GST Rate Changes and Slab Restructuring: CBIC issues Second Set of FAQs [Read Order]

The CentralBoard of Indirect Taxes and Customs (CBIC) has issued the second set of Frequently Asked Questions (FAQs) providing clarity on GST rate changes and slab restructuring recommended by the 56th GST Council meeting held on September 3, 2025. The clarifications span multiple sectors including pharmaceuticals, insurance, hospitality, transportation, construction, and emerging services.

In the pharmaceutical sector, the National Pharmaceutical Pricing Authority (NPPA) clarified that medicines and medical devices already released in the market prior to September 22, 2025 will not require recall, re-labelling, or re-stickering. Manufacturers and marketers must instead ensure revised prices are displayed at the retailer level through supplementary price lists in Form V/VI. This ensures compliance without disrupting supply chains.

In the case of unmanned aircrafts, or drones, the Council has rationalized GST to a uniform 5%. Previously, drones attracted varying rates of 28% for personal use, 18% for those equipped with cameras, and 5% for others. The new uniform slab eliminates ambiguity and simplifies compliance.

The special composition scheme for bricks remains unchanged, with GST continuing at 6% without input tax credit (ITC) and 12% with ITC, with a reduced threshold limit of ₹20 lakh. However, a major change has been introduced for sand lime bricks, which will now be taxed at 5% instead of 12%.

On the services front, individual life and health insurance supplied to individuals or families are now exempt from GST. Further, reinsurance services received by insurers have also been exempted. However, insurers availing exemptions must reverse ITC on inputs like commissions and brokerage, ensuring parity in treatment.

For the hospitality sector, accommodation services priced up to ₹7,500 per unit per day are mandatorily taxed at 5% without ITC, with no option to charge 18% with ITC. Similarly, beauty and physical well-being services are fixed at 5% without ITC, preventing service providers from opting for higher rates with credits.

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In manufacturing and transportation, job work services for bus body building continue to attract 18% with ITC, while job work for sand lime bricks will be taxed at 5% with ITC. Multimodal transport has been rationalized to 5% with restricted ITC if no air leg is involved, and 18% with full ITC if any part of the transport includes air cargo.

Local delivery services have been clarified to attract 18% GST. Where such services are provided through e-commerce operators (ECOs) by unregistered suppliers, liability to pay tax will rest with the ECO under Section 9(5) of the CGST Act.

Finally, leasing and renting services without an operator will continue to be taxed at the same rate as the underlying goods. For cars with operators, suppliers may now charge either 5% with ITC restricted to inputs in the same line of business or 18% with full ITC.

The CBIC noted that these clarifications are aimed at ensuring smooth implementation of the revised GST structure effective from September 22, 2025, and to provide rationality in tax treatment across diverse sectors.