GST Council held its 56th meeting at New Delhi. In the meeting, GST Council has recommended changes related to GST tax rates, measures for facilitation of trade and measures for streamlining compliances in GST.

Key recommendation of GST council are :

1. Changes in GST rates of goods and services
   1. The current 4-tiered GST rate structure is now simplified into a 2-tiered GST rate structure with a Standard Rate of 18% and a Merit Rate of 5%. A special de-merit rate of 40% is added for few goods and services.
   2. GST is reduced on common items like hair oil, toilet soap bars, shampoos, toothbrushes, toothpaste, bicycles, tableware, kitchenware, other household articles and shall now be levied @5%.
   3. GST is reduced on items like Ultra-high temperature (UHT) milk, Prepackaged and labelled chena or paneer, all Indian breads (roti, paratha, etc) and shall now be NIL rated.
   4. GST is reduced on air-conditioning machines, TVs, dishwashing machines, buses, trucks, ambulances, small cars, three-wheelers, motorcycles equal to or less than 350 CC, all auto parts and shall now be levied @18%.
   5. GST is reduced on agricultural goods, such as tractors, agricultural, horticultural or forestry machinery for soil preparation or cultivation, harvesting or threshing machinery, including straw or fodder balers, grass or hay mowers, composting machines and shall now be levied @5%.
   6. GST is reduced on cement and shall now be levied @18%.
   7. GST is reduced on 36 lifesaving drugs and medicines used for treatment of cancer, rare diseases and other severe chronic diseases and shall now be NIL rated.
   8. GST is reduced on other drugs and medicines and shall now be levied @5%.
   9. GST is reduced on various medical apparatus and devices used for medical, surgical, dental or veterinary usage or for physical or chemical analysis and shall now be levied @5%.
   10. GST is reduced on various medical equipment and supplies devices such as wadding gauze, bandages, diagnostic kits and reagents, blood glucose monitoring system (Glucometer) medical devices, etc and shall now be levied @5%.
   11. GST is reduced on renewable energy devices and parts for their manufacture and shall now be levied @5%.
2. Exemption from GST: No GST shall be applicable on all individual life and health insurance policies whether term life, ULIP or endowment policies and reinsurance.
3. Other Changes relating to Goods and Services: GST shall now be levied on Retail Sale Price (RSP) instead of transaction value on Pan Masala, Gutkha, Cigarettes, Unmanufactured tobacco, Chewing tobacco like Zarda.
4. Date of Implementation
   1. The changes in GST rates on services will be implemented with effect from 22 September 2025.
   2. The changes in GST rates on all goods except pan masala, gutkha, cigarettes, chewing tobacco products like zarda, unmanufactured tobacco and bidi, will be implemented with effect from 22 September 2025.
   3. Pan Masala, gutkha, cigarettes, chewing tobacco products like zarda, unmanufactured tobacco and bidi will continue at the existing rates of GST and compensation cess where applicable. The Council will decide the actual date on which the revised rates will be applicable to the above-mentioned goods.
5. Measures for facilitation of Trade
   1. Introduction of amendment in rule 91(2) of CGST Rules, 2017 to provide for sanction of 90% of refund claimed as provisional refund by the proper officer on the basis of identification and evaluation of risk by the system. In exceptional cases, the officer may proceed with detailed scrutiny before sanctioning the refund. This provision is effective from 1st November, 2025.
   2. Introduction of amendment in section 54(6) of the CGST Act, 2017 to provide for sanction of 90% of refund claimed on provisional basis, in cases arising out of inverted duty structure, on similar lines as is presently available for refund in respect of zero-rated supply. This provision is effective from 1st November, 2025.
   3. Introduction of amendment in section 54(14) of the CGST Act, 2017 to remove the threshold limit applicable for refunds arising out of exports made with payment of tax.
   4. Introduction of an optional simplified GST registration scheme wherein registration shall be granted on an automated basis within three working days from the date of submission of application in case of low-risk applicants and applicants who based on their own assessment, determine that their output tax liability on supplies to registered persons will not exceed Rs. 2.5 lakh per month (inclusive of CGST, SGST/UTGST and IGST). The scheme will provide options for voluntary adoption and withdrawal. This scheme shall be available from 1st November, 2025.
   5. Omission of section 15(3)(b)(i) of CGST Act, 2017 which required establishing that the discount is in terms with the agreement entered into or before at the time of supply and linking of the same with relevant invoices. Also, Section 15(3)(b) & Section 34 CGST Act, 2017 to be amended to provide that discount shall be granted by credit note issued under Section 34 and the recipient shall reverse the Input tax credit where credit note is issued for post-sale discount.
   6. Clarifications to be issued on certain issues relating to post sale discount-
      1. Non-reversal of Input Tax Credit on account of post-sale discount through financial/commercial credit note
      2. Treatment of the post-sale discount provided by manufacturer to the dealer as additional consideration, in the transaction between dealer and end-customer
      3. Treatment of post-sale discount as consideration in lieu of promotional activities etc. performed by the dealer.

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Source: Press Information of Bureau

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