Press Release, Dated 16-09-2025
1. Introduction
The Central Board of Indirect Taxes and Customs (CBIC) has released FAQs-2 to provide detailed guidance on the decisions taken during the 56th GST Council meeting held on 3rd September 2025. These clarifications address a wide range of sectors, including pharmaceuticals, construction materials, insurance, hospitality, transportation, and e-commerce, ensuring uniform compliance with the revised GST framework.
2. Impact on Drugs, Medical Devices, and Bricks
Manufacturers and marketing companies dealing in drugs and medical devices are required to revise their MRPs and issue updated price lists in Form V/VI to dealers, retailers, State Drug Controllers, and the Government. Importantly, recalling or re-labelling existing inventory before 22nd September 2025 is not mandatory, offering transitional relief. For the construction sector, sand lime bricks now attract a reduced GST rate of 5%, while other bricks remain taxable at 6% without ITC or 12% with ITC.
3. Clarifications on Insurance and Hospitality Services
The FAQs confirm that individual life and health insurance services are exempt from GST. However, reversal of ITC will be required on input services other than reinsurance. In the hospitality and personal services sector, hotel establishments charging up to ₹7,500 per day and beauty services will be taxed at 5% without ITC, aligning with the Council’s intent to balance affordability and revenue needs.
4. Job Work, Leasing, and Transport Services
CBIC has also clarified GST treatment for job work and transport services. Job work for bus body building and residual manufacturing services is taxable at 18% with ITC, while job work for bricks is at 5% with ITC. Leasing or rental services without an operator follow the GST rate applicable to like goods, whereas cars with operators may be taxed at 5% with restricted ITC or 18% with full ITC. Multimodal transport services will be taxed at 5% with restricted ITC if there is no air leg, and at 18% with full ITC if air transport is involved.
5. E-Commerce Deliveries and Compliance Requirements
For local deliveries through e-commerce operators (ECOs), GST at 18% will apply, with liability falling on the ECO where the supplier is unregistered. ECOs facilitating local deliveries are not considered GTAs. Businesses must comply by issuing revised price schedules reflecting updated GST and MRP, applying prescribed rates, reversing ITC wherever required, and following the ITC restrictions outlined for multimodal transport. All procedures are to be followed in line with the NPPA OMs dated 12-09-2025 and 13-09-2025 as well as the 56th GST Council’s decisions.
