The changes proposed in the GST Council Meeting are 2 of 2 types
A. Changes / Reduction in GST rates on Goods and Services
B. Measures for Trade Facilitation
Changes / Reduction in GST rates on Goods and Services
Globally, the indirect tax system has lesser number of tax rates (i.e. 2 or 3). The GST Council in the current meeting has tried to do away with the 12% GST rate with a conscious attempt to reduce the number of tax rates. The proposed revised rates shall be notified vide relevant notifications and shall be made applicable w.e.f. 22nd September 2025.
The reduction in the tax rate is intended to reduce tax burden on the ultimate consumer / common man. The Council has also noted and taken conscious decision of not exempting certain products to ensure that exemptions (along with non-availability of ITC) should not result in cascading effect of taxes which burdens the pocket of ultimate consumer / common man. Along with reducing GST rates, Council has also clarified about its intent for implementing reforms for faster disbursement of GST refunds for inverted duty/GST rate structures.
We have tried to summarise some of the rate changes in the table below:
Particulars |
HSN |
Current Rate |
Proposed Rate |
|---|---|---|---|
UHT Milk / Pre-packaged and labelled chena / paneer / Pizza Bread / Chapati / Roti / Khakhra |
0401 / 0406 / 1905 |
5% |
Nil |
Condensed Milk / Butter / Cheese /Brazil or Other nuts / Dates / Dried Fruits / etc. |
Various |
12% |
Nil |
Cocoa Powder/ Chocolates /Pastry / Cakes / Biscuits / Ice Cream / Water/ Plant based milk drinks / beverages |
Various |
18% |
Nil |
Caffeinated Beverages / Carbonated beverages / Other Non-alcoholic beverages |
22029990/ 2202 220291 / 220299 |
28% 18% |
40% 40% |
Various Agricultural equipments such as sprinklers, tractors, composting machines, harvesting machinery |
Chapter 84 & 87 |
12% |
5% |
Parts and spare parts of Tractors |
Various |
18% |
5% |
Renewal Energy Devices / Parts |
Various |
12% |
5% |
Textile Sector related items such as threads, yarns, carpets, embroidery, etc. |
Various |
12% |
5% |
Various Critical Drugs |
Chapter 30 |
12% |
Nil |
Medical Items such as steam, medical grade oxygen, diagnostic kits, surgical rubber gloves, Glucometers, spectacles for correcting vision, etc. |
Various |
12% |
5% |
Consumer Essentials such as personal care products, kitchenware, specified furniture items, cotton hand bags, etc. |
Various |
12% / 18% |
5% |
Consumer Electronics such as AC, Dishwashers, TV sets, Monitors |
Various |
28% |
18% |
Small Cars, Motorcycles ≤350cc, MVs cleared as Ambulances, Three Wheeled Vehicles, etc. |
Various |
28% |
18% |
Fertiliser chemicals (sulphuric acid, ammonia, nitric acid) |
Various |
18% |
5% |
Cement |
2523 |
28% |
18% |
Services |
|||
Life and health insurance premiums (including Reinsurance) |
9971 |
18% |
Exempt |
Hotel Accomodation having value less than INR 7,500/- per day |
9962 |
12% with ITC |
5% without ITC |
Passanger Transport Services by any motor vehicles where fuel cost is included |
9964 |
5% with restricted ITC or 12% with full ITC |
5% with restricted ITC or 18% with full ITC |
Passenger Air Transport Services in other than Economy Class |
9964 |
12% with ITC |
18% with ITC |
Supply of goods transport services by GTA |
9965 |
5% without ITC (FCM or RCM) 12% with ITC |
5% without ITC (RCM or FCM) 18% with ITC |
Beauty and physical well-being services |
99972 |
18% with ITC |
5% without ITC |
Various Job Work Services |
9988 |
12% with ITC |
5% with ITC |
Admission to Casinos, betting, gambling, horse racing, online gaming, sporting vehicles like IPL |
9996 |
28% |
40% |
Measure for Trade Facilitation
1. Refund Reforms – Speeding Up Working Capital Flow
Risk based provisional sanction of 90% of refund claim will be available for exporters and inverted duty cases from 1st November 2025.
The minimum threshold limit of INR 1,000/- for refund claim to be removed for allowing low-value export consignments through courier, post, etc.
2. Simplified GST Registrations
Auto-approval of GST registration within 3 working days for taxpayers with liability ≤ ₹2.5 lakh/month (self assessment). The scheme shall have voluntary opting in and withdrawal from the scheme.
Additionally, simplified registration scheme shall be provided for facilitating suppliers supplying through e-commerce portals from their place of business across multiple states. This will address the procedural challenges faced by suppliers seeking registration in multiple states as per E-commerce Portal's requirements.
3. Intermediary Services – Place of Supply Recasted
Place of supply for intermediary services (commonly known as agency or broker services) in case where supplier / receiver is outside India is proposed to be changed from Location of Supplier to Location of Recipient. This will help Indian Intermediary Service exporters to claim export benefits (earlier these were taxable in India).
Similarly, intermediary services received from foreign service providers will be taxable in India i.e. reverse charge mechanism.
4. Post-Sale Discounts – Tightening Valuation Provisions
The requirement for pre-agreement and linking with original Tax invoices is proposed to be removed for issuing Credit Note (with GST) for Post-Sale Discounts.
Thus, Section 15(3) and Section 34 of the CGST Act will be linked to provide for allowing post sale discounts via GST credit notes subject to ITC reversal by recipients.
This amendment will ease the process of providing post sale discounts vide GST Credit Notes. However, supplier's will have to continue to take the onus of ITC reversal by recipients.
Further, Council has recommended issuance of Circulars for providing clarifications of certain issues around post-sale discounts.
5. Goods and Services Tax Appellate Tribunal (GSTAT)
The GSTAT will be made operational for accepting appeals before end of September 2025 and will commence hearing before end of December 2025. Time limit for filing of back-log of appeals before the GSTAT has been proposed to be 30.06.2026.
Further, Principal Bench of GSTAT will also server as National Appellate Authority for Advance Ruling ensuring consistency in advance rulings and offering greater certainty to taxpayers.