Big GST changes land Sept 22: Sin goods stay pricey, new tribunal, refunds, details inside
The Finance Minister will determine the final transition date for revised rates on these items, underscoring their fiscal significance.
- Sep 3, 2025,
- Updated Sep 3, 2025 10:28 PM IST
The 56th GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman at Sushma Swaraj Bhavan on September 3, introduced a slate of rate revisions and procedural reforms aimed at trade facilitation and middle-class relief—while strategically holding back GST cuts on high-revenue tobacco products.
Key decisions from the Council include GST rate adjustments across goods and services, a shift in taxation methodology for sin goods, and the operational launch schedule for the Goods and Services Tax Appellate Tribunal (GSTAT).
Tax shift for tobacco products
In a notable move, the Council approved a switch from transaction value to Retail Sale Price (RSP) for calculating GST on pan masala, gutkha, cigarettes, unmanufactured tobacco, and chewing tobacco like zarda. However, citing ongoing financial obligations under the compensation cess account, the Council deferred the implementation of new rates on these products. They will remain taxed at current rates until cess-related loan payments are cleared.
The Union Finance Minister will determine the final transition date for revised rates on these items, underscoring their fiscal significance.
Relief for the middle class and trade
For all other goods—excluding tobacco-related products—new GST rates will be effective from September 22. Service sector rate changes will also come into effect the same day.
One immediate tax relief includes IGST and compensation cess exemption for a new armored sedan imported by the President’s Secretariat, a move classified as ad hoc.
On services, the Council clarified that stand-alone restaurants cannot misclassify themselves as ‘specified premises’ to gain input tax credit benefits under the 18% GST rate. Additionally, valuation rules have been updated to reflect recent changes in lottery ticket taxation.
Refund and appellate system overhaul
The Council also pushed for streamlined refund procedures. Pending CGST Act amendments, the CBIC will begin implementing a revised system for 90% provisional refunds on inverted duty structure cases, leveraging data analytics and risk evaluation tools—similar to zero-rated supply refunds.
A long-awaited step towards strengthening the GST framework, the Council confirmed the Goods and Services Tax Appellate Tribunal (GSTAT) will be operational by the end of September to accept appeals, with hearings starting by December. The Principal Bench of GSTAT will function as the National Appellate Authority for Advance Ruling, promoting consistency in tax interpretations.
The Council also set June 30, 2026, as the final date for filing all backlog appeals.
Process reform implementation pending
Process reforms under GST law and procedure, which were discussed but not detailed during the meeting, will be notified at a later date.
FAQs on the approved recommendations are expected soon, aimed at providing clarity to businesses and individual taxpayers alike.
The 56th GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman at Sushma Swaraj Bhavan on September 3, introduced a slate of rate revisions and procedural reforms aimed at trade facilitation and middle-class relief—while strategically holding back GST cuts on high-revenue tobacco products.
Key decisions from the Council include GST rate adjustments across goods and services, a shift in taxation methodology for sin goods, and the operational launch schedule for the Goods and Services Tax Appellate Tribunal (GSTAT).
Tax shift for tobacco products
In a notable move, the Council approved a switch from transaction value to Retail Sale Price (RSP) for calculating GST on pan masala, gutkha, cigarettes, unmanufactured tobacco, and chewing tobacco like zarda. However, citing ongoing financial obligations under the compensation cess account, the Council deferred the implementation of new rates on these products. They will remain taxed at current rates until cess-related loan payments are cleared.
The Union Finance Minister will determine the final transition date for revised rates on these items, underscoring their fiscal significance.
Relief for the middle class and trade
For all other goods—excluding tobacco-related products—new GST rates will be effective from September 22. Service sector rate changes will also come into effect the same day.
One immediate tax relief includes IGST and compensation cess exemption for a new armored sedan imported by the President’s Secretariat, a move classified as ad hoc.
On services, the Council clarified that stand-alone restaurants cannot misclassify themselves as ‘specified premises’ to gain input tax credit benefits under the 18% GST rate. Additionally, valuation rules have been updated to reflect recent changes in lottery ticket taxation.
Refund and appellate system overhaul
The Council also pushed for streamlined refund procedures. Pending CGST Act amendments, the CBIC will begin implementing a revised system for 90% provisional refunds on inverted duty structure cases, leveraging data analytics and risk evaluation tools—similar to zero-rated supply refunds.
A long-awaited step towards strengthening the GST framework, the Council confirmed the Goods and Services Tax Appellate Tribunal (GSTAT) will be operational by the end of September to accept appeals, with hearings starting by December. The Principal Bench of GSTAT will function as the National Appellate Authority for Advance Ruling, promoting consistency in tax interpretations.
The Council also set June 30, 2026, as the final date for filing all backlog appeals.
Process reform implementation pending
Process reforms under GST law and procedure, which were discussed but not detailed during the meeting, will be notified at a later date.
FAQs on the approved recommendations are expected soon, aimed at providing clarity to businesses and individual taxpayers alike.