56th GST Council Meeting Highlights: Updates, Outcome, Press Release and Latest News

The 56th GST Council meeting happened on 3rd September 2025 at New Delhi. The GST Council has met after six months to discuss the long-pending agenda items. Significant decisions were taken in line with the government's vision for implementing next-gen GST reforms- GST Council has approved the two-tier GST rate structure of 5% and 18%, removing the 12% and 28% slabs. 

Let’s explore the 56th GST Council meeting highlights in this article.

Key Takeaways

• 56th GST Council meeting happened on 3rd September 2025 at New Delhi.
• 15 August 2025- On the 79th Independence Day, 15th August 2025, Prime Minister Narendra Modi announced the implementation of Next-Generation GST reforms. 
• The GST Council approved the Next gen GST reforms removing 12% and 28% tax slabs, while merging items into the 5% or 18% tax slabs, introduced a 40% tax slab for demerit goods, corrected the inverted tax structure on fertilizers, fabrics and more. The GST rate changes will come into effect from 22nd September 2025, except for GST rate change on tobacco and tobacco products.
• The agenda also has aspects such as introducing pre-filled returns and automated GST refunds, which might be discussed on 4th September 2025.

Highlights from the 56th GST Council Meeting

3rd September 2025

1. FM quoted, "These reforms have been carried out with a focus on the common man. Every tax on the common man's daily use items has gone through a rigorous review, and in most cases, the rates have come down drastically."
2. The GST Council approved exempting GST on life and health insurance.
3. Tobacco and its products will continue to be charged at the existing 28% rate until compensation liability, like loan and interest thereon, is discharged. 
4. The rest of the GST rate changes on goods and services (except for tobacco and its products) will come into effect from 22nd September 2025.
5. Simplification of GST registration process: 
6. The GST Council recommended moving towards two-tier GST rate structure (18% standard and 5% merit), and a special 40% demerit rate on select products.
7. Secretary confirmed during the media briefing that there is no change recommended for the monthly GST return filing.
8. The Goods and Services Tax Appellate Tribunal (GSTAT) will be made operational in 2025. The Principal Bench of the GSTAT will also serve as the National Appellate Authority for Advance Ruling. Deadlines given below-
   1. Accepting appeals before 30th September 2025 
   2. Commence hearing before 31st December 2025
   3. Limitation date for filing of backlog appeals- 30th June 2026
9. From 1st November 2025, CBIC will implement the revised system for granting 90% provisional refunds on account of the inverted duty structure and zero-rated supplies of goods and services. It will be based on a system-run data analysis and risk evaluation.
10. The GST Council recommended removing the threshold limit for refunds arising from exports made with payment of tax, thereby easing the compliance burden for exporters who send goods through the post and courier.
11. CGST Sections 15 and 34 are amended. It removed the provision for establishing the discount in terms of an agreement entered into before or at the time of such supply and specifically linking of the same with relevant invoices. Further, both provisions are amended to provide for reversal of input tax credit by the recipient in case where a post-sale discount is given and the value of supply is reduced through a GST credit note by supplier. A GST Circular will be issued in due course.
12. Going forward, the place of supply for intermediary services will be in line with the default rule under the IGST Section 13(2). It shall be the location of the recipient of such services. Accordingly, Indian exporters can claim export benefits.
13. The GST Council approved a scheme for small suppliers supplying through electronic commerce operators for a simplified GST registration.
14. The GST Council also recommended retail sale price-based valuation instead of transaction value for tobacco and its products.

GST Rate Cuts:

GST Rate Hikes:

* To come into effect at a later date (not from 22nd Sept, 2025) through a notification, after the loan and interest obligations under the compensation cess are discharged.  

Expectations from 56th GST Council Meeting

GST Rate Rationalisation

A much-needed move from the GST Council expected at the 56th GST Council meeting is restructuring and rationalising the GST rate structure. The Group of Ministers (GoM) for rate rationalisation, along with the fitment committee, had delayed the submission of its report at the 55th GST Council meeting held in December 2024. 

In February 2025, Sanjay Agarwal, chairman of the Central Board of Indirect Taxes and Customs (CBIC), mentioned that socio-economic and revenue factors had made the GST rate rationalisation task challenging for the Group of Ministers and the fitment committee. He further stressed that the GoM must reach a consensus on the recommendations for GST rate rationalisation.

Media reports suggest that GoM  hahas approved the Centre's decision to shift items in 12% and 28% GST rate slab may be shifted to either the 5% or the 18% slabs.ntroduction of 40% GST slab for sin goods is also being contemplated. The GST Council may pass the final recommendation.

There are speculations that the GoM will also recommend removing the inverted tax structure prevalent across industries such as textiles, footwear, fertilisers, paper and packaging. The GST Council is likely to recommend a phased approach for GST rate rationalisation, such that the rule change allows taxpayers enough time to implement GST rate changes while avoiding any potential anti-profiteering issues.

Review of Compensation Cess

The GST Council may decide whether to extend or end the levy, collection, and distribution of compensation cess to States. Currently, the GST Council has to repay the back-to-back loans to meet the shortfall in GST Compensation. Media reports indicate that the GST Council might replace compensation cess with health and clean energy cess after March 2026. If the change were to come into force, it needs constitutional amendment.

Levy and collection of compensation cess was extended up to 31st March 2026. A GoM is formed to study the possibility of a new tax levy to replace the compensation cess after it ends. The GoM is headed by the Minister of State in the Finance Ministry, Pankaj Chaudhry and is slated to submit their report by 30th June 2025.

GST Rate Changes 

Taxation of certain items under GST is still being contemplated. One such item is the GST on health insurance. The GST Council at its 55th meeting provided a timeline extension for the GoM to study GST on insurance premia. The taxation of health insurance and life insurance under GST could be deliberated at the 56th GST Council meeting. An 18% GST rate is currently charged on insurance premia, which is proposed for an exemption.

There is speculation that the 56th GST Council may unify the GST levy on commercial drones. The Council may recommend reducing the GST rate on drones from 28% to 5%. Also, taxation of GST on drones with detachable cameras has been a significant point of contention. 

The move will clarify the classification of goods in the Unmanned Aircraft System (UAS). A higher rate of 28% is levied for the personal use of drones, whereas a lower rate of 5% is charged for business use under the HSN code 8806. The tax authorities have mostly charged 18% GST on these drones by classifying them as camera equipment instead of aircraft. Industry experts claim that drones must be categorised based on their main operation, airborne mobility rather than additional accessories.

The Council may also consider GoM submissions on charging GST on virtual digital assets, the practical implementation of CGST Section 11A (to waive recovery of GST not levied or short-levied due to common trade practices in specific sectors), and sector-specific clarifications for e-commerce, real estate, and gaming.

The 56th GST Council meeting is crucial for many industries as some of the long-standing issues may find closure.

Press Releases 

3rd September 2025 highlights