56th GST Council Meeting: Slabs, cess and simplification – Here’s what to expect
June 26, 2025
The 56th GST Council meeting is expected to take up key issues including rate rationalisation, compensation cess, and compliance simplification. The meeting is set to convene in the last week of June or early July.
The 56th Goods and Services Tax (GST) Council meeting, postponed from its original June schedule due to a packed agenda, is set to convene in the last week of June or early July. With the Monsoon Session of the Parliament looming, the Council is expected to meet and address long-pending demands from industry and state governments. These demands include highly anticipated rationalisation of GST rates and the future of the Compensation Cess, which is currently scheduled to expire in March 2026.
Other key agenda items that are likely to be discussed, experts said, are the reclassification of intermediary services as exports, steps toward compliance simplification, among others.
The government is yet to announce a formal date of the GST Council meeting and the agenda is also expected to be finalised subsequently.
Expectations from GST Council Meeting:
GST rate rationalisation: Fewer slabs, more clarity?
The GST Council is expected to discuss a proposal to rationalise GST rates by reducing the number of slabs from the current four to three while removing the 12 per cent tax slab. Vivek Baj, Partner, Economic Laws Practice, said, “It is likely that the Council may consider eliminating the 12 per cent GST rate slab altogether. In such a scenario, goods and services currently falling under the 12 per cent category may either be moved to the 5 per cent slab or elevated to the 18 per cent slab, depending on their nature and essentiality.” Alternatively, he added, the Council may explore the introduction of a new 15 per cent slab by merging the existing 12 per cent and 18 per cent slabs.
Brijesh Gandhi, Partner, NPV & Associates LLP, said, “If approved, this change could push several goods and services currently taxed at 12 per cent into the 18 per cent bracket, potentially leading to a moderate increase in consumer prices. However, the simplification is aimed at reducing classification disputes and easing compliance for taxpayers and administrators alike.”
A much-awaited decision, but this does come with its share of challenges. Shivashish Karnani, GST Division, DPNC Global, said, “The challenge lies in determining where current 12 per cent items will be repositioned, moving them to 18 per cent could increase consumer burden, while shifting to 5 per cent may impact revenue collections. The Council will need to carefully balance revenue neutrality with compliance simplification.”
Saurabh Agarwal, Tax Partner, EY India, said, “While simplification is a welcome objective, it is important that the exercise is driven not merely by the elimination of rate slabs, but by a careful reclassification of goods and services to reflect evolving consumption patterns, affordability, and economic needs.”
GST compensation cess: Towards integration
The GST Council is likely to deliberate on the compensation cess, with discussions pointing towards converting it into a regular tax levy. Some states have raised concerns that continuing it as a cess would mean the revenue flows directly to the Centre. Meanwhile, the Group of Ministers on this issue is reportedly in favour of integrating the cess into the existing GST rate structure.
Experts believed that the continuation of compensation cess beyond its original timeline means that consumers and businesses will continue bearing the additional tax burden for an extended period. Pratik Jain, Partner Price Waterhouse & Co LLP, said, “Another critical decision could be possible removal of GST on ‘intermediary’ services where the customers are outside India– which has been a long standing ask of the industry. This would help strengthen India’s position as a global hub for export-oriented services and ensure parity with international best practices.”
Shivashish Karnani from DPNC Global, said, “The GST Council should use this extension period to implement comprehensive measures that boost organic GST collections including better compliance mechanisms, technology upgrades, and anti-evasion measures. More importantly, we need a clear, time bound roadmap for phasing out this cess as GST revenues mature. The goal should be to make GST collections self-sustaining without relying on these supplementary levies, thereby truly delivering on the promise of a simplified indirect tax regime.
Intermediary services: Export status on the table
Another area of discussion for the Council will be the GST treatment of intermediary services, especially those dealing with foreign clients. Karthik Mani, Partner, Indirect Tax, BDO India, said, “This amendment would bring an end to various ongoing disputes on this issue, mainly involving the services provided by the back offices and GCCs to foreign clients, who claim such services as exports of services while the tax authorities dispute these claims by treating their services as intermediary and subject to tax in India.”
Experts maintained that classifying broker, agent, and digital platform services as exporters is a progressive move that could boost India’s services exports competitiveness. However, they said that it will be important to emphasize that due foreign exchange should be realised by these intermediaries to enjoy the benefits of zero rate.
Easing GST registration: One nation, one system
Another expectation is aligning state-level GST registration processes with the Central Board of Indirect Taxes and Customs (CBIC)’s streamlined system. This, according to experts, will help businesses operating in more than one state who often face delays and rejections due to different rules in each state. Shivashish Karnani said, “Aligning state GST registration procedures with the recently streamlined CBIC instructions would be a game changer for businesses, particularly those operating in multiple states. Uniform norms would mean faster registration, fewer technical rejections, and smoother PAN-India operations for businesses.”
GST appellate tribunal: Reducing burden on High Courts
Expectations are also the GST Council assessing the progress on the setting up of the GST Appellate Tribunal (GSTAT). Karthik Mani from BDO India, said, “This is particularly important since presently the taxpayers are approaching the High Courts against the orders issued by the first appellate authority in the absence of the GSTAT, leading to increase in the pendency of the matters before the High Courts.”
To conclude…
Saurabh Agarwal from EY India, said, “Insurance products also require policy attention. Term insurance and health insurance are both essential for financial security which currently attract 18 per cent. Bringing these under a lower slab or even making them exempt, could significantly improve their penetration and align with broader public policy goal.” As the GST Council reconvenes after more than six months, stakeholders await clarity on critical reforms that could reshape India’s indirect tax landscape. With the Monsoon Session of Parliament on the horizon, the decisions made in this meeting could have long-lasting fiscal and economic implications.
The last GST Council meeting took place in December 2024. The body comprises Union Finance Minister Nirmala Sitharaman and finance ministers (or senior ministers) of states.
[The Financial Express]
