56th GST Council Updates: GST Rate Revisions 2025
56th GST Council Updates: GST Rate Revisions 2025
The 56th GST Council meeting was held on 3rd September 2025 at Sushma Swaraj Bhavan, New Delhi, under the chairpersonship of Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman.
The Council made important recommendations regarding changes in GST rates for goods and services, relief measures for individuals and businesses, and measures to facilitate trade under GST. FAQs were also issued to clarify the key points.
This blog summarises the key recommendations, along with practical guidance for businesses and CAs.
Implementation Timeline
The Council has decided that most of the GST rate changes for goods and services will be effective from 22nd September 2025, with a few exceptions for certain sin goods.
- Services: All revised GST rates on services will apply from 22nd September 2025.
- Goods: All goods except pan masala, gutkha, cigarettes, chewing tobacco (like zarda), unmanufactured tobacco, and bidi will follow the revised GST rates from 22nd September 2025.
- Sin goods exception: These items will continue at the current rates until loan and interest obligations under the compensation cess account are fully discharged.
- Provisional refunds: CBIC will start administratively implementing 90% provisional refunds for inverted duty structures, using system-based risk analysis.
Why it matters: Businesses can plan inventory, invoicing, and pricing strategies ahead of the effective date. CAs can advise clients on transitional provisions to avoid compliance issues.
GST Rate Changes: Before vs After GST Rates by Sector
The GST Council has rationalized rates across sectors to simplify compliance, reduce household costs, and ensure fairness in taxation. Here’s an overview of key changes:
1. Daily Essentials
Key Items | Old Rate | New Rate | Impact |
Hair Oil, Shampoo, Toothpaste, Soap, Shaving Cream | 18% | 5% | FMCG & personal care products become cheaper, higher affordability |
Butter, Ghee, Cheese & Dairy Spreads | 12% | 5% | Reduced food inflation, relief for households |
Pre-packaged Namkeens, Bhujia & Mixtures | 12% | 5% | MRP correction, savings for consumers |
Utensils | 12% | 5% | Lower household kitchenware costs |
Feeding Bottles, Napkins for Babies & Clinical Diapers | 12% | 5% | Lower cost of baby care essentials |
Sewing Machines & Parts | 12% | 5% | Support to small-scale tailoring & textile sector |
2. Farmers & Agriculture
Key Items | Old Rate | New Rate | Impact |
Tractor Tyres & Parts | 18% | 5% | Reduced cost of ownership & maintenance |
Tractors | 12% | 5% | Lower capital investment for farmers |
Specifies Bio-Pesticides, Micro-Nutrients | 12% | 5% | Boost to sustainable farming |
Drip Irrigation Systems & Sprinklers | 12% | 5% | Affordable irrigation, water-use efficiency |
Agricultural, Horticultural or Forestry Machines for Soil Preparation, Cultivation, Harvesting & Threshing | 12% | 5% | Encourages farm mechanization |
3. Healthcare & Insurance
Key Items | Old Rate | New Rate | Impact |
Individual Health & Life Insurance | 18% | Nil | Lower premiums, higher penetration |
Thermometer | 18% | 5% | Affordable diagnostic tools |
Medical Grade Oxygen | 12% | 5% | Critical healthcare relief |
Diagnostic Kits & Reagents | 12% | 5% | Cheaper medical testing |
Glucometer & Test Strips | 12% | 5% | Affordable diabetes care |
Corrective Spectacles | 12% | 5% | Reduced eye-care expenses |
4. Automobiles
Key Items | Old Rate | New Rate | Impact |
Petrol & Petrol Hybrid, LPG, CNG, Cars (not exceeding – 1200cc & 4000mm) | 28% | 18% | Affordable entry-level cars |
Diesel & Diesel Hybrid Cars (not exceeding – 1500cc & 4000mm) | 28% | 18% | Boost to middle-class buyers |
3 Wheeled Vehicles | 28% | 18% | Lower transport cost for auto drivers |
Motorcycles (350cc & below) | 28% | 18% | Bikes become more affordable |
Motor Vehicles for Goods Transport | 28% | 18% | Reduced logistics & supply chain cost |
5. Education
Key Items | Old Rate | New Rate | Impact |
Maps, Charts & Globes | 12% | Nil | Education made more accessible |
Pencils, Sharpeners, Crayons & Pastels | 12% | Nil | Relief to students & parents |
Exercise Books & Notebooks | 12% | Nil | Lower schooling expenses |
Erasers | 5% | Nil | Basic stationery cost cut |
6. Electronic Appliances
Key Items | Old Rate | New Rate | Impact |
Air Conditioners | 28% | 18% | Middle-class affordability improves |
Television (above 32”) (including LED & LCD TVs) | 28% | 18% | Boost to consumer electronics demand |
Monitors & Projectors | 28% | 18% | Affordable IT & education infra |
Dish Washing Machines | 28% | 18% | Encourages household adoption |
Retail Sale Price (RSP) Changes
Certain sin goods (pan masala, gutkha, cigarettes, bidi, unmanufactured tobacco, chewing tobacco like zarda) will now be taxed based on Retail Sale Price (RSP) instead of transaction value.
- Why: Ensures correct GST collection on goods that are widely distributed and priced variably.
- Special exemption: Ad hoc IGST and compensation cess exemption granted on a new armoured sedan imported for the President of India.
ITC, Stock & Invoicing Rules
- Carry Forward ITC: Existing credits remain usable.
- Exempt Supplies: Newly exempt items after 22 Sept require ITC reversal.
- Stock Already Held: Supplies made post-22 Sept must follow new GST rates, even if purchased earlier.
- Imports: IGST will follow revised rate notifications.
Why it matters: Proper ITC and stock management ensures compliance and avoids penalties.
Compliance & Litigation Updates
- Refunds: CBIC will implement 90% provisional refunds for inverted duty structures, using system-driven risk evaluation.
- GSTAT:
- Operational by the end of September 2025
- Hearings start end of December 2025
- Backlog appeals accepted until 30 June 2026
- GSTAT also serves as the National Appellate Authority for Advance Ruling
Impact: Faster dispute resolution and greater clarity on advance rulings help businesses plan confidently.
Action Checklist for Businesses & CAs
- Update GST software & rate masters to reflect new rates.
- Advise clients on ITC reversals & exemptions for newly exempt items.
- Prepare refund applications for inverted duty credits.
- Revise contracts, MRPs, and quotations to reflect updated GST rates.
- Prepare for GSTAT appeals.
- Communicate rate changes to clients and consumers.
- Ensure automatic GST registration for eligible applicants within 3 working days.
Final Word
The 56th GST Council meeting marks a significant step toward simplifying the GST framework. Essentials and healthcare items have become more affordable, while luxury and sin goods are now taxed at higher rates to ensure fairness.
For businesses, CAs, and tax practitioners, these changes mean:
- Updating IT systems and rate masters
- Advising clients on ITC reversals and exemptions
- Revising pricing, contracts, and quotations
- Preparing for faster dispute resolution via GSTAT
That’s all from us for now. If you have any queries or need further clarification regarding these GST changes, feel free to comment below.
Staying informed and proactive is key — the revised GST structure is simpler, fairer, and future-ready.
FAQs
Ans: Effective 22nd September 2025, except for certain sin goods.
Ans: No, existing e-way bills remain valid.
Ans: CBIC provides 90% provisional refunds, automated in Saral GST.
Ans: Yes, they cannot declare themselves as ‘specified premises’ and cannot opt for 18% GST with ITC.
Ans: Operational by end of September 2025, hearings from end of December 2025, backlog appeals until 30 June 2026.
