Recent GST Council 2025 Updates
By Clear Fillings
Published on Aug 05, 2025
Council Timing & Agenda
The 56th GST Council meeting is expected in August 2025, after Parliament's monsoon session concludes around August 12. The delay stems from pending reports being prepared by the Group of Ministers (GoMs) on rate rationalisation and cess management—without which the Council is unlikely to convene
Rate Rationalisation & Structural Reform
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A sweeping rate overhaul is in the pipeline, with the government aiming to reduce the number of GST slabs, notably by likely phasing out the 12% slab and shifting many items into the 5% category
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Products such as consumer goods in the 12% bracket, air conditioners (top slab items), and certain services are under review for possible rate reductions
Insurance Sector Change
- Health and term life insurance policies—currently taxed at 18% GST—are under GoM review, with proposals to reduce the rate to 12%, 5%, or even zero for pure term insurance covering only risk (no investment component
Garments Tax Proposal
- In earlier deliberations during the 55th Council meeting, a potential ** hike in GST from 12% to 18% on readymade garments priced above ₹1,000** was proposed. Industry groups like GEAR from Rajasthan strongly oppose this, advocating for 5% GST on garments up to ₹25,000, and only 18% above that threshold to protect middle-class consumers and artisans
Cess Mechanism & State Revenue Protection
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With the GST compensation cess set to expire in March 2026, the GoM is evaluating cess levy on sin goods (e.g. tobacco) to cushion state finances against revenue shortfalls
Relief for Small Vendors
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The Council may grant amnesty from interest and penalties to small vendors who received notices based on UPI data. This move seeks to ease pressure on traders with annual turnover under ₹40 lakh (goods) or ₹20 lakh (services), who may have overlooked GST registration due to limited digital
GST Appellate Tribunal (GSTAT) Progress
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Instituting the GST Appellate Tribunal (GSTAT) is again on the agenda. Once formed, it will help shift tax appeals away from High Courts, resolve disputes faster, and strengthen institutional architecture—a commitment signaled at prior Council meetings
Legislative & Compliance Updates
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Several major administration and compliance reforms recommended during the 55th GST Council meeting are in force from April 1, 2025. These include:
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Mandatory generation of Form GSTR‑2B before GSTR‑3B filing using IMS.
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Retrospective clarification on SEZ warehousing.
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Amendment to Section 17(5)(d) interpreting “plant and machinery”.
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Simplified 10% pre-deposit norms for penalty-only appeals.
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Expansion of the ISD mechanism to include inter‑state reverse‑charge supplies.
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New Rule 67B in CGST Rules for credit note reversal by recipients
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Final Thoughts
The upcoming GST Council session in August 2025 is poised to deliver one of the most transformative GST policy shifts since the regime's inception in 2017. Key outcomes likely include rate rationalisation, sector‑specific tax reliefs (insurance, garments), indemnity measures for small vendors, and formalising GSTAT. These changes aim to simplify compliance, rationalise the slab structure, and protect both consumers and states from disruption. Watching developments over the coming weeks will be crucial.
