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Key Highlights from the 56th GST Council Meeting – Effective Sept. 22, 2025

GST2.0 update

 

The 56th GST Council Meeting, held on 3rd September 2025 in New Delhi under the chairpersonship of Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman, introduced a host of structural reforms and trade facilitation measures designed to simplify GST compliance and ease the burden on businesses.

We’ve summarised the most important updates below for your quick reference:

Major GST Reforms & Rate Rationalisation:

  • Introduction of a simplified 2-rate GST structure: 18% Standard Rate; 5% Merit Rate and special 40% rate for de-merit goods
  • Full GST exemption on life & health insurance policies
  • Rate Cuts from 28% to 18% on consumer durables:
    • ACs, TVs, dishwashers, small cars, motorcycles ≤350 CC
    • Uniform rate of 18% on all auto parts
  • Significant relief on medicines:
  • 33 drugs now taxed at 0% (down from 12%)
  • 3 critical medicines used for cancer/rare diseases treatment now taxed at 0% (down from 5%)
  • All other medicines taxed at 5% (down from 12%)
  • Operationalisation of the Goods and Services Tax Appellate Tribunal (GSTAT) for accepting appeals before or by the end of September 2025 and begin hearings by December 2025.
  • Correction of inverted duty structures in manmade textile & fertilizer sectors

Effective Date: All the recommendations (except sin goods rate changes) will be effective from 22nd September 2025.

Trade Facilitation Measures:

  • Sanction of risk-based provisional refund for Zero-Rated supplies and Inverted Duty Structure (IDS): Allow 90% provisional refunds based on system-driven risk evaluation, with scrutiny in exceptional scenarios.
  • Simplified, optional GST registration scheme for small and low-risk businesses (≤ INR 2.5 lakh/month tax liability) – registration within 3 working days.
  • Export refunds reform: Threshold limit removed for low-value consignments.
  • Simplified registration for small sellers on e-commerce platforms across states.
  • Amendment to Place of Supply (POS) rules for intermediary services: Enabling Indian service exporters to claim export benefits.
  • Post-sale discount reforms: Easier credit note-based adjustments, elimination of pre-agreement requirement.
  • Retail Sale Price (RSP)–based valuation under GST for specified tobacco products.

Effective Date: Measures like risk-based refund and simplified registration for small businesses will be effective from 1st November 2025.

These reforms mark a significant step towards making GST more streamlined, transparent, and business-friendly. Please click here to view the detailed document.

 

At AKM Global, our Indirect Tax team works closely with clients across industries to ensure end-to-end GST registration, compliance, advisory, and litigation support —  to help you manage these regulatory changes confidently.

For any assistance or clarification, feel free to reach out to us at info@akmglobal.in

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