Key Decisions Proposed in 56th GST council meeting

Here’s a gist of the 56th GST Council Press Release (3rd September 2025) with important highlights:

1. GST Rate Changes on Goods

Large number of daily-use food items (milk, butter, cheese, paneer, nuts, fruits, pasta, biscuits, juices, ice cream, tea/coffee extracts, etc.) reduced from 12–18% → 5% or Nil. Medicines & healthcare: Many life-saving drugs (e.g., Onasemnogene, Mepolizumab, Daratumumab, Emicizumab, etc.) brought to Nil or 5%. Medical devices (glucometers, lenses, diagnostic kits, oxygen, thermometers, etc.) reduced to 5%. Essential goods: Toiletries like soap, shampoo, toothpaste, candles, sanitary items also reduced to 5%. Agriculture & rural economy: Fertilizer micronutrients, irrigation equipment, agricultural machinery, diesel engines, and tractor parts all cut to 5%. Renewable energy devices (solar, wind, biogas, tidal, waste-to-energy, PV panels) → 5%. Vehicles: Small petrol/diesel cars (≤1200cc / 1500cc) now at 18% (from 28%). Electric & hybrid vehicles (smaller models) also reduced to 18%. Luxury cars, motorcycles >350cc, yachts, private aircraft remain at 40%. Coal, lignite, peat → 18% (up from 5%). Cement also reduced from 28% to 18%.

2. GST Rate Changes on Services

Clarification: Standalone restaurants cannot classify themselves as “specified premises” to charge 18% with ITC. Amendments made to valuation rules for lottery tickets.

3. Implementation Dates

22nd Sept 2025: Most new GST rates on goods & all services start. Pan Masala, Gutkha, Cigarettes, Chewing Tobacco, Zarda, Bidi – existing high rates (28% GST + 40% cess) continue until compensation cess loans are cleared.

4. Trade Facilitation Measures

Process Reforms: Simplifications in GST law & refund process (details in Annexure V). Refunds: System-based 90% provisional refunds for inverted duty structure, using risk-based analysis (like zero-rated supplies).

5. Goods and Services Tax Appellate Tribunal (GSTAT)

Will be operational by Sept 2025 for appeals. Hearings to begin by Dec 2025. Deadline for backlog appeals: 30th June 2026. GSTAT’s Principal Bench will also act as National Appellate Authority for Advance Ruling, improving dispute resolution and consistency.

 Why This Is Important

Big relief for consumers: Cheaper food, medicines, medical devices, household goods. Boost for farmers & rural sector: Lower cost for fertilizers, irrigation equipment, and tractors. Push for renewable energy: Solar, wind, tidal devices cheaper. Automobile sector impact: Affordable small cars & EVs, but luxury vehicles taxed heavily. Transparency & ease of doing business: Faster refunds, operational GST Tribunal, clarity on tax disputes.