56th GST Council Meeting: Expectations of Citizens, Businesses, and Tax Professionals

The 56th meeting of the Goods and Services Tax (GST) Council is scheduled to be held in New Delhi on September 3 and 4, 2025. Finance Minister Nirmala Sitharaman will chair the session, with state finance ministers and senior officials in attendance.

With the meeting spread over two days, stakeholders are anticipating major reforms-particularly in GST rates, compliance processes, and revenue-sharing mechanisms.

Citizens: Relief in Consumption and Services

For ordinary consumers, the most immediate expectation from the Council is lower GST rates on daily essentials and household items. Reports suggest that the government is considering a rate cut on certain goods currently taxed at 12%, potentially bringing them down to 5%. Items like toothpaste, butter, cheese, soaps, and personal care products could see reductions that directly ease household budgets.

Electronics and home appliances, which attract the highest GST rate of 28%, may also shift to the 18% slab. This includes mid-tier televisions, refrigerators, washing machines, and air conditioners. If approved, such cuts would lower retail prices by 6% to 10%, expanding affordability for the middle class.

Another major area of citizen interest is insurance premiums. The Council is expected to deliberate on exempting life and health insurance from GST. Currently, the 18% levy increases the cost of policies, discouraging wider uptake. Exemption would encourage financial protection and align with broader social-security goals.

While there is also talk of introducing a 40% slab for “sin goods” like tobacco and luxury automobiles, this would not impact the majority of households. Instead, it may serve to balance revenue losses arising from rate cuts on essential goods.

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Businesses: Simplification and ITC Clarity

For Indian businesses, the priority remains simplification of the GST rate structure. Since its rollout in 2017, GST has evolved with multiple slabs, creating compliance challenges and frequent disputes.

The 56th Council meeting is expected to discuss a shift towards a two-slab system set at 5% for essentials and 18% for most other goods and services. Businesses argue that such a structure will reduce classification disputes, litigation, and administrative burdens.

Another critical issue is the correction of inverted duty structures. Sectors such as textiles, footwear, fertilizers, paper, and packaging continue to face scenarios where inputs attract higher GST than finished goods. This results in accumulated input tax credit (ITC) that cannot be effectively utilized, blocking working capital.

The Council is expected to revisit these anomalies, offering relief to small and medium enterprises (SMEs) in particular.

Compliance automation is also on the agenda. Proposals include pre-filled GST returns, faster refunds, and upgrades in e-invoicing systems. If implemented, these steps will reduce errors, ease reconciliation, and support businesses in meeting timelines with fewer manual interventions. Improved technology integration is also aligned with India’s push for a digital economy and greater transparency in taxation.

The automobile sector is watching the Council closely. A proposal to cut GST from 28% to 18% for small hybrid cars could lower on-road prices significantly, giving a boost to both manufacturers and consumers. This would also support India’s green mobility initiatives, encouraging adoption of energy-efficient vehicles.

Tax Professionals and Policymakers: Revenue and Compensation

For tax professionals and state governments, the bigger question revolves around the revenue impact of sweeping rate cuts. The central government has not yet quantified the exact loss to the exchequer from proposed changes.

With GST collections forming a major share of state revenues, the phasing out of the compensation cess in 2026 is a key concern. States like Kerala have already indicated that they will raise the issue of revenue loss and demand clarity on how the Centre plans to safeguard state finances.

Policymakers are also exploring whether the compensation cess should be replaced with targeted levies such as a clean-energy cess or health-oriented cess. This would preserve revenue streams while aligning with national policy priorities.

Tax professionals, meanwhile, are awaiting clarity on unresolved compliance issues. Questions about place-of-supply rules, GST treatment for cross-border digital services, and e-commerce platforms remain points of contention. A simplification of rules would not only improve ease of compliance but also reduce litigation, which has been mounting over the years.

The Central Board of Indirect Taxes and Customs (CBIC) has issued an advisory cautioning taxpayers and media outlets against speculation. While expectations are high, final decisions will only emerge after consensus between the Centre and states, a hallmark of the GST Council process.

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Balancing Expectations with Economic Realities

While citizens and businesses expect relief through lower GST rates and smoother compliance, the government faces the challenge of maintaining economic and budgetary balance. India has consistently reported GST collections above ₹1.5 lakh crore per month, but significant rate cuts could impact this trend. The Council must weigh growth-oriented reforms against the risk of weakening state revenues.

Economists suggest tempered expectations, noting that any sweeping changes will likely be phased in gradually. The GST framework is designed to be consensus-driven, which often tempers bold proposals into incremental reforms.

Outlook

The 56th GST Council Meeting arrives at a critical juncture for the Indian Indirect Tax Regime. Citizens hope for relief on daily expenses and services like insurance. Businesses seek a simpler, rationalized structure and freedom from blocked credits while Tax professionals, Revenue Officials and states want clarity on revenue protection and cess replacements.

Whether the meeting delivers sweeping reforms or gradual adjustments, its outcomes will shape India’s indirect tax system for years ahead.

By balancing ease of doing business-compliance and responsible financial governance, the Council has the opportunity to strengthen the role of Goods and Services Tax as a unifying tax regime.

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