The 56th GST Council, led by Union Finance Minister Nirmala Sitharaman in New Delhi on September 3, 2025, announced a major overhaul to India’s Goods and Services Tax (GST) regime.
These changes, effective September 22, 2025, are expected to directly impact household budgets and business operations, making certain daily-use items more affordable while maintaining standard taxation for most goods and services.
The updated framework replaced the previous four-slab system (5%, 12%, 18%, and 28%) with a streamlined two-rate structure: a 5% rate for essential goods and an 18% standard rate for most goods and services.
Below is a detailed FAQ explaining the key clarifications provided by the Council.
Q1. Is it required to recall and re-label MRP on medicines already in the supply chain before 22nd September 2025? How will the re-labelling be implemented?
Answer: The National Pharmaceutical Pricing Authority (NPPA), through OMs dated 12.9.2025 and 13.9.2025, clarified:
Previously, GST on unmanned aircrafts was:
Q3. What is the current GST rate on bricks?
Services provided by insurers to individual or family customers (not groups) are exempt from GST.
Q5. Are any input services for insurers also exempted?
Reinsurance services are exempt. ITC on other inputs or input services must be reversed as the output services are exempt.
Q6. Can hotels supplying accommodation under Rs. 7,500/unit/day opt for 18% GST with ITC?
No. GST 5% without ITC is mandatory for units ≤ Rs. 7,500/unit/day.
Q7. Can hotels claim ITC for such units?
No. ITC cannot be claimed for units charged at 5% GST without ITC.
Q8. Is 5% GST without ITC mandatory for beauty and physical well-being services? Can providers charge 18% with ITC?
Yes, 5% without ITC is mandatory; charging 18% with ITC is not allowed.
Q9. How should service providers handle ITC when GST is 5% without ITC?
18% with ITC. Specific previous entry for bus body building has been subsumed under residual job work services.
Q11. GST on job work services for bricks?
5% with ITC for bricks that attract 5% GST (e.g., sand-lime bricks).
Q12. GST on multimodal transport of goods?
Yes, ITC is allowed only on transportation input services, not on other inputs.
Example:
Entire service taxed at 18%, full ITC allowed.
Example: ‘A’ → ‘B’ Rs. 1,200 (includes air), ‘B’ → ‘C’ Rs. 800 (air, 18%), ‘B’ → ‘D’ Rs. 200 (CTO, 18%).
Answer: GST is payable by the ECO under Section 9(5) of CGST Act.
Q16. Tax rate for local delivery services?
18% GST.
No. ECOs, whether providing or through whom services are provided, are not included under GTA.
Q18. Taxation of leasing/renting services without operator?
Taxed same as supply of like goods. Example: Car taxed at 18% → leasing without operator also 18%.
Q19. Taxation of leasing/renting a car with operator?
Supplier may charge 5% with ITC (same line of business) or 18% with full ITC.
These changes, effective September 22, 2025, are expected to directly impact household budgets and business operations, making certain daily-use items more affordable while maintaining standard taxation for most goods and services.
The updated framework replaced the previous four-slab system (5%, 12%, 18%, and 28%) with a streamlined two-rate structure: a 5% rate for essential goods and an 18% standard rate for most goods and services.
Below is a detailed FAQ explaining the key clarifications provided by the Council.
Q1. Is it required to recall and re-label MRP on medicines already in the supply chain before 22nd September 2025? How will the re-labelling be implemented?
Answer: The National Pharmaceutical Pricing Authority (NPPA), through OMs dated 12.9.2025 and 13.9.2025, clarified:
- All manufacturers and marketing companies selling drugs/formulations (including medical devices) must revise Maximum Retail Prices (MRP).
- Revised price lists or supplementary price lists (Form V/VI) must be issued to dealers, retailers, State Drug Controllers, and the government to reflect updated GST rates and MRP.
- Recall, re-labelling, or re-stickering of stocks already released in the market prior to 22nd September 2025 is not mandatory if price compliance is ensured at the retailer level.
Previously, GST on unmanned aircrafts was:
- Personal-use drones: 28%
- Drones with digital camera/video recorders: 18%
- All other drones: 5%
Q3. What is the current GST rate on bricks?
- Special Composition Scheme applies from 1st April 2022, as accepted in the 45th GST Council meeting (17.09.2021).
- Bricks (other than sand-lime bricks): 6% without ITC, 12% with ITC; threshold limit Rs. 20 lakh.
- Sand-lime bricks: GST reduced from 12% to 5%.
Services provided by insurers to individual or family customers (not groups) are exempt from GST.
Q5. Are any input services for insurers also exempted?
Reinsurance services are exempt. ITC on other inputs or input services must be reversed as the output services are exempt.
Q6. Can hotels supplying accommodation under Rs. 7,500/unit/day opt for 18% GST with ITC?
No. GST 5% without ITC is mandatory for units ≤ Rs. 7,500/unit/day.
Q7. Can hotels claim ITC for such units?
No. ITC cannot be claimed for units charged at 5% GST without ITC.
Q8. Is 5% GST without ITC mandatory for beauty and physical well-being services? Can providers charge 18% with ITC?
Yes, 5% without ITC is mandatory; charging 18% with ITC is not allowed.
Q9. How should service providers handle ITC when GST is 5% without ITC?
- ITC on goods/services used exclusively for such supplies cannot be claimed.
- ITC on goods/services partly used for these supplies must be reversed proportionally under Section 17(2) of the CGST Act, 2017.
18% with ITC. Specific previous entry for bus body building has been subsumed under residual job work services.
Q11. GST on job work services for bricks?
5% with ITC for bricks that attract 5% GST (e.g., sand-lime bricks).
Q12. GST on multimodal transport of goods?
- Without air transport: 5% with restricted ITC (only on goods transportation services).
- With at least one leg by air: 18% with full ITC.
Yes, ITC is allowed only on transportation input services, not on other inputs.
Example:
- ‘A’ hires ‘B’ for Rs. 1,200 (no air), ‘B’ hires GTA ‘C’ Rs. 600 (18% GST) and CTO ‘D’ Rs. 400 (5% GST).
- GST by B: 5%
- ITC: GTA input Rs. 30 (5% of 600), CTO input Rs. 20 (5% of 400)
Entire service taxed at 18%, full ITC allowed.
Example: ‘A’ → ‘B’ Rs. 1,200 (includes air), ‘B’ → ‘C’ Rs. 800 (air, 18%), ‘B’ → ‘D’ Rs. 200 (CTO, 18%).
- GST by B: 18%
- ITC: GTA input Rs. 36, Air transport input Rs. 144
Answer: GST is payable by the ECO under Section 9(5) of CGST Act.
Q16. Tax rate for local delivery services?
18% GST.
- Direct by registered supplier: GST by supplier
- Via ECO by unregistered supplier: GST by ECO
- Via ECO by registered supplier: GST by supplier
No. ECOs, whether providing or through whom services are provided, are not included under GTA.
Q18. Taxation of leasing/renting services without operator?
Taxed same as supply of like goods. Example: Car taxed at 18% → leasing without operator also 18%.
Q19. Taxation of leasing/renting a car with operator?
Supplier may charge 5% with ITC (same line of business) or 18% with full ITC.
You may also like
Ryanair rival adds new Canary Island flights for just £73
Blue Badge users issued three-month warning
New Covid symptoms are 'easy to miss' as XFG strain spreads rapidly around UK
Luke Littler's request emerges immediately after winning £500,000 darts title
"From where will people get their birth certificate for SIR?": WB CM Mamata Banerjee
