The Central Board of Indirect Taxes and Customs (CBIC) has released a series of new and superseding notifications to update GST rates and regulations on goods.

• Notification No. 9/2025 – Central Tax (Rate) dated 17.09.2025 supersedes the earlier 2017 notification, incorporating the latest changes to CGST rates on goods.
• Notification No. 10/2025 – Central Tax (Rate), also dated 17.09.2025, replaces a previous notification to provide an updated list of goods exempted from CGST.
• Notification No. 13/2025 – Central Tax (Rate) amends a 2018 notification to specify revised GST rates for handicraft items.
• Notification No. 11/2025 – Central Tax (Rate) introduces updated GST rates on goods imported for petroleum operations.
• Notification No. 2/2025 – Compensation Cess (Rate) updates the applicable compensation cess rates on certain goods.
• Notification No. 14/2025 – Central Tax (Rate) confirms that there is no change in the GST rate on bricks under the special composition scheme.

These notifications reflect the government's efforts to streamline and clarify GST provisions in line with the decisions taken at the 56th GST Council meeting.

FAQ-3 on Goods Rate Notifications as per recommendations of the GST Council in its 56th meeting on 3rd September 2025

Q.1 In which notification will I find the CGST rates changes for goods? Is a new Notification being issued?

You will find the changes in CGST rates on goods in Notification No. 9/2025- Central Tax (Rate) dated 17.9.2025. This Notification No. 9/2025- Central Tax (Rate) dated 17.9.2025 has been issued in supersession of earlier Notification No. 1/2017- Central Tax (Rate) dated 28th June 2017.

Q.2 In which notification will I find the list of exempted goods from CGST? Is a new Notification being issued?

You will find the list of goods exempted from CGST in Notification no. 10/2025-Central Tax (Rate) dated 17.9.2025. This Notification no. 10/2025-Central Tax (Rate) dated 17.9.2025 has been issued in supersession of earlier Notification No.2/2017- Central Tax (Rate) dated 28^th June 2017.

Q.3 In which notification will I find the GST rate for handicrafts? Is a new Notification being issued?

You will find the GST rates for handicrafts in Notification no. 13/2025-Central Tax (Rate) dated 17.9.2025. This Notification no. 13/2025-Central Tax (Rate) dated 17.9.2025 has been issued to amend Notification No.21/2018- Central Tax (Rate) dated 26^th July, 2018.

Q.4 Which notification prescribes the amended rates of compensation cess?

Notification no. 1/2017-Compensation Cess (Rate) dated 28.6.2017 has been amended vide Notification no. 2/2025-Compensation Cess (Rate) dated 17.9.2025 to notify the changes in compensation cess rates.

Q.5 Which is the notification relating to change in GST rate on goods imported for petroleum operations?

Please refer to notification no. 11/2025- Central Tax (Rate) dated 17.9.2025 in this regard.

Q.6 Has a new notification been issued for bricks under Special Composition Scheme?

There is no change in GST rate under the special composition scheme for bricks other than sand lime bricks. Notification no. 14/2025- Central Tax (Rate) dated 17.9.2025 has been issued in this regard.

The Ministry of Finance has released a second set of Frequently Asked Questions (FAQs) to provide further clarification on key decisions made during the 56th GST Council meeting. These updates span across various sectors, including pharmaceuticals, construction, services, and logistics.

In the pharmaceutical sector, the National Pharmaceutical Pricing Authority (NPPA) clarified that while manufacturers must update the Maximum Retail Price (MRP) to reflect revised GST rates, it is not mandatory to recall or re-label existing stock in the supply chain—provided retailers comply with pricing norms.

The Council has also introduced uniform GST rates for multiple products. Notably, the GST on all types of drones has been standardized at 5%, replacing the earlier rates of 5%, 18%, and 28%. The composition scheme for bricks remains unchanged, offering a choice between 6% without Input Tax Credit (ITC) or 12% with ITC, while the rate for sand lime bricks has been reduced from 12% to 5%.

In the service sector, beauty and wellness services are now taxed at a mandatory 5% without ITC. Further clarifications include GST exemptions for individual life and health insurance, including reinsurance services—requiring insurers to reverse ITC on related inputs.

For the hospitality sector, accommodation units priced up to ₹7,500 per day must now charge 5% GST without ITC, eliminating the previous option to apply 18%.

In logistics, multimodal transport services attract 5% GST with limited ITC if no air travel is involved, and 18% with full ITC if air transport is included.

Lastly, e-commerce operators are now liable for GST on local delivery services offered by unregistered suppliers through their platforms.

Ministry of Finance

Frequently Asked Questions-2 (FAQs-2) on the decisions of the 56th GST Council held in New Delhi

Posted On: 16 SEP 2025 3:10PM by PIB Delhi

Q.1 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) vide OMs dated 12.9.2025 and 13.9.2025 have clarified the following:

• All manufacturers/ marketing companies selling drugs/ formulations shall revise the Maximum Retail Price (MRP) of drugs/formulations (including medical devices).
• The manufacturers/ marketing companies shall issue revised price list or supplementary price list, in Form V/VI, to dealers and retailers for display to consumers, and to State Drug Controllers and the Government, reflecting the revised GST rates and revised MRP.
• Recalling, re-labelling, or re-stickering on the label of container or pack of stocks released in the market prior to 22^nd September, 2025 is not mandatory, if manufacturer/ marketing companies are able to ensure price compliance at the retailer level.

The OMs are available in the website of the National Pharmaceutical Pricing Authority (NPPA) under Department of Pharmaceuticals:

https://nppa.gov.in/uploads/tender/01da3cf0cd3d17c68c9a63fe23878260.pdf and https://nppa.gov.in/uploads/tender/12fbbb0cb337f1d2d70afb3fbcb57f39.pdf

Q.2 Unmanned aircrafts (Drones) attracted 5%, 18% and 28% GST rate. The 56th GST Council had recommended 5% GST rate on drones. Whether this 5% GST rate will apply to all types of drones?

Answer: Earlier unmanned aircrafts for personal use attracted 28% GST, unmanned aircrafts with digital camera/video camera recorders attracted 18% GST rate and all other unmanned aircrafts apart from aforementioned categories attracted 5% GST.

The GST council in its 56th meeting held on 03.09.2025 has recommended uniform GST rate of 5% on all the drones.

Q.3 What is the current GST rate on bricks?

Answer: A Special Composition Scheme on supply of the bricks (other than sand lime bricks) was implemented w.e.f 1st April,2022 based on the Report of the Group of Ministers on Capacity Based Taxation and Special Composition Scheme which was accepted by GST Council in its 45th meeting held on 17th Sep 2021. Under the scheme, bricks attract GST of 6% without ITC and 12% with ITC with threshold limit for bricks at Rs. 20 lakhs instead of Rs.40 lakhs as is applicable to goods. The GST council in its 56th meeting held on 3rd September, 2025 did not recommend any change on the special composition scheme rates except on sand lime bricks on which GST rate has been recommended to be reduced from 12% to 5%. Hence, all kinds of bricks except sand lime bricks continue to attract GST of 6% without ITC and 12% with ITC with a threshold limit of Rs. 20 lakhs.

Q.4 What are the insurance services covered within the ambit of the exemption granted to individual life and health insurance?

Answer: Services of individual health and life insurance business provided by insurers to the insured, where the insured is not a group, are included within the ambit of the exemption. When these services are provided to an individual, or to an individual with his/her family, the same will be exempted.

Q.5 In addition to exempting services of individual health and life insurance supplied by insurers, will any input services of insurers be also exempted?

Answer: At present, insurers are availing ITC on many inputs and input services such as commissions, brokerage and reinsurance, etc. Out of these input services, reinsurance services will be exempted. Input Tax Credit of other inputs or input services is to be reversed because the output services will be exempted.

Q.6 Do hotels which supply units of accommodation having value less than or equal to Rs 7500/- per unit day have the option of supplying such units at 18% with ITC?

Answer: Suppliers of hotel accommodation service where the value of a unit of accommodation is less than or equal to Rs 7500/- per unit per day, shall have to charge GST at 5% without ITC on such units. It is a mandatory rate prescribed for such services, and the option to pay GST at the rate of 18% with ITC is not available for such units.

Q.7 Will hotels supplying units of accommodation having value less than or equal to Rs 7500/- per unit per day be able to avail ITC in relation to such units?

Answer: The hotels supplying units of accommodation which have value less than or equal to Rs 7500/- per unit per day, shall not be able to avail ITC on such units, as the GST rate prescribed for such supplies is 5% without ITC.

Q.8 Is the 5% without ITC rate on beauty and physical well-being services mandatory? Can service providers charge 18% with ITC?

Answer: The 5% without ITC rate on beauty and physical well-being services is mandatory. Service providers do not have the option to charge 18% with ITC on these services.

Q.9 How should a service provider deal with input tax credit (ITC) in cases where GST is payable at a rate of 5% without ITC?

Answer: In such cases,

a. Credit of input tax charged on goods or services used exclusively in supplying such services shall not be taken by the service provider; and

b. Credit of input tax charged on goods or services used partly for supplying such services and partly for supplying other taxable supplies shall be reversed by the service provider as if the supply leviable to 5% without ITC is an exempt supply. Consequently, proportionate ITC shall be required to be reversed by the service provider as per Section 17(2) of the CGST Act, 2017 and the rules made thereunder.

Q.10 What is the GST rate applicable on job work services in relation to bus body building?

Answer: Job work services in relation to bus body building are taxable at a GST rate of 18% with Input Tax Credit (ITC). Earlier, these services were covered under a specific entry [erstwhile Entry (ic) of Heading 9988] and attracted 18% with ITC. In the recent rate rationalization exercise, all residual job work services or other manufacturing services have been aligned to 18% with ITC, thereby subsuming the specific entry for bus body building.

Q.11 What is the GST rate applicable on job work services in relation to bricks?

Answer: Job-work services in relation to those bricks that will attract GST @5% (E.g. sand lime bricks) will be taxable at the rate of 5% with ITC.

Q.12 What is the GST rate applicable on multimodal transport of goods?

Answer: Multimodal transport of goods (where at least two different modes are used by a multimodal transporter) will be taxable as follows:

a. 5% with restricted input tax credit — i.e. ITC allowed only on input services of transportation of goods limited to 5% of the value; when no leg of transport of goods is by air.

b. 18%, with full input tax credit; when at least one leg of the transport is by air.

Q.13 Can ITC be taken on multimodal transport services, where no leg of transport is by air and the applicable rate is 5%?

Answer. Input services of goods transportation limited to 5% of the value will be allowed even if supplier of such services has charged a higher rate of tax. ITC will not be allowed for other inputs or input services.

Example: ‘A’ engages ‘B’ (multimodal transporter) for transport of goods from New Delhi to Gaya for Rs. 1200, without involving any transportation through air. B’ hires GTA ‘C’ for Rs. 600 who charges tax @18% and Container Transport Operator ‘D’ for Rs. 400 who charges tax @5%.

GST Rate applicable for the service provided by ‘B’: 5%

ITC available to ‘B’:

a. GTA input: Rs. 30 (5% of Rs. 600), not Rs. 108 (18% of 600)

b. CTO input: Rs. 20 (5% of Rs. 400).

Q.14 What is the tax treatment if multimodal transportation involves transport of goods through air also?

Answer: If at least one leg of transport is through air, the applicable GST rate will be 18%. In such cases entire ITC of inputs or input services is allowed.

Example: ‘A’ engages ‘B’ (multimodal transporter) for transport of goods from New Delhi to Gaya for Rs. 1200, which involves transportation through air. B’ engages a service provider ‘C’ providing services of transport of goods through air for Rs 800 and a GTA ‘D’ for Rs. 200 who charges tax @18%.

GST rate applicable on the service provided by B: 18% ITC available to ‘B’:

a. GTA input: Rs 36 (18% of Rs. 200)

b. Input on the services of goods transportation by air: Rs 144 (18% of Rs. 800).

Q.15 Who is liable to pay GST for Local Delivery Services provided through ECO?

Answer: Services by way of local delivery provided through an e-commerce operator (ECO) where the person supplying such services is not liable to register under Section 22(1) will be covered under Section 9(5) of the CGST Act. In such cases, the liability to pay GST will be on the ECO.

Q.16 At what rate are local delivery services taxable? Answer: The services of local delivery are taxable at 18%.

If such services of local delivery are supplied directly by a registered person: GST @ 18% payable by that person.

If such services of local delivery are supplied through ECO by a person who is not liable to be registered: GST @ 18% payable by the ECO under section 9(5).

If such services of local delivery are supplied through ECO by a registered person: GST@18% is payable by the supplier of the local delivery service, i.e., the registered person supplying through ECO.

Q.17 Whether an ECO providing the local delivery services are covered within the scope of GTA? What will be the effect if the local delivery services are provided through an ECO?

Answer: “Goods Transport Agency” (GTA) will not include:

a. “electronic commerce operator by whom the services of local delivery are provided,”

and

b. “electronic commerce operator through whom the services of local delivery are provided.”

Q.18 What is tax treatment for leasing or renting services without operator?

Answer: Majority of leasing or rental services without operator are taxed at the same rate of tax as applicable on supply of like goods. No change is proposed in this regard. The tax rate on such services will continue to be equal to the tax rate applicable on supply of like goods. For example, if cars or machines are taxed at 18% then the rate of 18% will be applicable for leasing or renting (without operator) of such cars or machines. Similarly, if supply of any motor vehicle is taxed at 40% or 5% then the leasing or renting services (without operator) will also be taxed at 40% or 5% respectively.

Q.19 What is the applicable tax rate on leasing/renting a car with operator?

Answer: Supplier of services of leasing/renting a car with operator (for example, driver) will now have the option of charging 5% with ITC of input services in same line of business or 18% with full ITC.

The Ministry of Finance has released a set of FAQs clarifying the decisions made during the 56th GST Council meeting held in New Delhi. As per the announcement, changes in GST rates for most goods and services—excluding cigarettes, chewing tobacco, unmanufactured tobacco, and beedis—will come into effect from 22 September 2025. The existing GST rates for these specified tobacco products will continue until all compensation cess liabilities are settled.

There have been no changes to the registration thresholds under the CGST Act, 2017. The revised GST rates will be formally notified through official CBIC notifications.

For supplies made prior to the new rates coming into force, tax liability will be determined in accordance with Section 14 of the CGST Act, based on the date of invoice issuance or receipt of payment. Input Tax Credit (ITC) on purchases made before the rate change remains valid for adjusting tax liabilities. However, ITC must be reversed if the outward supplies become exempt under the revised rates.

The FAQs also provide guidance on imports, e-way bills, and sector-specific rate adjustments. Key highlights include:

• Agricultural machinery, medicines, small cars, large vehicles, motorcycles, renewable energy equipment, and technical textiles are subject to revised rates.
• Select daily-use consumer goods such as toilet soap, face powder, and shampoos will now attract a 5% GST rate.
• Services such as beauty treatments, wellness services, and budget hotel accommodations will also be taxed at 5%.
• Sin and luxury goods, including gambling, lotteries, and premium sporting events, will attract a 40% GST rate.
• Job work services related to the pharmaceutical and leather industries will enjoy reduced rates, while those related to offshore oil and gas, residuary job work, and high-value transport services will continue under standard or higher rates.

These policy changes aim to streamline the GST structure, ensure continuity in the input tax credit chain, and strike a balance between consumer affordability and industry sustainability.

Ministry of Finance

Frequently Asked Questions (FAQs) on the decisions of the 56th GST Council held in New Delhi

Posted On: 03 SEP 2025

Q.1 When will the changes in GST rates come into force?

Ans. As per recommendations of the GST Council in its 56th meeting, the changes in GST rates on services and goods other than cigarettes, chewing tobacco products like zarda, unmanufactured tobacco and beedi will be effective from 22nd September, 2025. For the specified goods namely, cigarettes, chewing tobacco products like zarda, unmanufactured tobacco and beedi, the existing rates of GST and compensation cess will continue to apply and the new rates will be implemented at a later date to be notified, based on discharging of entire loan and interest liabilities on account of compensation cess.

Q.2 Is there any change in threshold of the registration re-quired for goods under CGST Act, 2017?

Ans. No, there is no change in threshold of the registration required for goods under CGST Act, 2017.

Q.3 Which notification provides for the revised rates?

Ans. The changes in GST rates will be notified in the rate notification. The notification would be placed on CBIC website.

Q.4 What happens to the applicable rate of tax, if I had supplied goods/services or both before the changes in GST rates come into force but the invoices were issued lat-er?

Ans. As per Section 14 (a)(i) of CGST Act, 2017, in case the goods or services or both have been supplied before the change in rate of tax, and the invoice for the same has been issued after the change in rate of tax, then the time of supply i.e. date of liability to pay tax on such supply will be as follows:

i. If the payment is received after the change in rate of tax, then time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier.

ii. If the payment has been received before the change in rate of tax, the time of supply shall be the date of receipt of payment.

Q.5 What would be the GST rate applicable if I have received advances for sup-ply of goods/services or both but supply has not been completed or invoice is not is-sued?

Ans. The GST rate will be determined as per the time of supply provi-sions. (Refer Section 14 of the CGST Act, 2017).

Q.6 What will happen to the ITC for purchases made before changes in GST rates came into effect? Will I get ITC at reduced rate now?

Ans. Section 16(1) of CGST Act entitles a registered person to take credit of the input tax charged on his inward supplies, which he uses or intends to use in the course or furtherance of his business, subject to conditions and restrictions which may be prescribed and in the manner provided under section 49 of the CGST Act 2017, which gets credited to his e- credit ledger.

Accordingly, if a registered person receives an inward supply and tax has been duly charged on it, at a rate which is in consonance with the rate prevailing at the time of such supply, the said registered person is entitled to the credit of such tax paid, subject to the other conditions/ restrictions and manner specified in section 49 of the CGST Act 2017.

Q.7 What will be the impact on the IGST rate on import of goods?

Ans. The IGST on imported goods will be the GST rates as notified in the rate notification except where IGST rate has been exempted separately.

Q.8 The GST rate has been reduced on my outward supply of goods/services made on or after 22nd September, 2025 but I already have ITC of GST in ledger that ac-crued on account of higher rate. Can I continue to use such credit?

Ans. The input tax credit once duly availed in e-credit ledger can be used for discharge of any output tax liability in terms of provisions of section 49(4) of CGST Act and rules made thereunder.

Q.9 My outward supply is exempt under new rate schedule. But I already have ITC of GST paid in my ledger. Will I need to reverse ITC?

Ans. The ITC can be utilized to discharge outward liability for supplies of goods/services or both made till 21st September, 2025. However, for supplies made on or after i.e 22nd September, 2025 when the rate change is effected, ITC will have to be reversed as per provisions of CGST Act, 2017.

Q.10 Will I be allowed to take refund of accumulated credit arising out of invert-ed duty structure for supplies effected upto the date of effect of revised rate as noti-fied?

Ans. The said issue has been clarified vide circular No. 135/05/2020-GST dated 31.03.2020 (as amended), which states that refund of accumulated ITC in terms of clause (ii) of first proviso to section 54(3) of the CGST Act, is available where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies. However, the input and output being the same in such cases, though attracting different tax rates at different points in time, do not get covered under the provisions of clause (ii) of the first proviso to sub-section (3) of section 54 of the CGST Act.

Q.11 If I already have stock on the date when rate changes come into effect, should I apply the revised rate?

Ans. GST is levied on supply. Therefore, on goods supplied on or after the revised GST rates are notified, the new GST rates will be applicable on the outward supplies of goods/services or both.

Q.12 Will the e-way bills have to be cancelled and generated afresh on goods in transit when the new rates come into effect?

Ans. As per rule 138 of CGST Rules, 2017 the e-way bill is to be gen-erated before the start of supply/transport of goods. There is no mandatory requirement for cancellation and fresh generation of e-way bills for goods in transit when the new rates come into effect. E-way bills currently in transit will continue to remain valid as per their original validity period.

Q.13 UHT (Ultra High Temperature) milk has been exempted. Does exemption to UHT milk also cover plant-based milk?

Ans. All dairy milk, other than UHT milk, were already exempt from GST. Hence UHT milk has been exempted to provide same tax treatment to similar goods. Plant based milk drinks except soya milk drinks attracted 18% GST while soya milk drink attracted 12% GST. The GST rate on plant-based milk drinks and soya milk drinks have now been reduced to 5%.

Q.14 What is the reason for 40% rate on ‘other non-alcoholic beverag-es’?

Ans. The principle behind the recent rate rationalisation exercise is to keep similar goods at the same rate to avoid issues of misclassification and disputes. This has also been applied to ‘other non-alcoholic beverages’.

Q.15 What is the GST rate on food preparations not elsewhere specified in any of the schedules?

Ans. Food preparations not elsewhere specified will attract a GST rate of 5%.

Q.16 What is the reason for revising GST rate only on specified varieties of Indi-an bread?

Ans. Bread was already exempt while pizza bread, roti, porotta, para-tha etc attracted different rates. All Indian breads, by whatever name called have been exempted even though only few goods have been mentioned by way of illustrative exam-ple.

Q.17 Why has the rate of carbonated beverages of fruit drink or carbonated beverages with fruit juice been increased?

Ans. These goods attracted compensation cess in addition to GST. Since it has been decided to end compensation cess levy, the tax has been increased to maintain the pre rate rationalization level of tax.

Q18. Why is there a different tax treatment between paneer and other cheese?

Ans. Prior to rate rationalisation, paneer sold in other than pre-packaged and labelled form already attracted nil rate. Therefore the changes have been made only in respect of paneer supplied in pre-packaged and labelled form. Paneer is an Indian cottage cheese. This is mostly produced in small scale sector. The measure is intended to promote Indian cottage cheese.

Q.19 What is the reason for differential tax treatment for natural honey and ar-tificial honey?

Ans. This is intended to promote natural honey.

Q.20 Has the GST on all agriculture machinery / equipment been re-duced?

Ans. The GST rate on agriculture machinery/equipment such as, sprinklers, drip irrigation system, Agricultural, horticultural or forestry machinery for soil preparation or cultivation; lawn or sports-ground rollers, harvesting or threshing ma-chinery, including straw or fodder balers; grass or hay mowers, other agricultural, horti-cultural, forestry, poultry-keeping or bee-keeping machinery, composting machines etc, which earlier attracted 12% GST, has now been reduced to 5%.

Q.21 Why has agriculture machinery not been fully exempted ?

Ans. The objective of the rate rationalisation is to maintain balance between users and producers. While providing relief for the farmers, it is important that the domestic manufacturing does not get adversely impacted. If agriculture machinery is fully exempted, the manufacturers/dealers of these goods would not be able to claim input tax credit on the GST paid on raw materials and will have to reverse the ITC paid on the inputs. This would increase their effective tax incidence and cost of production. This may in turn be passed on to farmers in the form of higher prices which in turn would make the measure counterproductive.

Q.22 What is the GST rate on medicines?

Ans. All drugs/ medicines have been prescribed a concessional rate of GST of 5%, except those specified at nil rate.

Q.23 Why have all medicines not been exempted from GST in gen-eral?

Ans. If drugs/ medicines are fully exempted, the manufactur-ers/dealers would not be able to claim input tax credit on GST paid on raw materials and will have to reverse the ITC paid on the inputs. This would increase their effective tax in-cidence and cost of production. This may in turn be passed on to consumers/ patients in the form of higher prices which in turn would make the measure counterproductive.

Q.24 Does the 5% GST rate apply on all medical devices?

Ans. The rate of 5% applies on all medical devices, instruments, ap-paratus used in medical, surgical, dental and veterinary uses other than that are ex-empted specifically.

Q.25 Why has the GST rate been reduced on medical devices? Will this not lead to inverted duty structure?

Ans. The measure is intended to lower the cost of healthcare and thereby benefit patients, particularly the poor. This measure does not create any new in-verted duty structure as the existing structure already had inverted duty structure alt-hough this measure may deepen the inversion. However, under GST, refund of accumu-lated input tax credit arising on account of inverted duty structure is available to manu-facturers. GST Council has also recommended process reforms to enable expedited re-funds.

Q.26 What is the revised GST rate on small petrol, LPG, CNG, or diesel cars? What is covered under small cars?

Ans. The GST rate on all small cars has been reduced from 28% to 18%. For the purposes of GST, small cars means Petrol, LPG, or CNG cars with engine capacity up to 1200 cc and length up to 4000 mm and Diesel cars with engine capacity up to 1500 cc and length up to 4000 mm.

Q.27 What is the new GST rate on vehicles exceeding 1500 cc or length exceed-ing 4000mm? What is the GST rate on utility vehicles?

Ans. The GST rate on all mid-size and large cars i.e vehicles exceeding 1500 cc or length exceeding 4000mm is 40%. Further, motor vehicles in the category of Utility Vehicles, by whatever name called including Sports Utility Vehicles (SUV), Multi Utility Vehicles (MUV), Multi-purpose Vehicles (MPV) or Cross-Over Utility Vehicles (XUV), with an engine capacity exceeding 1500 cc, length exceeding 4000 mm, and ground clearance of 170 mm and above, will also attract a GST rate of 40% without any cess.

Q.28 What is the GST rate on 3-wheelers?

Ans. The GST rate on three-wheelers classified under HSN 8703 is 18%. It has been reduced from 28%.

Q.29 What is the GST rate on buses and other vehicles meant to carry 10 or more persons, including the driver, such as buses?

Ans. All motor vehicles designed to transport ten or more persons, including the driver, and classified under HSN 8702, will attract a GST rate of 18%. It has been reduced from 28%.

Q.30 What is the GST rate on vehicles supplied as ambulances?

Ans. Motor vehicles cleared as ambulances, and duly fitted with all necessary fitments, furniture, and accessories necessary for an ambulance at the time of clearance from the factory will attract a GST rate of 18%. It has been reduced from 28%.

Q.31 What is the GST rate on goods transport vehicles such as lorries and trucks?

Ans. Motor vehicles designed for the transport of goods, such as lor-ries and trucks, classified under HSN 8704 will attract a GST rate of 18%. It has been re-duced from 28%.

Q.32 What is the GST rate on trailers and semi-trailers of tractors?

Ans. Tractors, other than road tractors for semi-trailers of engine ca-pacity more than 1800 cc, attract a GST rate of 5%. However, road tractors for semi-trailers, with engine capacity more than 1800 cc attract a GST rate of 18%. It has been reduced from 28%.

Q.33 What is the GST rate on motorcycles?

Ans. Motorcycles of engine capacity upto 350 cc attract a GST rate of 18% while Motorcycles of engine capacity exceeding 350 cc attract a GST rate of 40%.

Q.34 GST rate is 18% for motor cycles upto 350cc? Does this include 350cc motor cycles?

Ans. The 40% rate is applicable only to motorcycles exceeding 350cc. Therefore the 18% rate also applies to motor cycles of 350cc or lesser than 350cc.

Q.35 Currently mid-size and big cars attract 28% GST and compensation cess ranging from 17-22% with the overall tax incidence ranging from 45-50%. What will be the new rate?

Ans. The new GST rate on mid-size and big cars will be 40% with no compensation cess.

Q.36 Has GST rate been reduced on bicycles and parts?

Ans. The GST rate has been reduced to 5% on bicycles and its parts from 12%.

Q.37 Why has small agricultural tractors not been fully exempted from GST?

Ans. The objective is to provide relief to the farmers while not disin-centivising domestic producers. Fully exempting small tractors would be counterpro-ductive. When the rate of tax on any goods is nil, the suppliers cannot claim Input Tax Credit (ITC) on the inputs used in manufacture of the goods and will have to reverse the same. This means that the producers have to absorb this cost which will eventually be passed to the buyers.

Q.38 Why is 40% rate referred to as a ‘special rate’? What is the basis for sub-jecting goods to special rate?

Ans. The special rate is applicable only on few select goods, predom-inantly on sin goods and few luxury goods and therefore is a special rate. Most of these goods attracted Compensation Cess in addition to GST. Since it has been decided to end the Compensation Cess levy, the Compensation Cess rate is being merged with GST so as to maintain tax incidence on most goods. On other goods and services, the spe-cial rate has been applied as these were already attracting the highest GST rate of 28%.

Q.39 What is the reason for differential tax rates on wood pulp?

Ans. Wood pulp is used for making paper and textiles. The paper chain and the textile chain operate separately. For textiles, the tax treatment is to main-tain parity with other textile goods.

Q.40 Why has GST not been removed on raw cotton?

Ans. Currently, cotton attracts GST on reverse charge basis. This means that agriculturists do not have to pay GST when they supply raw cotton. The rea-son for taxing cotton in GST is to avoid breakage in input credit chain and the GST paid on cotton is available as input tax credit for the textile industry. This will ultimately bene-fit the consumers.

Q.41 For the textile sector, why is the rate not reduced on chemical dyes, plastics, metals, rubber used in metallised yarn, zippers, elastics, rubberised yarn, elastic covered yarn, embellishments etc?

Ans. The aim of the rate rationalisation exercise is to correct inversion in the manmade value chain. This is in line with the fibre neutral policy. However, the listed items are multi use goods.

Reducing GST on these goods will require an end use-based mechanism which is against the current policy of moving away from end use-based exemptions.

Q.42 Will technical textiles such as geotextiles and agro-textiles face deeper inversion as these primarily use plastic components such as polyethylene and polypropylene?

Ans. Technical textiles such as geotextiles and agro- textiles are classified as textiles and not plastics by virtue of the Harmonised System of Nomenclature of World Customs Organ-isation adopted by India. While inversion may deepen, under GST, refund of accumulat-ed credit on account of inverted duty is available. Therefore, accumulated input tax cred-it gets neutralised by way of refund. The process reform will ensure expedited sanction of the refunds.

Q.43 Why is refund of inverted duty structure on imitation zari made out of metallised plastic film restricted while there is no other restriction on refund on other textile products made from plastic or rubber?

Ans. The decision to restrict ITC on the plastic/ polyester film in imitation zari was taken in the 52nd Council meeting. The focus of this GST rate rationalisation exercise has been to streamline GST rates.

Q.44 What is the new GST rate on toilet soap bar? Why has a distinction been kept between liquid soap and soap in bars?

Ans. The new GST rate on toilet soap bar is 5%. This is intended to lower the monthly expendi-ture for the lower middle class and the poorer sections of society.

Q.45 What is the reason for reducing GST on face powder and shampoos? Will this not benefit MNCs and luxury brands?

Ans. These goods are daily use items for almost all segments of population. Although expen-sive face powder and shampoos sold by MNCs or luxury brands will also benefit, the ob-jective of the rate rationalisation exercise is to further simplify the tax structure. Adminis-tering a tax based on brand or value of cosmetics will create complexity in tax structure besides posing challenges for administration.

Q.46 Why GST been reduced only on select items such as face powder and shaving cream?

Ans. The GST rate has been reduced to 5% only on certain goods that are daily use items for most segments of population.

Q.47 Why has GST not been reduced on mouthwash which is also com-monly consumed across households like dental floss?

Ans. GST Council recommended to reduce the GST rate to 5% on tooth paste, tooth brush and dental floss which are in the nature of basic dental hygiene goods.

Q.48 Why has GST rate on coal been increased? Will this not impact elec-tricity cost?

Ans. Coal attracted, prior to rate rationalization, 5% GST+ Compensation Cess of Rs 400/ton. The Council has recommended to end Compensation Cess and hence the rate has been merged with GST. There is no additional burden.

Q.49 Has the GST rate on tendu leaves been reduced? Why has the rate been reduced?

Ans. GST rate on tendu leaves has been reduced to 5% as tobacco leaves are already at 5%. Tendu leaves are also a minor forest produce.

Q.50 What is the GST rate on renewable energy equip-ment/devices?

Ans. The GST rate on renewable energy equipment/devices that were at 12% has been reduced to 5%.

Q.51 Why has the GST rate been reduced on renewable energy equipment /devices? Will this not lead to inverted duty structure?

Ans. These goods already faced inverted duty structure. While reducing the GST rate to 5% will deepen inversion, mechanism for refund arising out of inverted duty structure is available. In addition, process reforms will ensure expedited refunds. The objective is to promote renewable energy goods.

Q.52 Why has the GST rate on marble and travertine blocks and granite blocks been reduced?

Ans. Earlier, marble and travertine blocks and granite blocks attracted GST rate of 12%. These are in the nature of intermediate goods and GST rate on these goods has been reduced to 5%.

Q.53 What is the GST rate on spectacles and goggles (heading 9004)?

Ans. Spectacles and goggles for correcting vision now attract 5% GST (reduced from 12% and 18% respectively), while spectacles and other goggles other than for correcting vision continue to attract GST rate of 18%.

Q.54 What is the GST rate on batteries (heading 8507)?

Earlier, lithium-ion batteries attracted 18% GST and other batteries attracted 28% GST. Now, all batteries under heading 8507 will be uniformly taxed at 18% GST.

Q.55 What is the GST rate on Air Conditioners, TVs, monitors and dish-washers?

Ans. GST on air conditioners and dishwashers has been reduced from 28% to 18%. Earlier TVs and monitors up to 32 inches earlier attracted 18% GST while larger TVs and moni-tors attracted 28% GST. Now all TVs and monitors will be uniformly taxed at 18%.

Q.56 Which policies are covered under the ambit of the GST exemption recommended on life insurance?

Ans. The policies covered under the exemption recommended on life insurance are all indi-vidual life insurance policies including term, ULIP, and endowment plans and reinsur-ance services thereof.

Q.57 Which policies are covered under the ambit of the GST exemption recommended on health insurance?

Ans. The policies covered under the exemption recommended on health insurance are all in-dividual health insurance policies including family floater plans and senior citizen poli-cies and the reinsurance services thereof.

Q.58 Whether the passenger transportation services will be taxed at 18%?

Ans. No, the passenger transportation services will be taxed at a merit rate of 5% with no ITC. However, service providers will have the option to charge a standard rate of 18%, which would allow them to claim full ITC.

Q.59 Whether the same option of two rates is available to transport of passenger by air?

Ans. No such option is available for transport of passenger by air i.e. if travel is by economy class then rate of GST is 5% otherwise the GST rate will be 18%.

Q.60 Whether the rate of 18% is applicable to transportation of goods by GTA?

Ans. The transportation of goods by GTA will continue to be taxed at the merit rate of 5% with no ITC. However, the GTA will have the option of charging GST at the standard rate of 18% with full ITC.

Q.61 Whether transportation of goods in containers by Container Train Operator (CTO) will be taxed at 12%?

Ans. No, service of transportation of goods in container by CTO will be given the option of charging 5% rate with no ITC or 18% rate with full ITC.

Q.62 What is the GST rate for transportation of goods by the multi modal transporter?

Ans. Multimodal transportation of goods will be taxed at 5% GST with restricted ITC provided no transportation of goods by air is involved. However, where the transportation of goods by air is involved then the rate of GST will be 18% with full ITC.

Q.63 Why not fully exempt GTA services from GST considering the im-portance of this sector?

Ans. When a service is exempt the service provider cannot claim ITC. This adds to their cost and makes the service costlier. Moreover, specific exemptions have already been pro-vided where required such as transport of essential items (B2C) like agricultural pro-duce, milk, etc.

Q.64 What is the recommended GST rate on services by way of job work in relation to pharmaceutical products?

Ans. These services will now attract the rate of 5% with ITC. This was earlier taxable at 12%.

Q.65 What is the recommended GST rate on services by way of job work in relation to hides, skins and leather falling under Chapter 41?

Ans. The said services will now attract the rate of 5% with ITC. This was earlier taxable at 12%.

Q.66 Whether the rate of 5% recommended for job work in relation to hides, skins and leather also cover job-work in relation to manufacture of leather goods or foot wear falling under Chapter 42 or 64?

Ans. No, the said recommendation will not cover job-work in relation to manufacture of leather goods or foot wear falling under Chapter 42 or 64.

Q.67 Whether the job works services in relation to manufacture of alcoholic liquor for human consumption are also recommended to be charged at the lower rate of 5%?

Ans. No, the said services will continue to attract a rate of 18% with ITC.

Q.68 What would be the GST rate on residuary job work services?

Ans. Residuary job-work services, i.e. those job-work services for which a specific rate is not notified, currently attract GST at 12% rate. Such services will now attract GST at the rate of 18%.

Q.69 Why not make job work completely tax-free instead of just lowering the rate?

Ans. Exempting job work services will break the ITC chain, which increas-es costs. This is especially relevant for the sectors where multiple layers of job-workers are involved. A lower rate of 5% with ITC, gives full credit benefit for businesses thereby avoiding any cascading of tax.

Q.70 Whether the works contract services relating to oil and gas explora-tion and production (E&P) in the offshore area will be taxed at 18%?

Ans. Yes, the works contract and associated services, in respect of offshore works contact relating to oil and gas exploration and production(E&P) in the offshore area will be taxed at 18% GST.

Q.71 Whether the hotel accommodation services, where the value of supply is up to Rs.7500 per unit per day, or equivalent, will be taxed at 18%?

Ans. No, the said service will attract GST rate of 5% without ITC.

72. What is the recommended GST rate on beauty and physical well-being ser-vices? What all will be covered under this rate?

Ans. Beauty and physical well-being services including services of health clubs, salons, bar-bers, fitness centers, yoga, etc. will attract GST rate of 5% without ITC. These services attracted 18% GST earlier.

Q.73 Whether lottery tickets, betting, gambling, horse racing, and casi-nos attract GST at the rate of 40%?

Ans. Yes, for all specified actionable claims including betting, casinos, gambling, horse rac-ing, lottery and online money gaming, GST rate of 40% will apply.

Q.74 What is the recommended rate of GST on services of admission to sporting events like the IPL?

Ans. Admission to sporting events like IPL will attract 40% GST, However, this rate of 40% will not apply to admission to recognized sporting events.

Q.75 What will be the rate of GST on services of admission to sporting events other than sporting events like IPL?

Ans. Admission to other sporting events including recognised sporting events where the ticket price is not more than Rs. 500 continues to be exempt, and if the ticket price is more than Rs. 500, it continues to be taxed at the standard rate of 18%.