India’s GST framework is entering a new phase of transformation. The 56th GST Council meeting has delivered one of the most sweeping tax overhauls since 2017 — a reset that goes beyond rates to touch profitability, liquidity, and reputation. These reforms are designed to simplify structures, rationalise rates, and support both businesses and consumers, marking a pivotal step in India’s journey towards Atmanirbhar Bharat.

Key highlights from the 56th GST Council Meeting

Transition from a four-slab structure to a simplified two-slab system — 5% for essentials and 18% for standard items — with a 40% slab for luxury and sin goods (effective 22 September 2025).

Essential food items and FMCG products moved to the 5% slab; small cars, motorcycles, ACs, and electronics shifted to the 18% slab.

36 life-saving drugs exempted from GST; life and health insurance policies brought under GST exemption.

GST registration process to be completed in just three working days.

Goods and Services Tax Appellate Tribunal (GSTAT) to start operations by September 2025.

Risk-based provisional refunds for zero-rated exports and inverted duty structure (IDS) cases.

Alignment of post-sale discounts with credit notes and removal of taxability disputes for intermediary services.

Transformative impact on businesses and consumers

These reforms mark a landmark shift in India’s tax landscape. With rationalised rates, improved affordability, and streamlined compliance, GST 2.0 is expected to:

  • Stimulate consumption and ease inflationary pressures.

  • Boost domestic manufacturing, supply chains, and MSME growth.

  • Unlock working capital for exporters and high-impact sectors such as textiles, pharma, and renewable energy.

  • Provide certainty through faster dispute resolution and simplified compliance.

From reform to readiness: Grant Thornton Bharat’s rapid support framework

Managing the GST reset requires more than tax adjustments — it demands coordinated action across finance, operations, and compliance. Our rapid support framework enables management to respond with clarity, discipline, and preparedness through:

1.

Transition planning

Managing inventory, ITC, and procurement flows.

2.

Commercial and contract review

Identifying areas for renegotiation and client/vendor communication.

3.

Compliance preparedness

Strengthening records, processes, and audit-readiness.

4.

Impact assessment

Evaluating rate changes, exemptions, margins, and cash flows.

56th GST Council Meeting: Healthcare sector

56th GST Council Meeting: Healthcare sector

The industry will benefit from reduced pricing with the lowering of applicable GST rates, and patients will experience affordable access to critical drugs.

Podcast: Navigating the GST overhaul
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Podcast: Navigating the GST overhaul

In #GTBharat’s PolicyCast, our leader, Krishan Arora decodes the Council’s reforms from a policy lens. Watch the full discussion for actionable takeaways.

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Webinar: Decoding the 56th GST Council recommendations
Watch

Webinar: Decoding the 56th GST Council recommendations

Grant Thornton Bharat hosted a session on the 56th GST Council meeting, where experts unpacked key measures, sectoral impacts, and GST 2.0 readiness.

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    testimonial client avatar
    The consensus on GST rate rationalisation—adopting a streamlined two-rate structure of 5% and 18%, with a 40% special rate for sin goods within the first day of the Council meeting marks a landmark moment in India's indirect tax evolution. It reflects the true spirit of GST2.0, envisioned to enhance ease of living and make essential consumption more affordable across sectors like FMCG, retail, automobiles, pharma, textiles, and agriculture.
    Krishan Arora Partner, Tax Planning & Optimisation and India Investment Advisory Leader, Grant Thornton Bharat
    testimonial client avatar
    Lower prices, higher affordability and rising disposable incomes are expected to drive rural markets, strengthening India’s consumption-led growth story. In urban areas, consumer savings from GST cuts are likely to push demand for premium FMCG products. In recent weeks, demand had softened as consumers waited for clarity on GST rationalisation. So, retailers are expecting a strong sales rebound during the festival season.
    Naveen Malpani Partner and Consumer Industry Leader, Grant Thornton Bharat
    testimonial client avatar
    The rate rationalisation is a pivotal shift for India’s energy sector. By reducing GST on renewable energy devices and components, the government has lowered project costs, enhancing the financial viability of solar, wind, battery storage and green hydrogen solutions.
    Manoj Mishra Partner and Tax Controversy Management Leader, Grant Thornton Bharat
    Saket Mehra, Partner and Auto & EV Industry Leader, Grant Thornton Bharat
    The rate cut on GST for small cars could significantly lower acquisition costs by up to INR 1 lakh (accounting for a 12 per cent drop in process), which is expected to revive demand, especially in Tier 2 and Tier 3 cities, with the festive season approaching.
    Saket Mehra Partner and Auto & EV Industry Leader, Grant Thornton Bharat