also included GST exemption for life and health insurance, simplification of GST registration, and the operationalization of the Goods and Services Tax Appellate Tribunal (GSTAT).
Key Outcomes of the 56th GST Council Meeting
The 56th Goods and Services Tax (GST) Council convened in New Delhi on September 3, 2025. This meeting, held after a six-month hiatus, addressed various long-standing agenda points. Key decisions aligned with the government's vision for future GST reforms, including the approval of a simplified two-tier GST rate structure comprising 5% and 18% slabs, effectively eliminating the previous 12% and 28% categories. Consequently, the Central Board of Indirect Taxes and Customs (CBIC) issued notifications on September 17, 2025, detailing all modifications to GST rates, exemptions, and amendments to the Central Goods and Services Tax (CGST) Rules. The majority of these new GST rates and rules are scheduled to take effect from September 22, 2025. This article outlines the significant highlights from the 56th GST Council meeting.
Important Decisions from the Meeting
- The 56th GST Council meeting took place in New Delhi on September 3, 2025.
- On August 15, 2025, India's Prime Minister Narendra Modi declared the initiation of Next-Generation GST reforms during the 79th Independence Day celebration.
- Notifications 09/2025-CTR to 17/2025-CTR and 13/2025-Central Tax and 14/2025-Central Tax, issued on September 17, 2025, formalize these changes.
- The GST Council endorsed next-generation reforms, which involve eliminating the 12% and 28% tax slabs by reassigning items to either the 5% or 18% categories. A new 40% tax slab was introduced for demerit goods, and inverted tax structures on products like fertilizers and fabrics were rectified. These GST rate adjustments become effective from September 22, 2025, with the exception of changes concerning tobacco and related products.
- The agenda also included potential discussions on September 4, 2025, regarding the introduction of pre-filled returns and automated GST refunds.
Official Notifications from the 56th GST Council Meeting
Central Tax Notifications
| Notification | Description | Summary |
|---|---|---|
| 13/2025- Central Tax | Central Goods and Services Tax (Third Amendment) Rules, 2025 | • Rule 31A(2): Valuation factor changed by substituting 128 with 140 (impacts value of supply of lottery). • Rule 39(1A): Clarifies reverse charge references to CGST Act section 9 and IGST Act section 5(3) and 5(4), effective 1st April 2025. • Rule 91(2): Provisional refund order in FORM GST RFD-04 within 7 days based on risk; officer may skip provisional refund and proceed under rule 92; no revalidation of RFD-04; effective 1st October 2025. • Appeals: CGST Rule 110 updated to use new FORM GST APL-02A; new rule 110A enables single-member bench transfers where no question of law; ties to section 109(8) threshold of INR 50 lakh; rule 111 aligned; rule 113(2) introduces summary order FORM GST APL-04A; • Annual return changes (GSTR-9): New ITC rows (A1, A2, H1, etc.), clearer placement of reclaimed ITC with references to CGST Rules 37, 37A, 38, 39, 42, 43; revised Part V timing notes for FY 2024-25 onward, applicable from date of notifying in official gazatte. • Reconciliation statement (GSTR-9C): adds fields for supplies covered by section 9(5) of CGST Act; late fee reference aligned to section 47(2); clarifies “payable” vs “paid”, applicable from date of notifying in official gazatte. • Commencement: Applicable from 22nd September 2025 for all except, unless otherwise stated. |
| 14/2025- Central Tax | Persons not eligible for provisional refund under section 54(6) of CGST Act | • Provisional refund not allowed under section 54(6) to: 1) any registered person without Aadhaar authentication per rule 10B; 2) persons supplying specified goods: areca nuts (0802 80), pan masala (2106 90 20), tobacco and manufactured tobacco substitutes (Chapter 24), and essential oils (3301). • Effective from 1st October 2025. |
Central Tax Rate Notifications
| Notification | Description | Summary |
|---|---|---|
| 09/2025-CT rate | Revised tax rates and schedules | Supersedes 01/2017-CTR to notify GST rates on various goods by detailed schedules. This includes major slab restructuring and new product/sector coverage. Schedule I (5%): Essential goods (food grains, dairy, pulses, spices, medicines, renewable energy) Schedule II (18%): Processed foods, spirits, cement, ores, sports goods, toys, art, manufactured products Schedule III (40%): Soft drinks, luxury vehicles, yachts, aircraft, gambling Schedule IV (3%): Gold/precious metal jewellery, silver coins, handcrafted idols, platinum products, semi-processed gems, handicrafts Schedule V (0.25%) & Schedule VI (1.5%): Rough diamonds, industrial diamonds, uncut gemstones Schedule VII (28%): Pan masala, Tobacco, cigarettes These changes are to be effective from 22nd September 2025 |
| 10/2025-CT rate | Revised exemption list for goods | Supersedes 02/2017-CTR to update the list of goods exempt from central GST, expands exemptions especially for agricultural, food, health, and education items. Also, defines terms such as ‘pre-packaged and labelled’, “unit container” and clarifies the scope of items such as the drugs in Annexure I & musical instruments in Annexure II. This notification is to be effective from 22nd September 2025 |
| 11/2025-CT rate | GST rate amendment for petroleum and coal bed methane operations | The rate is changed from the earlier 12% to 18%. This amendment will be effective from 22nd September 2025. |
| 12/2025-CT rate | Amendment to used motor vehicles | The notification chnages the reference for used motor vehicles (pertol/ deisel/ SUVs) from the older schedule (Schedule IV of 01/2017) to the updated schedules (Schedule II or III of 09/2025). This notification is to be effective from 22nd September 2025 |
| 13/2025-CT rate | Reduced GST rate on handmade items and handicrafts, etc. | Substitutes the previous notification 21/2018-CTR. It replaces the entire GST rate table. The new rates prescribed are 5% GST for a wide array of handicraft items including woodcraft, embroidery, coir, pottery, glassware, bamboo and cane crafts, paintings, sculptures, etc. Additionally, silver filigree work, handmade imitation jewellery and natural seed/bead jewellery attract a concessional rate of 3%. This notification is effective from 22nd September 2025. |
| 14/2025-CT rate | GST rate notified for bricks/tiles | Notifies GST at 12% for fly ash bricks, building bricks, fossil bricks, earthen/roofing tiles; clarifies product codes and coverage. This notification is effective from 22nd September 2025. |
| 15/2025-CT rate | Comprehensive service rate changes | Amends the GST rates on various services under the principal Notification 11/2017-CTR, as follows- 1) New rate 18%- Transport services (non-Indian railways container transport, multimodal transport), courier and postal services, local delivery through e-commerce operators, professional and business services, manufacturing job work. (Previously 12% GST). 2) New rate 5%- Tailoring services, job work for food, textiles, printing educational materials, brick manufacturing, handicrafts, beauty and cleaning services. 3) New rate 1.5%- Job work on diamonds. Tightened rules on input tax credit claims with clear exceptions and illustrations. This notification is effective from 22nd September 2025 It is also clarified with respect to renting, that ‘premises’ means a place from where hotel accommodation services are being supplied or are to be supplied, with effect from 1st April 2025. |
| 16/2025-CT rate | Exemptions to services- Removal of Local delivery by or through ECO & including individual health/life insurance | - Amends the definition of GTA given under the principal Notification 12/2017-CTR to exclude local delivery by or through ECO (e-commerce operator) - Inserts exemptions for individual health/life insurance & reinsurance - Clarifies that certain local delivery by or through e-commerce operator are excluded from certain exemptions - Defines ‘group’ and ‘health insurance business’. - This notification is effective from 22nd September 2025 |
| 17/2025-CT rate | Reverse charge on local delivery service by ECO | Adds a clause in the principal notification 17/2017-CTR, specifies that the e-commerce operator shall pay GST under RCM on services by way of local delivery except where the person supplying such services through the electronic commerce operator is liable for mandatory GST registration under section 22(1) This notification is effective from 22nd September 2025 |
Key Outcomes and Announcements
- The Finance Minister stated that the reforms prioritized ordinary citizens, noting a rigorous review of taxes on essential daily items, which largely resulted in significant rate reductions.
- The GST Council endorsed GST exemption for both life and health insurance.
- Tobacco and related products will maintain their current 28% GST rate until compensation liabilities, including loans and associated interest, are settled.
- All other GST rate adjustments for goods and services, excluding tobacco and its derivatives, are effective from September 22, 2025.
- The GST registration process is to be simplified.
- The Council advised transitioning to a two-tier GST rate system, featuring an 18% standard rate and a 5% merit rate, alongside a 40% demerit rate for specific items.
- During a media briefing, the Secretary affirmed that no changes were proposed for the monthly GST return filing procedure.
- The Goods and Services Tax Appellate Tribunal (GSTAT) is scheduled to become operational in 2025, with its Principal Bench also functioning as the National Appellate Authority for Advance Ruling. The following deadlines have been set:
- Appeals must be accepted by September 30, 2025.
- Hearings are to commence by December 31, 2025.
- The deadline for filing backlog appeals is June 30, 2026.
- Effective November 1, 2025, the CBIC will introduce an updated system for issuing 90% provisional refunds for inverted duty structures and zero-rated supplies of goods and services. This system will rely on data analysis and risk assessment.
- The GST Council suggested eliminating the threshold for tax-paid export refunds, thereby simplifying compliance for exporters using postal and courier services.
- CGST Sections 15 and 34 have been modified. The previous requirement to link discounts to agreements made at or before the time of supply and to specific invoices has been removed. Both sections now mandate the recipient to reverse input tax credit if a post-sale discount is provided and the supply value is lowered via a supplier's GST credit note. A GST Circular detailing this will be released shortly.
- Moving forward, the place of supply for intermediary services will adhere to the default rule under IGST Section 13(2), designating the recipient's location as the place of supply. This change allows Indian exporters to claim export benefits.
- The GST Council approved a simplified GST registration scheme for small suppliers operating through e-commerce platforms.
- The GST Council also advocated for valuing tobacco and its products based on retail sale price rather than transaction value.
GST Rate Reductions
| Category | Items | From (%) | To (%) |
|---|---|---|---|
| Daily Essentials | Hair Oil, Shampoo, Toothpaste, Toilet Soap Bar, Tooth Brushes, Shaving Cream | 18 | 5 |
| Butter, Ghee, Cheese & Dairy Spreads | 12 | 5 | |
| Pre-packaged Namkeens, Bhujia & Mixtures | 12 | 5 | |
| Utensils | 12 | 5 | |
| Feeding Bottles, Napkins for Babies & Clinical Diapers | 12 | 5 | |
| Sewing Machines & Parts | 12 | 5 | |
| Uplifting Farmers & Agriculture | Tractor tyres & parts | 18 | 5 |
| Small tractors (capacity < 1800 cc) | 12 | 5 | |
| Specified 12 bio-Pesticides and micro-Nutrients | 12 | 5 | |
| Drip Irrigation System & Sprinklers | 12 | 5 | |
| Agricultural, Horticultural or Forestry Machines (Soil Preparation, Cultivation, etc.) | 12 | 5 | |
| Healthcare Sector | Individual Health & Life Insurance | 18 | Exempted |
| Thermometer | 18 | 5 | |
| Medical Grade Oxygen | 12 | 5 | |
| All Diagnostic Kits & Reagents | 12 | 5 | |
| Glucometer & Test Strips | 12 | 5 | |
| Corrective Spectacles | 12 | 5 | |
| 33 drugs and medicines, listed in the press release | 12 | Nil | |
| Agalsidase Beta, Imiglucerase and Eptacog alfa activated recombinant coagulation factor VIIa drugs | 5 | Nil | |
| Drugs and medicines such as Faricimab, Pertuzumab, Fluticasone Furoate + Umeclidinium + Vilanterol FF/UMEC/VI, Ocrelizumab, and Brentuximab Vedotin | 12 | 5 | |
| Automobiles | Petrol & Petrol Hybrid, LPG, CNG Cars (≤1200cc & ≤4000mm) | 28 | 18 |
| Diesel & Diesel Hybrid Cars (≤1500cc & ≤4000mm) | 28 | 18 | |
| Three wheelers | 28 | 18 | |
| Motorcycles (≤350cc) | 28 | 18 | |
| Motor Vehicles for the transport of goods | 28 | 18 | |
| Education | Maps, Charts & Globes | 12 | Nil |
| Pencils, Sharpeners, Crayons & Pastels | 12 | Nil | |
| Exercise Books & Notebooks | 12 | Nil | |
| Eraser | 5 | Nil | |
| Electronic Appliances | Air Conditioners | 28 | 18 |
| Television (including LED & LCD TVs) | 28 | 18 | |
| Monitors & Projectors | 28 | 18 | |
| Dish Washing Machines | 28 | 18 |
GST Rate Increases
| Category | Item description | From (%) | To (%) |
|---|---|---|---|
| Mining | Coal, lignite, peat | 5 | 18 |
| Sin goods | Tobacco/pan masala* | 28 | 40 |
| Aerated waters | 28 | 40 | |
| Caffeinated beverages | 28 | 40 | |
| Carbonated beverages of fruit drinks / with fruit juice | 28 | 40 | |
| Other non‑alcoholic beverages | 18 | 40 | |
| Motor cars and larger hybrids (beyond small‑car thresholds) | 28 | 40 | |
| Motorcycles exceeding 350cc | 28 | 40 | |
| Aircraft for personal use | 28 | 40 | |
| Yachts and vessels for pleasure/sports | 28 | 40 | |
| Smoking pipes and cigarette/cigar holders | 28 | 40 | |
| Revolvers & pistols | 28 | 40 | |
| Admission to casinos, race clubs, and sporting events like IPL | 28% with ITC | 40% with ITC | |
| Licensing of bookmakers by race clubs | 28% with ITC | 40% with ITC | |
| Specified actionable claims (betting, casinos, gambling, horse racing, lottery, online money gaming) | 28% with ITC | 40% with ITC | |
| Leasing/rental without operator of goods attracting 40% GST | 28% with ITC | 40% with ITC | |
| Paper sector | Dissolving‑grade chemical wood pulp | 12 | 18 |
| Various papers/paperboards, other than exercise‑book paper | 12 | 18 | |
| Textiles | Apparel/Made‑ups > Rs 2,500 per piece | 12 | 18 |
| Quilted/cotton quilts and quilted products more than Rs.2,500 per piece | 12 | 18 |
- Effective from 22nd Sept, 2025 vide CGST-rate notfifications 09/2025 to 17/2025 dated 17th September 2025.
Anticipated Discussions at the 56th GST Council Meeting
GST Rate Rationalization
Expected from the 56th GST Council meeting was a crucial restructuring and rationalization of the GST rate framework. The Group of Ministers (GoM) responsible for rate rationalization, in collaboration with the fitment committee, had postponed submitting its report during the 55th GST Council meeting in December 2024. In February 2025, Sanjay Agarwal, Chairman of the Central Board of Indirect Taxes and Customs (CBIC), stated that socio-economic and revenue considerations presented challenges for the GoM and fitment committee in their GST rate rationalization efforts. He further emphasized the necessity for the GoM to achieve consensus on proposed GST rate rationalization recommendations. Media reports indicated that the GoM endorsed the Centre's plan to reallocate items from the 12% and 28% GST rate slabs to either the 5% or 18% categories. The introduction of a 40% GST slab for demerit goods was also under consideration, with the GST Council expected to issue final recommendations. It was speculated that the GoM would also propose eliminating inverted tax structures common in sectors like textiles, footwear, fertilizers, paper, and packaging. The GST Council was expected to suggest a gradual approach to GST rate rationalization, providing taxpayers sufficient time to adapt to changes and prevent anti-profiteering concerns.
Review of Compensation Cess
The GST Council was poised to determine whether to prolong or terminate the imposition, collection, and distribution of compensation cess to states. Presently, the Council is responsible for repaying back-to-back loans to cover shortfalls in GST Compensation. Media sources suggested a potential replacement of the compensation cess with a health and clean energy cess post-March 2026, a change that would necessitate a constitutional amendment. The compensation cess levy and collection were extended until March 31, 2026. A GoM was established to investigate the feasibility of a new tax to supersede the compensation cess upon its conclusion. Led by Minister of State for Finance, Pankaj Chaudhry, the GoM was scheduled to submit its report by June 30, 2025.
Proposed GST Rate Changes
Taxation of certain items under GST remained under consideration, including GST on health insurance. During its 55th meeting, the GST Council extended the deadline for the GoM to examine GST on insurance premiums. The 56th GST Council meeting was expected to discuss the taxation of both health and life insurance under GST. Currently, an 18% GST rate applies to insurance premiums, with a proposal for exemption under consideration. Speculation suggested that the 56th GST Council might standardize the GST levy on commercial drones, potentially recommending a reduction in the GST rate for drones from 28% to 5%. The GST taxation of drones equipped with detachable cameras had also been a significant point of contention. This initiative aims to clarify the classification of goods within the Unmanned Aircraft System (UAS). Drones for personal use incur a 28% GST rate, while those for business purposes are charged a lower 5% under HSN code 8806. Tax authorities have predominantly applied an 18% GST to these drones, categorizing them as camera equipment rather than aircraft. Industry specialists argue that drones should be classified according to their primary function of airborne mobility, rather than their additional accessories. The Council might also review GoM proposals concerning GST on virtual digital assets, the practical application of CGST Section 11A (allowing waiver of GST recovery for uncollected or under-collected amounts due to common trade practices in certain sectors), and specific clarifications for e-commerce, real estate, and gaming industries. The 56th GST Council meeting is significant for numerous industries, potentially resolving several long-standing issues.
Official Press Release of the 56th GST Council Meeting
Access the full press release from the Finance Ministry, released following the press conference on September 3, 2025.