CBIC issues Notifications giving effect to the recommendations made in 56th GST Council Meeting

This Tax Alert summarizes recent Notifications^[1] issued by the Central Board of Indirect Taxes and Customs (CBIC) giving effect to the recommendations made in the 56th Goods and Services Tax (GST) Council meeting^[2] and notifying amendments made vide Finance Act, 2025.

The highlights are:

• W.e.f. 22 September 2025, GST rates on various goods and services have been revised. Further, the compensation cess on specified goods such as motor vehicles, caffeinated beverages etc. have been reduced to Nil.
• E-commerce operator (ECO) shall be required to pay tax @ 18% on local delivery services provided through it by unregistered suppliers effective 22 September 2025. Further, local delivery services by or through ECO have been excluded from the scope of Goods Transport Agency (GTA).
• Appeals on specified matters relating to distribution of credit by Input Service Distributor (ISD), online information and database access or retrieval (OIDAR) services, and specified actionable claims are to be heard by the Principal Bench of GST Appellate Tribunal (GSTAT).
  
  Additionally, procedure has been prescribed for appeals to be heard by a single-member bench of GSTAT.
  
  
• Central Goods and Services Tax Rules, 2017 (CGST Rules) are amended as follows:
  
  
  • Valuation rules for actionable claims involved in lottery, betting, gambling and horse racing are revised to give effect to the new GST rate of 40%.
  • Refund claims for zero-rated supplies to be provisionally sanctioned based on system-driven risk evaluation.
  • Additional reporting requirements in GSTR-9 and 9C have been prescribed.
  • New forms have been introduced to facilitate the operationalization of GSTAT.
    
    
• Amendments^[3] made in Central Goods and Services Tax Act, 2017 (CGST Act) vide Finance Act, 2025, are notified to be effective from 1 October 2025.
• Requirement to file annual return in GSTR-9/9A has been waived for taxpayers having aggregate annual turnover up to INR 2 crores, from FY 2024-25 onwards.

Comments:

• The allocation of matters to the Principal Bench of GSTAT is welcome move as it is likely to help reduce procedural delays at the State Bench level and foster consistency in rulings on such matters.
• The exclusion of local delivery services provided by e-commerce operators from the scope of GTA services brings significant clarity in streamlining service classification within the logistics industry and reducing interpretational challenges.
• In line with the recommendations of the GST Council, appropriate amendments will be made to the CGST Act, 2017 to permit the sanction of 90% provisional refund under the inverted tax structure. This will be implemented through a risk-based provisional refund mechanism, similar to that applicable for zero-rated supplies.
• Taxpayers may need to assess the requirement for input tax credit (ITC) reversal under Section 18(4) of the CGST Act in respect of inputs and capital goods held in stock, on which credit of GST and compensation cess has been claimed.
• Additionally, the eligibility of ITC on input services received prior to the grant of exemption may also require detailed examination, where the invoice is issued and ITC is availed post-exemption.

^[1] Notification No. 9/2025 to 17/2025-Central Tax (Rate), 9/2025 to 17/2025-Integrated Tax (Rate), 13/2025 to 16/2025 Central Tax, 2/2025-Compensation Cess (Rate), Notification No. S.O. 4219(E) - 4220(E), all dated 17 September 2025
^[2] Refer to our alert “GST Council announces major rate rationalization and trade facilitation measures” dated 4 September 2025
^[3] Refer to our alert “Union Budget 2025-26: Tax & Regulatory Amendments” dated 1 February 2025