The Goods and Services Tax (‘GST’) Council in its 56th meeting held on 3 September 2025 announced significant reforms, including the rationalization of the current 4-tier GST rate structure into a simple two-rate structure with a standard rate of 18% and a merit rate of 5%, along with a special de-merit rate of 40% for select specified goods and services. The measures focus on simplifying the tax structure, facilitating trade, and streamlining compliances under the GST law.

We have summarized the key recommendations (other than changes in rates) of the GST Council hereinbelow:

1. Operationalization of GST Appellate Tribunal (‘GSTAT’):

• The GSTAT will be made operational for accepting appeals before the end of September 2025 and will commence hearings before the end of December 2025
• Pending appeals can be filed till 30 June 2026
• Principal Bench will also function as the National Appellate Authority for Advance Ruling

2. Amendment in Post-Sale Discounts Provisions:

• Removal of requirement of establishing the discount by way of pre-supply agreement
• Amendments to Sections 15 and 34 of the CGST Act to specifically allow discounts through GST credit notes with the corresponding ITC reversal by the recipients
• Clarifications circulars to be issued for certain issues pertaining to post-sale discounts to reduce disputes

3. Place of Supply for Intermediary Services:

• Section 13(8)(b) of the IGST Act will be omitted. After this amendment, the place of supply for intermediary services will be determined as per Section 13(2) of the IGST Act, i.e., the location of the recipient of services

4. Risk-Based Provisional Refunds:

• Sanction of 90% of refund claim amounts on a provisional basis in respect of zero-rated supplies (exports and SEZ supplies) and refunds arising out of inverted duty structure on the basis of identification and evaluation of risk by the system
• Amendment to Section 54(14) of the CGST Act for removing the threshold limit for refunds on exports made with payment of tax. This will especially benefit small exporters making shipments through courier, postal modes etc.

5. Simplified GST Registration Scheme for Small and Low-Risk Businesses:

• An optional simplified GST registration scheme will be introduced, wherein registration shall be granted within 3 working days on an automatic basis from the date of submission of application to low-risk applicants and businesses with an estimated monthly tax liability not exceeding Rs. 2.5 lakh on supplies to registered persons
• A simplified registration mechanism for small suppliers making sales through e-commerce operators across multiple States by removing the current requirement of maintaining a principal place of business in every State of operation

The notifications and circulars in respect to the recommendations of the GST council meeting are expected to be issued soon.

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