GST Council 56th Meet (Sep 2025): New 5% & 18% Slabs, Insurance Exempt, Big Rate Cuts

Next-Gen GST Reforms — Highlights from the 56th GST Council (Sep 2025)

New rate structure • big price cuts • insurance exemption • rollout dates • refunds & compliance

Rate Structure

Standard: 18%

Merit: 5%

De-merit goods: 40%

Big Relief

• Life & Health Insurance: Exempt
• Electronics, Cement, Small cars/bikes: 28% → 18%
• Daily essentials/foods: to 5% / Nil

Go-Live

Services: 22 Sep 2025

Goods: 22 Sep 2025

Tobacco/pan masala: current rates until cess loans repaid

What gets cheaper (snap view)

Daily essentials & personal care

Hair oil/soap/shampoo

Toothpaste/brush

Many to 5% / 18%

Foods

Namkeen/sauces/noodles

Chocolates/coffee

UHT milk/paneer etc.

Nil/5%

Electronics & appliances

ACs

TVs ≤32"

Dishwashers

28% → 18%

Healthcare

Many drugs: 12% → 5%

Life-saving: Nil

Devices: 5%

Agriculture

Tractors

Sprinklers

Agri machines

12% → 5%

Auto

Small cars & bikes ≤350cc

28% → 18%

Auto parts: 18%

Hospitality & wellness

Hotels ≤ ₹7,500: 5% (no ITC)

Beauty/fitness/yoga (mass): 5% (no ITC)

Cement

28% → 18%

Now Exempt (Nil)

Individual Life Insurance (term/ULIP/endowment) + reinsurance

Individual Health Insurance (incl. family/senior plans) + reinsurance

Process & compliance (quick)

GSTAT: appeals start by end-Sep; hearings by Dec; backlog cut-off 30-Jun-2026.

Refunds: risk-based 90% provisional (zero-rated; admin for inverted) from 1 Nov 2025.

Registrations: fast-track (~3 working days) for low-risk/limited B2B from 1 Nov 2025.

Intermediary services: PoS to recipient location (needs law change).

Post-sale discounts: cleaner credit-note route; old circular to be rescinded.

Tobacco/pan masala: move to retail-sale-price valuation; rate shift later by notification.

Also decided (don’t miss)

• Actionable claims (betting/casinos/lottery/online gaming): treated as goods; GST 40% with ITC; lottery valuation aligned.
• Restaurants: a stand-alone restaurant cannot claim “specified premises” → stays 5% (no ITC).
• Local delivery via ECO (Sec. 9(5)): tax by the E-commerce Operator; clarified not GTA; rate per classification (typically 18%).
• Goods carriage—third-party insurance: 12% → 5% (with ITC).
• Exports (low-value): threshold removed for refunds where exported with payment of tax.
• E-commerce registrations: proposed scheme for inter-state sellers without principal place in each state (modalities to follow).
• Administrative: ad-hoc IGST+cess exemption for one armoured sedan for President’s Secretariat.

Apply after notifications/circulars issue; tobacco/pan-masala rate change later.

Action checklist (teams)

Update rate masters, POS & ERP by 22 Sep.

Re-map insurance in payroll/vendor spend (now Nil).

Revise contracts/discount clauses & credit-note flows.

Plan refunds with 90% provisional path; tighten docs.

If you’re an intermediary/exporter, re-assess PoS once notified.

Reader’s quick brief of the PIB press release. Final impact only via official notifications & HSN/SAC specific entries.