The 56th GST Council Meeting on 3rd September 2025 has marked a significant milestone in India’s indirect tax landscape, introducing major GST rate rationalisations aimed at simplifying compliance and providing consumer relief. The Council has proposed a streamlined two-rate structure—5% for merit goods and 18% as the standard rate—with a 40% demerit rate for select items, impacting sectors from FMCG and healthcare to automobiles, aviation, and renewable energy.
While the reforms promise easier classification, lower disputes, and potential price reductions, businesses face challenges including input tax credit reversals, inventory valuation issues, anti-profiteering compliance, and rapid ERP updates. This blog unpacks the key rate changes, sector-wise implications, and practical action points for companies to navigate the new GST framework effectively.
