Key Decisions of the 56th GST Council Meeting: Rate Cuts, Reliefs & Reforms

On 3rd September 2025, the GST Council convened its 56th meeting at New Delhi under the chairpersonship of Union Finance Minister Smt. Nirmala Sitharaman. The much-anticipated session brought sweeping changes to GST rates, reforms to ease compliance, and institutional strengthening through the Goods and Services Tax Appellate Tribunal (GSTAT).

The decisions touch everyone—from households buying everyday essentials, to businesses grappling with inverted duty structures, and industries seeking cost relief. Let’s unpack the highlights.

GST Rate Changes: Goods

1. Relief for Households & Food Sector

• Dairy products such as UHT milk, condensed milk, butter, ghee, cheese, paneer (pre-packaged) now attract Nil–5% GST instead of 12%.
• Dry fruits & nuts (almonds, pistachios, hazelnuts, cashews) reduced from 12% to 5%.
• Staples & packaged foods like pasta, biscuits, corn flakes, namkeens, jams, juices, ice-cream, chocolates, sauces, soups and even tender coconut water—slashed to 5% from earlier 12–18%.

👉 This is a big relief for the aspirational middle class and makes packaged nutrition cheaper.

2. Big Push to Construction & Real Estate

• The headline reform: GST on cement reduced from 28% to 18%.
• Marble, granite blocks, travertine cut from 12% to 5%.
• Expect lower housing costs and competitive infra project bidding.

3. Healthcare & Pharma Sector Benefits

• Life-saving drugs and specialized treatments like Onasemnogene, Daratumumab, Obinutuzumab, Risdiplam, Emicizumab, and several rare-disease drugs—moved to Nil or 5% GST from earlier 12%.
• Medical devices like thermometers, glucometers, bandages, catgut sutures, diagnostic kits—reduced to 5%.
• Oxygen, hydrogen peroxide (medicinal grade), anaesthetics, iodine—all down to 5%.

👉 Healthcare affordability gets a strong push.

4. Automobiles & Mobility

• Tractors, small cars (≤1200cc petrol/≤1500cc diesel, ≤4000 mm length) down to 18% from 28%.
• Ambulances, three-wheelers, hybrid small cars—18% GST.
• Luxury cars, SUVs, motorcycles >350cc, yachts, aircraft for personal use—raised to 40% to balance revenue.
• EVs & fuel cell vehicles remain incentivized at 5%.

5. Other Essentials

• Toiletries like soap, shampoo, hair oil, toothpaste, talcum powder—reduced from 18% to 5%.
• Educational supplies like notebooks, exercise books, maps—moved to Nil GST.
• Handicrafts (wood, brass, glass, cork, jute, bamboo, toys, statues, furniture, artware)—all cut to 5%, boosting artisans.

GST Rate Changes: Services

1. Clarification issued: standalone restaurants cannot classify themselves as “specified premises” to opt for 18% with ITC.
2. Lottery valuation rules aligned with revised tax rates.

👉 Service rate changes are effective 22nd September 2025.

Implementation Timeline

• 22nd September 2025 – New GST rates for most goods and all services take effect.
• Tobacco, pan masala, gutkha, cigarettes—kept at existing rates + cess until compensation cess loans are fully repaid.
• Cement & construction materials – immediate impact from September, easing infra budgets.
• Refund reforms – CBIC to start risk-based provisional refunds (90% release) for inverted duty cases, reducing working capital stress.

Trade Facilitation & Reforms

Process Reforms

Annexure-V outlines multiple process simplifications (awaiting notifications). These include automation of refunds, ITC claim rationalization, and compliance alignment.

GSTAT Finally Operational

• GSTAT to start accepting appeals by September 2025, hearings from December 2025.
• Deadline for backlog appeals: 30th June 2026.
• Principal Bench to also serve as National Appellate Authority for Advance Rulings (NAAAR).

👉 This ensures speedy dispute resolution, consistent rulings, and reduced litigation burden.

Why These Decisions Matter

1. Inflation Control: Food & household rate cuts ease cost of living pressures.
2. Boost to Real Estate & Infra: Cement @18% unlocks stalled projects.
3. Healthcare Access: Reduced taxes on medicines & devices make treatments affordable.
4. SME Relief: Refund reforms improve liquidity.
5. Litigation Reduction: GSTAT provides long-pending appellate remedy.

The 56th GST Council Meeting is one of the most reform-oriented sessions since GST’s rollout. By balancing revenue needs with relief for the common man, the Council has recalibrated the tax system.

For taxpayers, the bottom line is clear: essentials get cheaper, healthcare becomes accessible, housing may turn more affordable, and litigation finally has a structured forum.

The GST Council has set the stage for a more predictable, taxpayer-friendly GST era.