56th GST Council Meeting: Changes in GST Rates of Goods and Services

I. Changes in GST Rates of Goods

The Council recommended numerous rate adjustments for goods, categorized by their impact on different sectors.

A. Rate Reductions (Benefiting Consumers and Specific Industries)

Many items saw significant rate reductions, primarily from 12% or 18% down to 5%, and some even to Nil, indicating a focus on making essential goods more affordable.

Food Sector:

• 5% to Nil: "Ultra-High Temperature (UHT) milk", Chena or paneer, pre-packaged and labelled", "Pizza bread", and "Khakhra, chapathi or roti".

• 18% to Nil: "Paratha, parotta and other Indian breads by any name called".

• 12% to 5%: A broad range of food products including condensed milk, butter, cheese, various dried fruits and nuts (e.g., Brazil nuts, almonds, dates, figs), processed meats (sausages, prepared fish), refined sugar, sugar confectionery, pasta, prepared vegetables (e.g., tomatoes, mushrooms), jams, fruit juices (including tender coconut water), coffee and tea extracts, yeasts, sauces, texturised vegetable proteins, namkeens, diabetic foods, and drinking water in 20-litre bottles.

• 18% to 5%: Malt, vegetable saps and extracts, margarine, glycerol, vegetable waxes, cocoa products (butter, fat, oil, powder, chocolates), malt extract and certain food preparations, corn flakes, pastry, cakes, biscuits, ice cream, and other unspecified food preparations.

Healthcare Sector:

• Complete Exemption (from 5% or 12% to Nil): "Agalsidase Beta", "Imiglucerase", "Eptacog alfa activated recombinant coagulation factor VIIa". Additionally, 33 specialized drugs, including "Onasemnogene abeparvovec", "Daratumumab", "Risdiplam", "Atezolizumab", "Obinutuzumab", "Polatuzumab vedotin", "Entrectinib", "Spesolimab", "Velaglucerase Alpha", and others, have been reduced from 12% to Nil.

• 12% to 5%: A wide range of medical supplies including "Anaesthetics", "Potassium Iodate", "Steam", "Iodine", "Medical grade oxygen", "Medicinal grade hydrogen peroxide", all other "Drugs and medicines" not specifically exempted (e.g., Fluticasone Furoate + Umeclidinium + Vilanterol FF/UMEC/VI, Brentuximab Vedotin), "Glands and other organs for organo-therapeutic uses", "Animal blood prepared for therapeutic, prophylactic or diagnostic uses", "Medicaments" of various systems (Ayurvedic, Unani, Siddha, homoeopathic), "Wadding, gauze, bandages and similar articles" for medical use, specified "Pharmaceutical goods", "All diagnostic kits and reagents", "Surgical rubber gloves or medical examination rubber gloves", "Blood glucose monitoring system (Glucometer) and test strips", "Patent Ductus Arteriousus / Atrial Septal Defect occlusion device", "Spectacles, corrective", and various "Instruments and appliances used in medical, surgical, dental or veterinary sciences" (e.g., scintigraphic apparatus, X-ray apparatus, mechano-therapy appliances, breathing appliances).

• 18% to 5%: "Thermometers for medical, surgical, dental or veterinary usage" and "Instruments and apparatus for medical, surgical, dental or veterinary uses for physical or chemical analysis."

Agriculture Sector:

• 12% to 5%: Fixed Speed Diesel Engines (not exceeding 15HP), "Other hand pumps", "Nozzles for drip irrigation equipment or sprinklers", "Sprinklers; drip irrigation system", "Agricultural, horticultural or forestry machinery for soil preparation", "Harvesting or threshing machinery", "Other agricultural, horticultural, forestry, poultry-keeping or bee-keeping machinery", "Composting Machines", "Tractors (except road tractors for semi-trailers of engine capacity more than 1800 cc)", "Self-loading or self-unloading trailers for agricultural purposes", and "Hand propelled vehicles" used in agriculture.

• 18% to 5% (Fertilizer & Pesticide Inputs): "Sulphuric acid", "Nitric acid", "Ammonia", "Gibberellic acid", a list of 12 "Bio-pesticides", and "Micronutrients" registered under the Fertilizer Control Order, 1985.

• 18% to 5% (Tractor-related): "Rear tractor tyres and rear tractor tyre tubes", "Tyre for tractors", "Tube for tractor tyres", "Agricultural Diesel Engine of cylinder capacity exceeding 250 cc for Tractor", "Hydraulic Pumps for Tractors", and a comprehensive list of "Following parts of tractors" including wheel rims, housings, support axles, bumpers, brake assemblies, gear boxes, transaxles, road wheels, radiator assemblies, silencer assemblies, clutch assemblies, steering wheels, hydraulic parts, fenders, hoods, wrappers, grills, side panels, extension plates, and fuel tanks.

Common Man Items:

• 18% to 5% (Personal Care): "Talcum powder, Face powder", "Hair oil, shampoo", "Dental floss, toothpaste", "Shaving cream, shaving lotion, aftershave lotion", "Toilet Soap (other than industrial soap)", and "Tooth brushes including dental-plate brushes".

• 12% to 5% (Household & Stationery): "Tooth powder", "Candles, tapers and the like", "All goods-safety matches", "Feeding bottles", "Nipples of feeding bottles", "Hand bags and shopping bags, of cotton and jute", "Tableware and Kitchenware of wood, porcelain or china, other than porcelain or china", "Sewing needles", "Kerosene burners, kerosene stoves and wood burning stoves of iron or steel", "Table, kitchen or other household articles of iron & steel; Utensils", "Table, kitchen or other household articles of copper; Utensils", "Brass Kerosene Pressure Stove", "Table, kitchen or other household articles of aluminium; Utensils", "Sewing machines", "Bicycles and other cycles", "Parts and accessories of bicycles", "Furniture wholly made of bamboo, cane or rattan", "Hurricane lanterns, Kerosene lamp / pressure lantern, petromax, glass chimney, and parts thereof", "Combs, hair-slides and the like", and "napkins and napkin liners for babies, clinical diapers".

• 12% to Nil (Stationery): "Erasers", "Pencil sharpeners", "Pencils (including propelling or sliding pencils), crayons, pastels, drawing charcoals, writing or drawing chalk and tailors’ chalk", "Exercise book, graph book, & laboratory note book and notebooks", and "Maps and hydrographic or similar charts of all kinds".

• 12% to 5% (Education-related): "Mathematical boxes, geometry boxes and colour boxes".

Renewable Energy Sector:

• 12% to 5%: "Solar cookers", "Solar water heater and system", and a list of "Following renewable energy devices and parts for their manufacture" including "Bio-gas plant", "Solar power-based devices", "Solar power generator", "Wind mills, Wind Operated Electricity Generator (WOEG)", "Waste to energy plants / devices", "Solar lantern / solar lamp", "Ocean waves/tidal waves energy devices/plants", and "Photo voltaic cells". Also, "Fuel Cell Motor Vehicles including hydrogen vehicles based on fuel cell technology".

Textile Sector:

• 12% to 5%: Sewing thread of manmade filaments and staple fibres, synthetic or artificial filament yarns, wadding, felt, nonwovens, rubber thread and cord, metallised and gimped yarn, twine, cordage, ropes, cables, articles of yarn, and all types of carpets and textile floor coverings (knotted, woven, tufted, felt, other). Also, various textile fabrics (terry towelling, gauze, tulles, lace, tapestries), labels, badges, braids, ornamental trimmings, embroidery, quilted textile products, textile fabrics coated with gum, tyre cord fabric, impregnated textile fabrics, linoleum, textile wall coverings, rubberised textile fabrics, textile wicks, hose piping, transmission/conveyor belts, textile products for technical uses, "Handmade/hand embroidered shawls", "Textile caps", and "Hats (knitted/crocheted)".

• 5% unchanged: "Articles of apparel and clothing accessories, knitted or crocheted, of sale value not exceeding Rs. 2500 per piece", "Articles of apparel and clothing accessories, not knitted or crocheted, of sale value not exceeding Rs. 2500 per piece", "Other made up textile articles, sets of sale value not exceeding Rs. 2500 per piece", and "Cotton quilts of sale value not exceeding Rs. 2500 per piece".

Handicrafts Sector:

• 12% to 5%: A comprehensive reduction for a vast range of handcrafted items, including "Idols of wood, stone [including marble] and metals", "Statues, statuettes, pedestals; high or low reliefs, crosses, figures of animals, bowls, vases, cups, cachou boxes, writing sets, ashtrays, paper weights, artificial fruit and foliage, etc.; other ornamental goods essentially of stone", "Statues and other ornamental articles" of ceramic, "Worked ivory, bone, tortoise shell, horn, antlers, mother of pearl", "Paintings, drawings and pastels, executed entirely by hand", "Original engravings, prints and lithographs", "Original sculptures and statuary, in any material", "Collections and collectors' pieces" of various interests (zoological, botanical, historical, archaeological, etc.), "Antiques of an age exceeding one hundred years", "Handcrafted candles", "Handbags including pouches and purses; jewellery box", "Carved wood products, art ware/decorative articles of wood", "Wooden frames for painting, photographs, mirrors etc.", "Statuettes & other ornaments of wood, wood marquetry & inlaid, jewellery box, wood lathe and lacquer work", "Art ware of cork", "Handmade/hand embroidered shawls", "Carved stone products", "Stone art ware, stone inlay work", "Tableware and kitchenware of clay and terracotta, other clay articles", "Statuettes & other ornamental ceramic articles (incl blue potteries)", "Ornamental framed mirrors", "Glass statues", "Glass art ware", "Art ware of iron", "Art ware of brass, copper/copper alloys, electro plated with nickel/silver", "Aluminium art ware", "Bells, gongs and like, non-electric, of base metal; statuettes, and other ornaments, of base metal; photograph, picture or similar frames, of base metal; mirrors of base metal; (including Bidriware, Panchloga artware, idol, Swamimalai bronze icons, dhokra jaali)", "Handcrafted lamps (including panchloga lamp)", "Furniture of bamboo, rattan and cane", "Dolls or other toys made of wood or metal or textile material", "Ganjifa card", and "Handmade Paper and Paper board".

Construction Sector:

• 12% to 5%: "Sand lime bricks or Stone inlay work".

• 28% to 18%: "Portland cement, aluminous cement, slag cement, super sulphate cement and similar hydraulic cements".

Defence Sector:

• 12% to 5%: "Two-way radio (Walkie talkie) used by defence, police and paramilitary forces etc.", and "Tanks and other armoured fighting vehicles, motorised, whether or not fitted with weapons, and parts of such vehicles".

Miscellaneous:

• 12% to 5%: "Live horses", "Marble and travertine blocks", "Granite blocks", "Natural menthol" and related products (menthol crystals, peppermint oil, etc.), photographic plates and films for medical use and other purposes, "Silicon wafers", "Plastic beads", "Latex Rubber Thread", "Rubber bands", "Whips, riding-crops and the like", "Pots, jars and similar articles of a kind used for the conveyance and packing of goods of ceramic", "Glasses for corrective spectacles and flint buttons", "Globes for lamps and lanterns, Founts for kerosene wick lamps, Glass chimneys for lamps and lanterns", "Milk cans made of Iron, Steel, or Aluminium", "Animal shoe nails", "Bells, gongs and the like, non-electric, of base metal; statuettes and other ornaments, of base metal; photograph, picture or similar frames, of base metal; mirrors of base metal; metal bidriware", "Hand operated rubber roller", "Contact lenses; Spectacle lenses", "Frames and mountings for spectacles, goggles or the like", "Coir products [except coir mattresses]", and "Slide fasteners and parts thereof".

• 28%/18% to 5%: "Unmanned aircrafts".

• IGST 18% to Nil: "Technical documentation in respect of goods exempted", "Natural Cut and Polished Diamonds up to 25 cents (1/4 carats) imported under Diamond Imprest Authorization Scheme", "Works of art and antiques", "Flight Motion Simulator and its parts", "Target Motion Simulator and its parts", "Parts, sub-assemblies of HACFS", "Low noise amplifier (Hermetic sealed), vent guide assembly-Return, vent guide assembly-supply, vent guide assembly-NBC for MRSAM system", "Parts and sub-assemblies of IADWS", "Military transport aircraft (C-130, C-295MW)", "Deep Submergence Rescue Vessel", "Unmanned Underwater vessels/platforms", "Ejection Seats for fighter aircrafts", "High performance batteries for drones and specialised equipment", "Communication devices including software defined radios with component and accessories", "Air diving, rebreather sets, diving systems, components and accessories", "Sonobuoys for naval air assets", "Ship launched missiles", "Rockets with calibre more than 100mm", "RPA (Remote Piloted Aircraft) for military use", and various "Parts, sub-assemblies, spares, accessories, tools, testing equipment, literature for goods like artillery weapons, rifles, aircrafts etc." (with specific exceptions).

B. Rate Increases (Primarily for Luxury and Sin Goods)

• Tobacco Products (28% to 40%): "Pan masala", "Unmanufactured tobacco; tobacco refuse", "Cigars, cheroots, cigarillos and cigarettes", "Other manufactured tobacco and manufactured tobacco substitutes", and products containing tobacco or nicotine substitutes "intended for inhalation without combustion".

• Valuation Change: GST will be levied on "Retail Sale Price (RSP) instead of transaction value on Pan Masala, Gutkha, Cigarettes, Unmanufactured tobacco, Chewing tobacco like Zarda."

• Beverages (Various increases, including 28% to 40%): "All goods (including aerated waters), containing added sugar or other sweetening matter or flavoured", "Other non-alcoholic beverages", "Caffeinated Beverages", and "Carbonated Beverages of Fruit Drink or Carbonated Beverages with Fruit Juice".

• Coal and Related Fuels (5% to 18%): "Coal; briquettes, ovoids and similar solid fuels manufactured from coal", "Lignite", and "Peat".

• Luxury Vehicles & Aircraft (28% to 40%): "Motor cars and other motor vehicles principally designed for the transport of persons" (excluding certain smaller vehicles and ambulances), "Motor vehicles with both spark-ignition internal combustion reciprocating piston engine and electric motor as motors for propulsion, of engine capacity exceeding 1200cc or of length exceeding 4000 mm", "Motor vehicles with both compression-ignition internal combustion piston engine [diesel-or semi diesel] and electric motor as motors for propulsion, of engine capacity exceeding 1500cc or of length exceeding 4000 mm", "Motor cycles of engine capacity exceeding 350 cc", "Aircraft for personal use", and "Yacht and other vessels for pleasure or sports".

• High-Value Apparel & Quilted Textile Products (12% to 18%): "Articles of apparel and clothing accessories, knitted or crocheted, of sale value exceeding Rs. 2500 per piece", "Articles of apparel and clothing accessories, not knitted or crocheted, of sale value exceeding Rs. 2500 per piece", "Other made up textile articles, sets of sale value exceeding Rs. 2500 per piece", "Cotton quilts of sale value exceeding Rs. 2500 per piece", and "Products wholly made of quilted textile material exceeding Rs. 2500 per piece".

• Paper Sector (12% to 18%): "Chemical wood pulp, dissolving grades", "Uncoated paper and paperboard, of a kind used for writing, printing or other graphic purposes", "Uncoated kraft paper and paperboard", "Other uncoated paper and paperboard", "Greaseproof papers", "Glassine papers", "Composite paper and paperboard", "Paper and paperboard, corrugated", and "Paper and paperboard, coated on one or both sides with kaolin".

• Other Machinery & Parts (28% to 18%): "Spark-ignition reciprocating or rotary internal combustion piston engine", "Compression-ignition internal combustion piston engines", "Parts suitable for use solely or principally with the engines of heading 8407 or 8408", "Pumps for dispensing fuel or lubricants of the type used in filling stations or garages", "Electric accumulators", and "Electrical ignition or starting equipment".

• Dutiable Articles for Personal Use (Imports) (28% to 18%): "All dutiable articles intended for personal use".

• Menthol Products (12% to 18%): Products made from other than natural menthol.

• Odoriferous Preparations (12% to 18%): "Odoriferous preparations which operate by burning (other than agarbattis, lobhan, dhoop batti, dhoop, sambhrani)".

• Biodiesel (12% to 18%): "Biodiesel (other than biodiesel supplied to Oil Marketing Companies for blending with High Speed Diesel)".

• Petroleum Operations Goods (12% to 18%): Goods required for petroleum exploration, mining leases, specified contracts under New Exploration Licensing Policy, Marginal Field Policy, and Coal bed methane operations.

II. Changes in GST Rates of Services

The Council also recommended significant adjustments to tax rates for various services.

A. Rate Reductions

• Hospitality - Supply of 'hotel accommodation' having value of supply of a unit of accommodation less than or equal to seven thousand five hundred rupees per unit per day or equivalent" reduced from 12% with ITC to 5% without ITC.

  
  

• Insurance - Supply of Service of third-party insurance of 'goods carriage'" reduced from 12% with ITC to 5% with ITC.

  
  

• Entertainment - Services by way of admission to exhibition of cinematograph films where price of admission ticket is one hundred rupees or less" reduced from 12% with ITC to 5% with ITC.

  
  

• Environmental Services - Services by way of treatment of effluents by a Common Effluent Treatment Plant" and "Services by way of treatment or disposal of biomedical waste" reduced from 12% with ITC to 5% with ITC.

  
  

• Beauty and Physical Well-being - Beauty and physical well-being services falling under group 99972" reduced from 18% with ITC to 5% without ITC.

  
  

• Job Work Services (12% to 5% with ITC)

  • Umbrella manufacturing.

  • Printing of goods under Chapter 48 or 49.

  • Bricks attracting 5% GST.

  • Pharmaceutical products (Chapter 30).

  • Hides, skins, and leather (Chapter 41).

  
  

• Multimodal Transport - Supply of Multimodal transport of goods within India" reduced from 12% with ITC to 5%, where no leg of transport is through air, with restricted ITC.

  
  

• Renting of Goods Carriage - Supply of Renting of goods carriage (with operator) where fuel cost is included in consideration" reduced from 12% with ITC to 5% with ITC of input services (in the same line of business).

B. Rate Increases

• Transportation Services:12% with ITC to 18% with ITC

• Supply of Air transport of passengers in other than economy class.

• Supply of Passenger transport by any motor vehicle where fuel cost is included.

• Supply of Transport of goods by GTA.

• Supply of transport of goods in containers by rail by any person other than Indian Railways.

• Supply of transportation of natural gas, petroleum crude, motor spirit, high speed diesel or ATF through pipeline.

• Supply of Renting of any motor vehicle (with operator) designed to carry passengers where the cost of fuel is included in consideration.

• Composite supply of works contract and associated services, in respect of offshore works contract relating to oil and gas exploration and production in offshore area.

  
  

• Gaming and Betting (28% with ITC to 40% with ITC)

  • Admission to casinos, race clubs, any place having casinos or race clubs, or sporting events like the IPL.

  • Services by a race club for licensing of bookmakers in such club.

  • Leasing or rental services, without operator, of goods which attracts 40% GST.

  • Specified Actionable Claims (betting, casinos, gambling, horse racing, lottery, online money gaming).

    
    

• Works Contracts to Government (12% with ITC to 18% with ITC)

  • Composite supply of works contract services involving predominantly earth work.

  • Composite supply of works contract provided by a sub-contractor to the main contractor providing services.

• Exploration/Mining Support Services (12% with ITC to 18% with ITC)

  • Other professional, technical and business services relating to exploration, mining or drilling of petroleum crude or natural gas or both

  • Support services to exploration, mining or drilling of petroleum crude or natural gas or both.

• Residual Job Work (12% with ITC to 18% with ITC) - Supply of job-work no elsewhere covered.

  
  

• Local Delivery Services through ECO (18% with ITC, no change in rate but new notification): Local delivery services through Electronic Commerce Operator (ECO)" to be "notified under section 9(5) of the CGST Act in cases where the person supplying such services through electronic commerce operator is not liable for registration under GST. These services are to be excluded from the scope of GTA services.

  
  

C. New Exemptions

• Life and Health Insurance

  • All individual health insurance, along with reinsurance thereof.

  • All individual life insurance, along with reinsurance thereof.

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Disclaimer: This GST update has been compiled for our clients and team of Seth & Associates. The same is not being circulated with the intent of advertising or soliciting any professional work. This update is only for the purpose of ease of understanding.

For a detailed discussion and professional advisory on matters related to GST kindly contact:

CA Dhruv Seth                                                                           CA Shashank Mittal

Partner – GST                                                                            HOD - GST

dhruv@sethspro.com                                                                  shashank@sethspro.com