56th GST Council Meeting: Updates, Outcome, & More
- PRITI SIRDESHMUKH
- Sep 19
- 8 min read
Updated: Sep 29
On September 3, 2025, the 56th GST Council meeting was held in New Delhi. The long-pending agenda topics were discussed at the GST Council's sixth meeting. In keeping with the government's plan to execute next-generation GST reforms, important decisions were made. The 12% and 28% slabs have been eliminated in favour of a two-tiered GST rate structure of 5% and 18%, as agreed by the GST Council.
Table of Contents
Key Takeaways of the 56th GST Council Meeting
The 56th GST Council meeting was held in New Delhi on September 3, 2025. Before the meeting, Prime Minister Narendra Modi declared the introduction of next-gen GST changes on August 15, 2025. In addition to introducing a 40% tax bracket on demerit products and correcting the inverted tax structure on fertilisers, textiles, and other items, the GST Council adopted several GST changes, which eliminated the 12% and 28% tax slabs and combined items into the 5% or 18% tax slabs. With the exception of modifications to the GST rates on tobacco and tobacco products, the amendments will take effect on September 22, 2025. The introduction of pre-filled forms and automatic GST refunds are other items on the agenda that may be debated on September 4, 2025.
Highlights of the 56th GST Council Meeting
According to the Finance Minister, "These reforms have been carried out with a focus on the common man. Every tax on the common man's daily use items has gone through a rigorous review, and in most cases, the rates have come down drastically." A streamlined GST system is at the heart of the reforms. These include:
Items are now in the 5% merit rate or the 18% standard rate, replacing the 12% and 28% slabs, leading to a two-tier structure for GST.
For luxury and select items, a specific 40% de-merit rate has been implemented.
Until compensation liabilities, such as loans and interest associated with them, are paid off, tobacco and related products will continue to be charged at the current 28% rate.
The GST Council approved exemption of life and health insurance from GST.
In important industries like textiles and fertilisers, inverted duty arrangements have been fixed.
Regarding the implementation of the new reforms, the following points are noteworthy:
With the exception of tobacco and its derivatives, the remaining GST rate adjustments for goods and services will take effect on September 22, 2025
During the media conference, the secretary affirmed that no changes are suggested for the submission of monthly GST returns.
Due to the inverted duty structure and zero-rated deliveries of goods and services, CBIC will begin implementing the updated mechanism for providing 90% temporary refunds on November 1, 2025. It will be predicated on a risk assessment and data analysis conducted by the system.
In order to reduce the compliance burden for exporters who ship their goods via courier and the postal service, the GST Council suggested eliminating the threshold limit for refunds resulting from exports made with tax paid.
Going ahead, the location of supply for intermediate services will be in compliance with Section 13(2)'s default rule. It will be where the person receiving those services is located. Indian exporters are therefore eligible to receive export benefits.
A plan for streamlined GST registration for small suppliers who provide through e-commerce operators was accepted by the GST Council.
In addition, the GST Council suggested that tobacco and its products be valued at retail selling prices rather than transaction values.
Sections 15 and 34 of the CGST Act have been modified. It eliminated the clause requiring the discount to be established in accordance with a contract signed prior to or at the time of the supply, and it specifically required that the contract be linked to the pertinent invoices. Additionally, all clauses have been changed to allow the recipient to reverse the input tax credit in the event that a post-sale discount is granted and the supplier reduces the value of the supply with a GST credit note. In due time, a GST Circular will be released.
2025 will see the establishment of the Goods and Services Tax Appellate Tribunal (GSTAT). The National Appellate Authority for Advance Ruling will also be the Principal Bench of the GSTAT. Deadlines are listed below:
Appeals will be accepted: September 30, 2025.
Start the hearing: December 31, 2025.
Submitting backlog appeals: June 30, 2026.
List of GST Rate Cuts
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 | 12 | Nil |
| Agalsidase Beta, Imiglucerase and Eptacog alfa activated recombinant coagulation factor VIIa drugs | 5 | Nil |
| Drugs and medicines such as Pertuzumab, Faricimab, Brentuximab Vedotin, and Fluticasone Furoate + Umeclidinium + Vilanterol FF/UMEC/VI, Ocrelizumab | 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 |
List of GST Rate Hikes
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 race clubs, casinos, and sporting events such as IPL | 28% with ITC | 40% with ITC |
| Bookmakers licensing 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 | 1 |
Expectations for the 56th GST Council Meeting
Key GST Rate Changes
The idea of taxing some goods under the GST is currently being considered. The GST on health insurance is one such item. The 56th GST Council meeting could discuss how health and life insurance are taxed under the GST. Insurance premia are currently subject to an 18% GST rate; an exemption is being proposed.
The Council may take into account industry-specific clarifications for e-commerce, real estate, and gaming, as well as GoM submissions on charging GST on virtual digital assets and the practical application of CGST Section 11A (to waive GST recovery not levied or short-levied due to common trade practices in specific sectors).
It is likely that the GST duty on commercial drones will be unified by the 56th GST Council. The Council might recommend cutting the drone GST rate from 28% to 5%. Another major cause of controversy has been the GST taxation of drones with detachable cameras. The action will make the Unmanned Aircraft System's (UAS) classification of items clearer. Under HSN code 8806, the personal use of drones has a higher levy of 28%, while business use is taxed at 5%.
GST Rate Rationalisation
Restructuring the GST rate slabs is one of the most significant adjustments being discussed. Along with a special 40% rate on sin items, the GST now has multiple tiers: 5%, 12%, 18%, and 28%. The suggestion that is being examined:
Slabs are being combined into two main rates: 5% and 18%
40% remaining for sin products and ultra-luxury items
Possible modifications to this reasoning:
The 12% tax on some goods, including necessities like toothpaste, butter, cheese, namkeen, personal care products, and textiles, may be lowered to 5%.
The 28% slab may drop to 18% for items such as compact vehicles, appliances, and electronics.
The present 18% insurance premium may be reduced to 5% or possibly eliminated.
Review of Compensation Cess
The levy, collection, and distribution of compensation cess to States may be extended or terminated at the discretion of the GST Council. After March 2026, the GST Council may decide to substitute a health and clean energy cess for the compensation cess. The reform would require a constitutional amendment in order to take effect. The compensation cess levy and collection period were extended until March 31, 2026. After the compensation cess expires, a GoM is established to investigate the potential for a new tax levy to take its place. The GoM, which is led by Pankaj Chaudhry, Minister of State in the Finance Ministry, is expected to deliver its findings by June 30, 2025.
Addressing Inverted Duty Structures
An inverted duty structure, in which input taxes are greater than output taxes, still affects a number of industries, including textiles, footwear, fertilisers, paper, and packaging. This results in blocked Input Tax Credits (ITC) and working capital shortages. The GST Council may:
Suggest a gradual fix for these irregularities.
Give industries enough time to get used to the new rates.
During implementation, make sure to take precautions against anti-profiteering conflicts.
Pre-Filled Returns and Automated Refunds
As part of the GST 2.0 reforms, the Council may also discuss automated refund procedures and pre-filled GST returns. These actions seek to:
Minimise human mistakes when filing returns.
Make sure taxpayers receive their refunds more quickly.
Boost adherence with little assistance.
Conclusion
The 56th GST Council meeting goes beyond a simple policy review. It is anticipated to serve as the GST 2.0 launchpad. The anticipated results might reduce the number of slabs to streamline India's GST system, lower taxes on necessities and consumer goods to promote consumption, and boost businesses by rationalising GST. It will also create the framework for an ecosystem of GST compliance that is more automated and transparent. The Council's choices will have a direct effect on households, businesses, and state finances because they are related to inflation management, consumer relief, and ease of doing business.
Frequently Asked Questions
What is the 56th GST Council meeting?
The Union Finance Minister and State/UT Finance Ministers/representatives convened the 56th GST Council meeting six months after the previous one to discuss important GST issues and offer suggestions for new-generation GST reforms.
When and where was the 56th GST Council meeting held?
The 56th meeting of the GST Council was held in New Delhi on September 3 and September 4, 2025.
Where is the 55th GST Council held?
The 55th meeting of the GST Council took place on December 21, 2024, at Jaisalmer, Rajasthan.
What changes were suggested in the 55th GST Council meeting?
Rate rationalisation with several rate reductions, clarifications, and exemptions on products and services was suggested during the 55th GST Council meeting. Additionally, it suggested changes to the CGST Act and Rules, 2017 regarding the pre-deposit for submitting an appeal, the Invoice Management System (IMS), and Input Service Distributors (ISD).
What are the key topics on the agenda?
The resolution of sector-specific GST anomalies, ease of compliance, and potential rationalisation of the GST rate are among the main items on the agenda for the 56th GST Council meeting.
Are there any other reforms under discussion?
Updates to digital invoices, steps to prevent tax cheating, and additional clarification on GST for online gaming are allegedly among the other revisions being discussed.
What are the expected benefits of the suggested rate changes?
The 56th GST Council meeting's rate reform is anticipated to result in fewer GST categorisation conflicts, a more straightforward GST rate structure, and easier corporate operations.
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