Introduction
The 56th GST Council meeting, held on 3rd September 2025 at New Delhi under the chairpersonship of Union Finance Minister Smt. Nirmala Sitharaman, brought several historic decisions. The focus of this meeting was on relief for the common man, aspirational middle class, rate rationalisation across sectors, and major reforms for trade facilitation.
This blog explains the key changes in GST rates on goods and services, implementation dates, process reforms, and the much-awaited operationalization of the GST Appellate Tribunal (GSTAT).
A. GST Rate Changes on Goods
The Council recommended significant GST rate rationalisation across essential goods, food items, textiles, agriculture, energy, and healthcare.
1. Food & Essential Items
- UHT Milk – GST reduced from 5% → Nil
- Paneer (pre-packaged) – 5% → Nil
- Pizza bread, roti, khakhra – 5% → Nil
- Parotta / Paratha – 18% → Nil
- Butter, ghee, cheese, condensed milk – 12% → 5%
- Dry fruits (almonds, pistachios, cashews, dates, citrus fruits, figs, etc.) – 12% → 5%
- Sugar, chocolates, confectionery – 18% / 12% → 5%
- Ice Cream & Edible Ice – 18% → 5%
👉 This is a major relief for household budgets as most packaged food items now attract just 5% GST or Nil.
2. Textiles & Apparel
- Yarns, fabrics, carpets, nonwovens, embroidery, textile accessories – 12% → 5%
- High-value garments (> ₹2500 per piece) – 12% → 18%
- Quilts & textile products > ₹2500 per piece – 12% → 18%
👉 Affordable textile products see relief, while luxury/high-value apparel now attracts higher GST.
3. Healthcare & Medicines
- Life-saving drugs (e.g., Agalsidase Beta, Imiglucerase, Onasemnogene Abeparvovec, Daratumumab, Atezolizumab, etc.) – 12% / 5% → Nil
- Medicines & medical devices (Oxygen, Hydrogen Peroxide, Bandages, Gauze, Glucometers, Thermometers, X-ray equipment, etc.) – 12% / 18% → 5%
- Health & Life Insurance premiums (individual policies) – Exempted from GST
👉 This will drastically reduce medical expenses for patients and boost accessibility of critical drugs.
4. Agriculture & Fertilizers
- Tractors, agricultural machinery, irrigation equipment, hand pumps, composting machines – 12% / 18% → 5%
- Bio-pesticides, micronutrients, sulphuric acid, nitric acid, ammonia – 12% / 18% → 5%
👉 Direct benefit for farmers and agri-sector, lowering input costs.
5. Energy & Environment
- Renewable energy devices (solar, wind, waste-to-energy, tidal energy, solar cookers, solar heaters, fuel cell vehicles, etc.) – 12% → 5%
- Coal, lignite, peat – 5% → 18% (to reduce overuse & promote clean energy)
👉 The push is clear: clean energy gets cheaper, coal gets costlier.
6. Consumer Goods & Common Man Items
- Soaps, toothpaste, shampoos, talcum powder, shaving creams – 18% → 5%
- Candles, safety matches, feeding bottles, sewing needles, bicycles, umbrellas, kerosene stoves, household utensils (steel, copper, aluminium, wood, ceramic) – 12% → 5%
- Toothbrushes – 18% → 5%
👉 Everyday essentials made affordable for the aspirational middle class.
7. Automobiles & Transport
- Small Cars (Petrol/CNG ≤1200cc, Diesel ≤1500cc, length ≤4000mm) – 28% → 18%
- Electric & Hybrid Vehicles (small) – 28% → 18%
- Motorcycles ≤350cc – 28% → 18%
- Luxury Cars, SUVs, Motorcycles >350cc, Yachts, Aircraft for personal use – 28% → 40%
👉 Clear distinction: mass mobility cheaper, luxury items costlier.
B. GST Rate Changes on Services
- Hotel Accommodation (< ₹7500 per night) – 12% → 5% (without ITC)
- Air Travel (Business Class) – 12% → 18%
- Goods Transport Agency (GTA) & Multimodal Transport – rationalised (option for 5% without ITC or 18% with ITC)
- Beauty & Wellness services (salons, spas) – 18% → 5% (without ITC)
- Cinemas (ticket ≤ ₹100) – 12% → 5%
- Casinos, betting, gambling, online gaming, horse racing, IPL tickets – 28% → 40%
👉 Services for the common man became cheaper, while luxury/entertainment services became costlier.
C. Date of Implementation
- 22nd September 2025 – Rate changes on most goods & services.
- Tobacco & Pan Masala products – continue at existing rates until compensation cess loans are repaid.
- Phased implementation for specific sectors as notified by CBIC.
D. Measures for Facilitation of Trade
1. Provisional Refunds (90%)
Refunds on exports & inverted duty structure (IDS) to be released on risk-based system auto-sanction from 1st Nov 2025.
2. Simplified GST Registration Scheme
- Auto-approval in 3 days for low-risk applicants.
- Special scheme for small e-commerce sellers to allow registration without multiple state offices.
3. Amendments in Place of Supply (Intermediary Services)
Exporters of intermediary services can now claim export benefits as place of supply will be recipient’s location.
4. Post-Sale Discount Clarifications
- Credit Note mechanism simplified.
- Circular No. 212/6/2024 rescinded.
5. GSTAT Operationalisation
- GST Appellate Tribunal (GSTAT) to start accepting appeals by Sept 2025 and hearings by Dec 2025.
- Backlog appeals filing deadline: 30th June 2026.
- Principal Bench to also serve as National Appellate Authority for Advance Rulings.
👉 This will bring certainty, consistency, and faster dispute resolution.
Conclusion
The 56th GST Council meeting stands out as a historic reform-oriented session. The common man gains from lower rates on food, medicines, consumer goods, and services, while luxury items see higher taxation. The trade facilitation reforms (refunds, registration, GSTAT) are equally significant, paving the way for ease of doing business.
For businesses, it is crucial to update GST billing systems, invoicing software, and contracts before the notified implementation date (22nd Sept 2025).
You also can download the press release.
