News Brief
GST 2.0: What Gets Cheaper, What Gets Costlier From 22 September
GST (Representative Image)
The Ministry of Finance has issued detailed FAQs clarifying the decisions taken during the 56th GST Council meeting.
The revised GST rates on goods and services (excluding tobacco products) will come into effect from 22 September, while the new tax structure for cigarettes, chewing tobacco, zarda, and beedis will be notified later, after compensation cess liabilities are cleared.
Key Highlights of the Revised GST Framework
Registration & Notifications
No change in the registration threshold under the CGST Act, 2017.
Revised rates will be formally notified on the CBIC website.
Input Tax Credit (ITC)
ITC claims remain valid at rates applicable at the time of inward supply.
Existing ITC in e-credit ledger can be used, but must be reversed if outward supplies become exempt after 22 September.
Refunds on inverted duty structure remain restricted as per earlier circulars.
Food & Daily Use Items
UHT milk exempted, aligning it with other dairy milk; plant-based and soya milk drinks reduced to 5 per cent.
Indian breads such as roti, porotta, paratha, and pizza bread now fully exempt.
Toilet soap bars taxed at 5 per cent (liquid soaps remain higher).
Face powders, shampoos, shaving creams reduced to 5 per cent.
Toothpaste, toothbrushes, and dental floss now at 5 per cent.
Agriculture & Essentials
GST on agricultural machinery and equipment (sprinklers, harvesters, irrigation systems) cut from 12 per cent to 5 per cent.
Natural honey promoted with lower tax compared to artificial honey.
Tendu leaves rate reduced to 5 per cent in line with tobacco leaves.
Healthcare
All medicines and drugs to attract concessional GST of 5 per cent.
Medical devices also cut to 5 per cent to reduce healthcare costs, with refund mechanisms to manage inverted duty.
Life insurance and health insurance policies (including ULIPs, endowment, and family floater plans) exempted from GST.
Mid-size & large cars, SUVs, MUVs, XUVs: New uniform rate of 40 per cent (without compensation cess).
Two-wheelers: Up to 350cc at 18 per cent, above 350cc at 40 per cent.
Three-wheelers, buses, ambulances, trucks, tractors, trailers: All cut to 18 per cent or lower.
Bicycles and parts reduced from 12 per cent to 5 per cent.
Energy & Industry
Coal GST merged with cess, no extra burden.
Renewable energy devices slashed to 5 per cent to encourage adoption.
Marble, granite, travertine blocks down from 12 per cent to 5 per cent.
Batteries streamlined at 18 per cent (earlier 18 per cent for lithium-ion, 28 per cent for others).
Air conditioners, dishwashers, TVs, and monitors now uniformly at 18 per cent.
Services
Passenger transport: Merit rate of 5 per cent without ITC; option of 18 per cent with ITC (except air travel).
Goods transport by GTA/CTO: 5 per cent without ITC or 18 per cent with ITC.
Job work: Pharmaceutical and leather-related services reduced to 5 per cent with ITC. Other job work raised to 18 per cent.
Hotel accommodation below ₹7,500: 5 per cent without ITC.
Beauty, fitness, wellness, yoga, salons: Reduced to 5 per cent (from 18 per cent).
Betting, casinos, gambling, lottery, horse racing, online money gaming, IPL tickets: Special GST rate of 40 per cent. Recognised sporting events remain exempt or at 18 per cent depending on ticket value.
Policy Rationale
The Council emphasised rate rationalisation for uniformity, simplification, and consumer relief while balancing industry viability.
Items like medicines, daily-use goods, and agricultural tools were made cheaper, while luxury/sin goods including large cars, gambling, and IPL events were brought under a 40 per cent special rate to maintain tax parity after phasing out compensation cess.
