The 56th meeting of the GST Council was held on September 03, 2025 in New Delhi under the chairpersonship of Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman. The GST Council, inter-alia, made recommendations relating to changes in GST tax rates, providing relief to individuals, the common man, and the aspirational middle class.
In line with these recommendations, the Central Board of Indirect Taxes & Customs (CBIC) has issued Notification No. 15/2025-Central Tax (Rate) dated September 17, 2025 (CGST, IGST & UTGST Rate), revising several GST rates on services with effect from 22nd September 2025.
Here are the key changes announced by the Ministry of Finance through Notification No. 15/2025-Central Tax (Rate):
Transport and Logistics Services
Reduced Rates (New Concessional Rates):
- Goods Transport by Road: Reduced to 2.5% CGST (5% total GST) with input tax credit restrictions
- Container Transport by Rail (non-Indian Railways): New concessional rate of 2.5% CGST (5% total) with conditions
- Multimodal Transportation (excluding air): 2.5% CGST (5% total) for non-air transport modes
- Vehicle Rental with Fuel: 2.5% CGST (5% total) when fuel costs are included
Standard Rate Applications:
- Most transport services maintain 9% CGST (18% total GST) as the standard rate
- Multimodal transport involving air: Continues at 9% CGST (18% total)
Postal and Delivery Services
- Postal Services: 9% CGST (18% total GST)
- Courier Services: 9% CGST (18% total GST)
- Local Delivery Services: 9% CGST (18% total GST)
- Other Delivery Services: 9% CGST (18% total GST)
Beauty and Wellness Services
New Concessional Rate Structure:
- Beauty and Physical Well-being Services (Group 99972): 2.5% CGST (5% total GST) with mandatory input tax credit restrictions
- This represents a significant reduction from previous rates for the beauty and wellness industry
Manufacturing and Job Work Services
Concessional Rates for Specific Categories:
- Diamond Job Work: 0.75% CGST (1.5% total GST)
- Food Products, Textiles, Printing, and Handicrafts Job Work: 2.5% CGST (5% total GST)
- Tailoring Services: 2.5% CGST (5% total GST)
- Alcoholic Liquor Manufacturing Job Work: 9% CGST (18% total GST)
Entertainment and Sports
- Recognized Sporting Events: 20% CGST (40% total GST) with specific exemptions for recognized sporting events
- Other Entertainment Services: 20% CGST (40% total GST)
Important Conditions and Restrictions
Input Tax Credit Limitations
The notification introduces stringent conditions for availing concessional rates:
- No Input Tax Credit Condition: Many services at 2.5% rate require that input tax credit on goods and services used in supplying the service has not been taken
- Restricted Input Credit for Transport: Multimodal transporters can only claim input tax credit up to 2.5% rate even if their service providers charge higher rates
- Same Line of Business Restriction: Vehicle rental services have specific restrictions on input tax credit for services in the same line of business
New Definitions Added
- Multimodal Transporter: Person entering contracts for multimodal transportation and acting as principal
- Mode of Transport: Defined as carriage by road, air, rail, inland waterways, or sea
- Recognized Sporting Event: Cross-referenced with existing notifications
- Handicraft Goods: As defined in earlier notifications
Sector-Wise Impact Analysis
Transportation Sector
The transport sector receives significant relief with multiple services moving to concessional 2.5% CGST rates, particularly benefiting:
- Road transport operators
- Container transport services
- Vehicle rental companies including fuel costs
- Multimodal logistics providers
Beauty and Wellness Industry
The beauty and wellness sector sees substantial rate reduction to 2.5% CGST, making these services more affordable for consumers while supporting the aspirational middle class.
Manufacturing and MSME Sector
Job work services for various manufacturing sectors receive concessional rates, particularly benefiting:
- Food processing industry
- Textile manufacturers
- Printing industry
- Handicraft producers
- Small tailoring businesses
Service Industry
Professional and technical services see mixed changes with some categories receiving rate benefits while maintaining revenue neutrality through input tax credit restrictions.
Implementation Timeline
Effective Date: September 22, 2025 Hotel Accommodation Clarifications: Effective from April 1, 2025 (retrospective application)
Compliance Considerations
Businesses in affected sectors must:
- Review their current GST registration and compliance status
- Assess eligibility for concessional rates based on input tax credit restrictions
- Update their invoicing systems and rate structures
- Ensure proper documentation for claiming concessional rates
- Understand the implications of input tax credit limitations on cash flows
Revenue and Policy Impact
These changes reflect the GST Council’s focus on:
- Supporting the aspirational middle class through reduced rates on beauty and wellness services
- Enhancing logistics efficiency through transport sector rate reductions
- Promoting manufacturing competitiveness through concessional job work rates
- Balancing revenue considerations with industry support through conditional benefits
The notifications represent a significant policy shift toward providing targeted relief while maintaining revenue through input tax credit restrictions, ensuring that the benefits primarily reach end consumers rather than creating cascading tax benefits throughout the supply chain.
Note: Similar notification has been brought under the UTGST Act, 2017 vide No. 15/2025-Union Territory Tax (Rate) dated September 17, 2025 and under the IGST Act, 2017 vide No. 15/2025-Integrated Tax (Rate) dated September 17, 2025.
The Complete Notifications can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/09/GST-Notifications-pertaining-to-Services-CGST-IGST-UTGST-N.-No.-15-2025.pdf
