56th GST Council Meet: Here’s What Gets Costlier, What Becomes Cheaper

The GST Council, in its 56th meeting, has cleared a sweeping rate rationalisation that will impact both consumers and businesses. Except for cigarettes, chewing tobacco products such as zarda, unmanufactured tobacco, and beedi where revised rates will be notified later. All other changes will come into force from 22nd September 2025.

What Gets Cheaper

Several essential goods and services have seen rate reductions:

• Food and Daily Use Items: UHT milk is now exempt, bringing it at par with other dairy milk. Plant-based and soya milk drinks now fall to 5% from 12–18%. Indian breads of all varieties, toilet soap bars, toothpaste, toothbrushes, dental floss, face powder, shampoos, and shaving cream will attract only 5%.
• Healthcare: All medicines are taxed at a concessional 5%, with medical devices also under the same slab. Health insurance policies, including family floater and senior citizen plans, are fully exempt.
• Renewables and Agriculture: GST on renewable energy devices, tendu leaves, marble and granite blocks, as well as agricultural machinery such as sprinklers and threshers, has been reduced to 5%. Bicycles and parts also fall to 5% from 12%.
• Automobiles: Small cars (petrol, LPG, CNG up to 1200 cc; diesel up to 1500 cc; length ≤ 4000 mm) will attract 18% instead of 28%. Three-wheelers, buses, ambulances, trucks, and trailers now also fall under 18%.
• Services: Beauty, wellness, and fitness services like salons, gyms, and yoga centers now attract 5% GST (without ITC), reduced from 18%. Job work services for pharma and leather have been cut to 5%. Hotel rooms up to ₹7,500/day remain at 5%. Passenger transport continues at 5%, while goods transport agencies (GTA) and container train operators get flexibility of 5% (no ITC) or 18% (with ITC).

What Becomes Costlier

Luxury and sin goods face steep hikes under a new special 40% GST slab:

• Automobiles: Mid-size and large cars, SUVs, MUVs, and motorcycles above 350 cc now attract 40% GST, replacing the earlier 28% GST plus 17–22% compensation cess.
• Beverages: Carbonated fruit drinks and beverages with fruit juice face higher rates as cess merges with GST. Other non-alcoholic beverages are set at 40%.
• Entertainment and Gambling: Casinos, betting, online gaming, horse racing, and lottery will face 40% GST. Entry to non-recognised sporting events like IPL matches will also attract 40%.
• No change in GST registration thresholds.
• ITC (input tax credit) availed earlier can be used even after rate change, but credit must be reversed where supplies become exempt.
• Imports will attract the revised IGST rates.
• E-way bills issued before September 22 remain valid.

Clarifications

The Council clarified that these changes are aimed at simplification and rate parity to avoid disputes, while balancing relief to consumers with protection of domestic producers.

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