56th GST Council Meeting Summary & Key Decisions

56th GST Council Meeting (3rd Sept 2025) – Detailed Coverage

GST Council Recommends ⇒ Notification(CG+SG) issued if changes required in rates/rules

⇒ Legislature(Parliament+ State legislature)Amendment required (if need to change in Act)

Overview of key Recommendation

Structural Reform

GSTAT (Goods & Services Tax Appellate Tribunal) made fully operational.

Intermediary services – place of supply shifted to recipient’s location – qualifies as exports thereby Service exporters gain full zero-rating benefits under GST

Post-sale discount rules simplified

• credit note-based adjustment + ITC reversal clarity.
• Circular No. 212/6/2024 rescinded (earlier discount mechanism).

Trade Facilitation measure

Refund:

• 90% provisional refunds extended to Inverted Duty Structure (IDS) cases
• Refunds allowed for small, low-value export consignments via courier/post.
• Risk-based refund sanction using AI/ML, reducing manual scrutiny.

Simplified GST registration for small/low-risk businesses (auto-approval within 3 days). Optional scheme for businesses with monthly liability ≤ ₹2.5 lakh. c) Simplified registration for small e-commerce sellers across states.

Rate Rationalisation & Relief:

• Rationalization of the current four tiered tax rate structure into a two rate structure with standard rate of 18% and rate of 5%
• A special demerit rate of 40 % is proposed on few goods and services
• The change in GST Rate on goods( except pan masala and tobacco) and service will be implemented e.f. 22 Sep 2025
• Current Tax structure (i.e. levy of GST compensation cess) to continue on pan masala and tobacco only

56^th GST Council Meeting Recommendation: Structural Reform

Operationalization of the Goods and Services Tax Appellate Tribunal (GSTAT)

• The Goods and Services Tax Appellate Tribunal (GSTAT) will be made operational for accepting appeals before end of September and will commence hearing before end of December this year.
• The Council also recommended the date of 06.2026 for limitation of filing of backlog appeals.
• The Principal Bench of the GSTAT will also serve as the National Appellate Authority for Advance Ruling.
• These measures will significantly strengthen the institutional framework of GST by providing a robust mechanism for dispute resolution, ensuring consistency in advance rulings, and offering greater certainty to taxpayers.
• This will further enhance trust, transparency, and ease of doing business under the GST regime.

(Adjudicating Authority (who passes order)- Appellate Authority(1^st) – Appellate Tribunal (GSTAT) (2^nd) – High Court – Supreme Court) Analysis:

Earlier: Absence of GSTAT forced taxpayers to approach High Courts for appeals, leading to delay, high costs, and pendency of GST-related disputes. No uniform appellate mechanism was available for consistency in rulings.

Change Recommended: GSTAT to be operational for accepting appeals by September 2025 and commence hearings by December 2025. Backlog appeals can be filed till 30th June 2026. The Principal Bench will also act as the National Appellate Authority for Advance Ruling.

56^th GST Council Meeting Recommendation: Structural Reform

Intermediary-  who arranges or facilitates the supply of goods or services or both, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account;

Amendment in place of supply provisions for intermediary services under section 13(8) of the IGST Act:

The Council recommended omission of clause (b) of section 13(8) of IGST Act 2017. Accordingly, after the said law amendment, the place of supply for “intermediary services” will be determined as per the default provision under section 13(2) of the IGST Act, 2017 i.e. the location of the recipient of such  services. This will help Indian exporters of such services to claim export benefit

Analysis: Earlier : Under Section 13(8)(b) of the IGST Act, the place of supply for intermediary services was treated as the location of the supplier (in India), even when services were provided to recipients outside India. This denied export benefits and resulted in tax liability in India.

Change Recommended :Omission of Section 13(8)(b). Now, place of supply will be determined as per Section 13(2), i.e., location of the recipient.

56^th GST Council Meeting Recommendation: Structural Reform

Amendment of section 15 and section 34 of CGST Act, 2017 in respect of Post Sale Discount: The Council has recommended:

• To omit section 15(3)(b)(i) of CGST Act, 2017 thereby omitting the requirement of establishing the discount in terms of an agreement entered into before or at the time of such supply and specifically linking of the same with relevant invoices,
• To amend section 15(3)(b) of CGST Act, 2017 to provide that discount should be granted through a credit note issued under section 34 of the CGST Act and to correspondingly amend section 34 to include a reference to section 15(3)(b), so as to provide for reversal of Input tax credit by the recipient in case where a post-sale discount is given and value of supply is reduced through GST Credit note.
• To rescind circular No.212/6/2024-GST dated 26^thJune 2024 which provided a mechanism ensuring compliance of conditions of Section 15(3)(b)(ii) of the CGST Act, 2017 by the suppliers.

Analysis:

Earlier Post-sale discount required prior agreement and invoice linkage under Section 15(3)(b)(i). Compliance burden existed along

with circular-based mechanism.

Change Recommended :Omission of Section 15(3)(b)(i); amendment to Section 15(3)(b) linking discounts with credit notes under Section 34; ITC reversal by recipient in such cases; rescinding of Circular 212/6/2024-GST.

56^th GST Council Meeting Recommendation: Structural Reform

Issuance of circular on certain issues pertaining to Post Sale Discount:

In order to remove ambiguity and legal disputes, the Council recommended to provide clarification on certain issues pertaining to Post Sale Discount namely, –

• non-reversal of Input Tax Credit on account of post-sale discount through financial/commercial credit note;
• Treatment of the post-sale discount provided by manufacturer to the dealer as additional consideration, in the transaction between dealer and end-customer;
• treatment of post-sale discount as consideration lieu of promotional activities etc. performed by the dealer.

OTHER MEASURES PERTAINING TO LAW & PROCESS:

The Council recommended retail sale price-based valuation under GST for Pan Masala, Cigarettes, Gutkha, Chewing Tobacco, Zarda, Scented

tobacco and Unmanufactured Tobacco. Accordingly, consequent amendments in CGST Rules, 2017 and notifications will be carried out

56^th GST Council Meeting Recommendation: Measures for Facilitation of Trade

Provisional Refund

Proposal for Risk-Based Provisional Sanction of refunds arising out of inverted duty structure (IDS):

• The Council recommended amending section 54(6) of the CGST Act, 2017, to provide for sanction of 90% of refund claimed on provisional basis, in cases arising out of inverted duty structure, on similar lines as is presently available for refund in respect of zero-rated supply.
• It has been decided by the Central Government that, pending requisite amendments in CGST Act, 2017, instructions shall be issued by the Central Board of Indirect Taxes and Customs (CBIC) to direct Central Tax field formations for grant of provisional refund equivalent to 90% of amount claimed as refund, arising out of Inverted Duty Structureon the basis of identification and evaluation of risk by the system, as in the case of provisional refunds on account of zero-rated supplies. This shall be operationalized from 1st November, 2025.

Analysis:

Earlier: Provisional sanction of 90% refund was available only in cases of zero-rated supplies (exports/SEZ). Refunds arising out of IDS were processed only after full verification, leading to delays.

Change Recommended: Amendment to Section 54(6) of CGST Act, 2017, to extend 90% provisional refund benefit to IDS cases as well. Till law amendment, CBIC will issue instructions for granting such provisional refunds based on risk evaluation by the system. Scheme to be effective from 1st November 2025.

56^th GST Council Meeting Recommendation: Measures for Facilitation of Trade

Amendment in CGST Act to provide for GST Refunds in respect of low value export consignments:

The Council recommended amendment to section 54(14) of the CGST Act, 2017 so as to remove the threshold limit for refunds arising
out of exports made with payment of tax. This will particularly help small exporters making exports through courier, postal mode etc.

Analysis:

Earlier: As per Section 54(14)- Notwithstanding anything contained in this section, no refund under subsection (5) or sub-section (6)

shall be paid to an applicant, if the amount is less than one thousand rupees.

– Small exporters faced problems because their refunds were blocked if the export consignment was below that limit.

Change Recommended :The threshold limit is proposed to be removed. That means even if the value of export consignment is small (say ₹500), exporters can still claim a refund of IGST paid.

56^th GST Council Meeting Recommendation: Measures for Facilitation of Trade

Simplified GST Registration Scheme for Small and Low-Risk Businesses:

• In order to simplify the registration process, the Council has recommended the introduction of an optional simplified GST registration scheme wherein registration shall be granted on an automated basis within three working days from the date of submission of application in case of low risk applicants And
• Applicants who based on their own assessment, determine that their output tax liability on supplies to registered persons will not exceed Rs. 2.5 lakh per month (inclusive of CGST, SGST/UTGST and IGST). The scheme will provide for voluntary opting into and withdrawal from the scheme.

Analysis:

Earlier: Registration process often involved physical verification or detailed scrutiny, causing delays and compliance burden even for

small/low-risk businesses.

Change Recommended : An optional simplified registration scheme with automated approval within 3 working days for low-risk applicants. Eligibility – monthly B2B tax liability not exceeding ₹2.5 lakh. Voluntary opting in and withdrawal allowed.

56^th GST Council Meeting Recommendation: Measures for Facilitation of Trade

Introduction of Simplified Registration Scheme for small suppliers supplying through electronic commerce operators:

• The Council approved in-principle, the concept of a simplified GST registration mechanism for small suppliers making supplies through ecommerce operators (ECOs) across multiple States facing challenges in maintaining principal place of business in each State as currently required under the GST framework. The detailed modalities for operationalizing the said scheme will be placed before GST Council.
• It will ease compliance for such suppliers and facilitate their participation in e-commerce across States.

Analysis:

Earlier: Small suppliers selling through e-commerce platforms had to take GST registration in every State where they made supplies,

requiring a principal place of business in each State – a major compliance burden.

Change Recommended : The Council has approved in-principle a simplified registration mechanism for such suppliers. Detailed modalities will be placed before the Council for final approval.

56^th GST Council Meeting Recommendation: Rate Rationalisation & Relief

56^th GST Council Meeting Recommendation: Rate Rationalisation & Relief

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Transition Issues

Goods at Current/higher Rate lying unsold on 22^nd Sept:

• Accumulation of Credit due to rate difference
• Blockage of Compensation cess- cost
• Sales on approval method can be explored
• Fixation of MRP- need to relabel/refix for downward
• Reversal of ITC in case of new reduced rate without ITC benefit
• Reversal of ITC in case of Supply being brought under exemption
• Rate applicable to goods and services in case of supply/advances before rate changes- Section 14/notifciation 40/2017

Inverted duty structure

Sectoral Analysis needed- Some Sector like Pharma, Renewal energy where input continue to be taxed at higher/existing rates while output rate have been reduced or exempted. No refund for traded goods

Passing of Rate benefit to Customers

• Expectation of government that industry would pass on the benefit
  to customers as they historically did ( No legal mandate as The
  government has notified 1st April 2025 as the sunset date for the
  anti-profiteering provisions under GST. Hence, the authority will not
  accept any new complaints or investigations regarding anti-
  profiteering)
• Benefit of GST reduction- can be passed on through other means and substantiated- MRP Relabeling mandatory?
• Impact of Cost on account of ITC Reversal and blockage on newly
  exempt goods