GST Council 56th Meeting Highlights: Major GST Rate Changes 2025

56th GST Council Meeting Highlights – Major GST Rate Cuts & Decisions

The 56th meeting of the GST Council was held on 3rd September 2025 in New Delhi under the chairpersonship of Union Finance Minister Nirmala Sitharaman. This meeting is being termed “historic” as it introduced significant GST rate reductions across multiple industries, relief measures for the middle class, and important reforms in trade facilitation.

In this blog, we bring you the complete details of GST rate changes, effective dates, exemptions, and sector-specific impacts from the 56th GST Council meeting.

---

Key Highlights of the 56th GST Council Meeting

1. Massive GST Rate Reductions

   • Dairy products like UHT milk, paneer, and cheese have seen tax cuts from 5–12% to Nil or 5%.
   • Essential medicines, including life-saving cancer and rare disease drugs, are now either Nil-rated or at 5% GST.
   • Several food products like chocolates, biscuits, and beverages moved from 18% to 5%.
   • In the automobile sector, GST on small cars, bikes under 350cc, EVs, and parts has been slashed from 28% to 18% or 5%.
   • On the other hand, luxury items like motorcycles above 350cc, high-end cars, and yachts now face 40% GST.

2. Implementation Timeline

   • All service-related GST rate cuts effective from 22nd September 2025.
   • Most goods rate changes also effective from 22nd September 2025, except for tobacco and pan masala.
   • Tobacco, cigarettes, gutkha, and pan masala will continue at old rates until the compensation cess loan repayment is completed.

3. New Refund Mechanism

   • A 90% provisional refund system for inverted duty structures will be introduced, using data analysis and risk evaluation.
   • This is expected to reduce cash flow issues for businesses.

4. Institutional Reforms

   • The long-awaited Goods and Services Tax Appellate Tribunal (GSTAT) will become functional.
   • Appeals will be accepted from end of September 2025, and hearings will begin by December 2025.
   • Backlog appeal deadline has been set to 30th June 2026.

---

Sector-Wise GST Changes

🥛 Dairy & Food Products

• UHT Milk: 5% → Nil
• Cheese & Butter: 12% → 5%
• Paneer (packaged): 5% → Nil
• Chocolates & Cocoa Products: 18% → 5%
• Biscuits, cakes, pastries: 18% → 5%

💊 Pharma & Healthcare

• Life-saving drugs like Onasemnogene, Daratumumab, Alectinib: 12% → Nil
• Essential medicines & diagnostic kits: 12% → 5%
• Medical equipment such as oxygen, thermometers, diagnostic instruments: 18% → 5%

🚗 Automobile Industry

• Small petrol & diesel cars (under 1200cc/1500cc, <4000mm): 28% → 18%
• Motorcycles up to 350cc: 28% → 18%
• EVs & Fuel Cell Vehicles: 12% → 5%
• Luxury motorcycles (>350cc), luxury cars & yachts: 28% → 40%
• Cement (key auto infra input): 28% → 18%

📺 Electronics & Home Appliances

• Televisions, monitors, projectors: 28% → 18%
• Lithium-ion batteries & accumulators: 28% → 18%
• Solar power devices: 12% → 5%

---

Why This GST Council Meeting Matters

This council meeting directly impacts the common man, middle class families, and businesses:

• Consumers will benefit from lower prices on dairy, medicines, food, and electronics.
• Industries such as automobiles, textiles, and construction get a boost with reduced tax rates.
• Government ensures revenue balance by keeping luxury and sin goods (tobacco, alcohol, luxury bikes, cars) at high rates.
• Businesses gain from faster refunds and the dispute resolution mechanism through GSTAT.

---

FAQs on GST Council 56th Meeting

Q1. When will the new GST rates be applicable?
Most GST changes will be effective from 22nd September 2025, except tobacco-related products.

Q2. Which products got the biggest tax cuts?
Dairy, medicines, automobiles, food & beverages, and electronics witnessed major tax reductions.

Q3. What is the new GST on small cars?
Cars under 1200cc petrol and 1500cc diesel (length under 4000mm) will now attract 18% GST instead of 28%.

Q4. How does the GST change benefit consumers?
Prices of essentials like milk, medicines, chocolates, biscuits, and even small cars are likely to drop.

Q5. What is GSTAT and why is it important?
The Goods and Services Tax Appellate Tribunal (GSTAT) is a new appellate body for dispute resolution, ensuring faster decisions and consistency in rulings.

---