GST Rate Cuts Decoded: Centre shares 75 FAQs simplifying 56h Council meeting decisions

Shortly after delivering the Prime Minister-promised "Diwali gift GST reforms", the Union government on Wednesday released a document addressing 75 common questions on various aspects of the GST Council’s key decisions. The FAQs -- about 4,500 words in total -- include 28 points on implementation and compliance-related nuances from the latest GST review. 

Here's a quick take on these FAQs: 

When will new GST rates apply?

• From September 22, 2025, except for cigarettes, chewing tobacco, unmanufactured tobacco and beedi. For these, old rates continue until further notice.

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Is there any change in registration threshold?

• No change.

Where will revised rates be notified?

• Through official rate notifications on the CBIC website.

What happens if supply is before rate change but invoice after?

• If payment is after rate change, tax applies on payment/invoice date (whichever is earlier). If payment was before, tax applies on payment date.

What about advances received before rate change?

• GST rate depends on time of supply rules under Section 14 of CGST Act.

Will ITC change for purchases made before rate change?

• No. ITC is allowed at the rate charged at the time of supply, if conditions are met.

What about IGST on imports?

• IGST will follow the revised rates unless exempted separately.

Can I use old ITC after rate cuts?

• Yes. ITC already availed can be used to pay future liabilities.

If my supply becomes exempt now, do I reverse ITC?

• Yes, ITC must be reversed for supplies made after September 22, 2025.

Can I claim refund of accumulated ITC due to rate changes?

• No. Refund is only for genuine inverted duty cases, not rate changes over time.

Do new rates apply to old stock?

• Yes. GST is on supply. Supplies after September 22 will attract new rates.

Do e-way bills need to be cancelled when rates change?

• No. Existing e-way bills remain valid.

Is plant-based milk also exempt?

• No. Dairy UHT milk is exempt. Plant-based milk is now at 5 per cent (earlier 12–18 per cent).

Why 40 per cent GST on other non-alcoholic beverages?

• To keep similar goods at the same rate and avoid disputes.

What is GST rate on unspecified food preparations?

• 5 per cent.

Why revise GST only on some Indian breads?

• To ensure all Indian breads (roti, paratha, porotta, pizza bread, etc.) are exempt, like plain bread.

Why increase GST on carbonated fruit drinks/fruit juice drinks?

• Because compensation cess ended, GST was raised to maintain the same overall tax.

Why different tax on paneer vs other cheese?

• Paneer (pre-packaged) now aligned with other forms. Promotes small-scale cottage industry.

Why different tax on natural vs artificial honey?

• To promote natural honey.

Has GST been reduced on all farm machinery?

• Yes, most farm machinery (sprinklers, threshers, harvesters, etc.) now 5 per cent instead of 12 per cent.

Why not exempt farm machinery fully?

• Exemption would block ITC, raise costs, and harm farmers. 5 per cent ensures balance.

What is GST on medicines?

• 5 per cent, unless specifically exempted.

Why not exempt all medicines?

• Exemption blocks ITC, raises costs, and would make medicines costlier.

Does 5 per cent apply to all medical devices?

• Yes, except those specifically exempted.

Will lowering tax on medical devices cause inversion?

• No new inversion. Refunds allowed for ITC. Goal is to reduce healthcare costs.

What is GST on small cars?

• 18 per cent (down from 28 per cent). Applies to petrol/LPG/CNG cars up to 1200cc & 4000mm, diesel cars up to 1500cc & 4000mm.

What is GST on bigger cars and SUVs?

• 40 per cent. Applies to cars above 1500cc or 4000mm, and SUVs/MUVs/XUVs with ground clearance above 170mm.

What is GST on three-wheelers?

• 18 per cent (down from 28 per cent).

What is GST on buses (10+ passengers)?

• 18 per cent (down from 28 per cent).

What is GST on ambulances?

• 18 per cent (down from 28 per cent).

What is GST on goods transport vehicles?

• 18 per cent (down from 28 per cent).

What is GST on tractor trailers/semi-trailers?

• 5 per cent for tractors, 18 per cent for road tractors above 1800cc (down from 28 per cent).

What is GST on motorcycles?

• 18 per cent for up to 350cc, 40 per cent above 350cc.

Does 18 per cent include 350cc bikes?

• Yes. Only above 350cc attract 40 per cent.

What is new GST on mid/big cars?

• 40 per cent (no compensation cess).

Has GST been cut on bicycles?

• Yes, 5 per cent (down from 12 per cent).

Why not exempt small tractors?

• Exemption blocks ITC, raises costs, and hurts farmers. 5 per cent ensures balance.

Why is 40 per cent called a ‘special rate’?

• It applies only to sin/luxury goods. Compensation cess merged with GST.

Why different GST on wood pulp?

• Paper and textile chains are treated separately to maintain parity.

Why not exempt raw cotton?

• Cotton is taxed on reverse charge to keep ITC chain intact for textiles.

Why not reduce GST on dyes, zippers, elastics, etc.?

• These are multi-use goods. End-use based exemptions are avoided.

Will technical textiles face inversion?

• Yes, but refunds are available. Reforms aim to fast-track refunds.

Why restrict refunds on imitation zari?

• Decision taken earlier. Current reforms focus on streamlining rates.

What is GST on toilet soap bars?

• 5 per cent (reduced from 18 per cent). Liquid soap remains different.

Why cut GST on face powder and shampoos?

• They are daily use items. Rate cut simplifies structure, even if luxury brands benefit.

Why only cut GST on select cosmetics like powder/shaving cream?

• Only items of daily use were targeted for rate cut.

Why not reduce GST on mouthwash?

• Focus was on basic dental hygiene items like toothpaste, toothbrush, and floss.

Why increase GST on coal?

• Compensation cess merged into GST. No extra burden.

Why reduce GST on tendu leaves?

• To align with tobacco leaves at 5 per cent.

What is GST on renewable energy devices?

• 5 per cent (down from 12 per cent).

Why cut GST on renewable energy goods despite inversion?

• To promote renewables. Refunds available for inversion.

Why cut GST on marble/granite blocks?

• They are intermediate goods. Rate cut reduces costs.

What is GST on spectacles/goggles?

• Corrective vision glasses 5 per cent (down from 12–18 per cent). Others remain 18 per cent.

What is GST on batteries?

• All batteries now 18 per cent (earlier 18 per cent for lithium-ion, 28 per cent for others).

What is GST on ACs, TVs, monitors, dishwashers?

• 18 per cent (down from 28 per cent).

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Which life insurance policies are exempt?

• All individual policies including term, ULIP, endowment, plus reinsurance.

Which health insurance policies are exempt?

• All individual policies, including floater and senior citizen covers, plus reinsurance.

Are passenger transport services taxed at 18 per cent?

• No, 5 per cent without ITC. But providers can opt for 18 per cent with ITC.

Do air passenger services get same option?

• No. Economy = 5 per cent, others = 18 per cent.

Is GTA taxed at 18 per cent?

• Default 5 per cent without ITC, but GTA can choose 18 per cent with ITC.

Is container train transport taxed at 12 per cent?

• No. Option of 5 per cent without ITC or 18 per cent with ITC.

What is GST on multimodal transport?

• 5 per cent without ITC, unless air is involved (then 18 per cent with ITC).

Why not exempt GTA services fully?

• Exemption blocks ITC and raises costs. Essential goods transport already exempt.

What is GST on job work for pharma products?

• 5 per cent with ITC (down from 12 per cent).

What is GST on job work for hides, skins, leather?

• 5 per cent with ITC (down from 12 per cent).

Does this cover job work for leather goods/footwear?

• No, only raw hides, skins, leather.

Is job work for alcohol taxed at 5 per cent?

• No, still 18 per cent.

What about other job work services?

• Residuary job work now 18 per cent (up from 12 per cent).

Why not make job work tax-free?

• Exemption breaks ITC chain. 5 per cent with ITC avoids cascading.

What is GST on oil & gas offshore contracts?

• 18 per cent.

What is GST on hotel stays below Rs 7,500/day?

• 5 per cent without ITC.

What is GST on beauty & wellness services?

• 5 per cent without ITC (down from 18 per cent). Includes gyms, salons, yoga, etc.

Are lottery, betting, casinos taxed at 40 per cent?

• Yes, including online gaming and horse racing.

What is GST on IPL admission?

• 40 per cent. Not applicable to recognised sporting events.

What is GST on other sports events?

• Exempt if ticket ≤ Rs 500. Otherwise 18 per cent.