56th GST Council Meeting: Key Highlights

The 56th GST Council Meeting, chaired by Finance Minister Nirmala Sitharaman on September 3–4, 2025, in New Delhi, has delivered historic GST reforms. Announced earlier as part of the Prime Minister’s Next-Generation GST roadmap (15th August 2025), these changes mark the most sweeping overhaul of India’s indirect tax system since GST’s launch in 2017.

The new rates will take effect from September 22, 2025.

(except for tobacco and pan masala products)

 

Highlights of the 56th GST Council Meeting

At the core of the reforms is a simplified GST structure:

Ø  The 12% and 28% slabs have been removed, with items moved into the 5% merit rate or the 18% standard rate.

Ø  A special 40% de-merit rate has been introduced for luxury and sin goods.

Ø  Inverted duty structures in key sectors such as fertilisers and textiles have been corrected.

Ø  Beyond rate changes, the Council has also approved several structural and compliance-related reforms:

ü  Retail Sale Price (RSP)-based valuation will now apply for pan masala, gutkha, cigarettes, and other tobacco products instead of transaction value.

ü  Clarifications issued for services – a standalone restaurant cannot classify itself as “specified premises” to charge GST at 18% with ITC.

ü  Valuation rules for lotteries have been aligned with rate changes.

ü  Automatic GST registration within three working days for low-risk applicants and those with limited ITC claims (benefiting nearly 96% of new applicants).

ü  Provisional refunds: 90% refund on claims from inverted duty structure and zero-rated supplies will be granted based on automated, risk-based evaluation from 1st November 2025.

ü  Refunds on low-value export consignments (via courier and post) will no longer face threshold restrictions.

ü  Simplified registration for small e-commerce suppliers across states has been approved in principle.

ü  Place of supply provisions for intermediary services under IGST have been amended to align with international trade norms.

ü  Post-sale discount rules simplified: discounts must be passed via GST credit notes, with corresponding ITC reversal by recipients where applicable.

ü  Operationalisation of the GST Appellate Tribunal (GSTAT): Appeals to be accepted before 30th September 2025, hearings to commence before 31st December 2025, with 30th June 2026 set as the deadline for backlog appeals. The Principal Bench will also act as the National Appellate Authority for Advance Ruling.

Most rate changes will apply from 22nd September 2025, while tobacco and pan masala will continue at 28% + cess until all compensation cess liabilities (loans and interest) are cleared.

GST Rate Changes at a Glance

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
Farmers & Agriculture	Tractor Tyres & Parts	18	5
	Tractors	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	Individual Health & Life Insurance	18	Nil
	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 (as per 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
	3 wheelers	28	18
	Motorcycles (≤350cc & below)	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 (above 32″) (including LED & LCD TVs)	28	18
	Monitors & Projectors	28	18
	Dish Washing Machines	28	18
Services	Hotel stays ≤ ₹7,500	12	5
	Gyms, salons, yoga centres, wellness services	18	5
Mining	Coal, lignite, peat	5	18
Sin and Luxury Goods	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 Industry	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

 For Detailed Information - Refer Press Release of PIB with below mentioned Annexures

Ø  Related to Goods

ü  HSN wise rate changes are at Annexure -I

ü  Sector wise rate changes are at Annexure -II 

Ø  Related to Services

ü  HSN wise rate changes are at Annexure -III

ü  Sector wise rate changes are at Annexure -IV

Ø  The process reforms and other measures related to GST law and Procedure are at Annexure -V.

Bottomline: The 56th GST Council Meeting has officially rolled out GST 2.0 – a simpler 2-slab system, lower rates on essentials, exemptions for healthcare & education, relief for farmers and MSMEs, and stronger compliance processes. This reform is expected to boost consumption, ease compliance, and make GST more citizen-centric.

 

Source : Press Information Bureau