The CBIC has issued a set of Frequently Asked Questions (FAQs) -2 on 16.09.2025, after the 56th GST Council Meeting held on 3rd September 2025. The objective was to clarify ambiguities in the implementation of recent GST rate changes, exemptions, and compliance requirements across sectors. The FAQs cover diverse industries such as pharmaceuticals, drones, construction materials, insurance, hospitality, beauty services, multimodal transport, e-commerce operators, and leasing/rental services.

The clarifications also integrate directions from the National Pharmaceutical Pricing Authority (NPPA) regarding revision of MRPs on medicines after GST rate reductions, as well as changes in job work taxation, exemption of reinsurance services, and rationalisation of transport-related tax structures.

Issues Addressed by these FAQs

A. Revision of MRPs on Medicines after GST Cuts – Is it required to recall and re-label MRP on medicines already in the supply chain before 22nd September, 2025? How will the re-labelling be implemented?

Ans. Manufacturers must revise MRPs whenever GST rates reduce. Recall or re-labelling of unsold stock is not mandatory if revised price lists (Form V/VI) are issued and displayed.

The OMs are available in the website of the National Pharmaceutical Pricing Authority(NPPA)under Department of Pharmaceuticals: https://nppa.gov.in/uploads/tender/01da3cf0cd3d17c68c9a63fe23878260.pdf andhttps://nppa.gov.in/uploads/tender/ 12fbbb0cb337f1d2d70afb3fbcb57f39.pdf

B. Uniform GST Rate on Drones – Unmanned aircrafts (Drones) attracted 5%,18% and 28%GST rate. 56th GST Council had recommended 5% GST rate on drones. Whether this 5% GST rate will apply to all types of drones?

Clarified – Earlier, drones attracted 28%, 18%, or 5% depending on type/use. Now, a uniform 5% GST rate applies to all drones.

C. GST on Bricks –  What is the current GST rate on bricks?

Clarified – Bricks continue under the special composition scheme 6% without ITC, 12% with ITC with Threshold limit: ₹20 lakh turnover. 

Sand lime bricks: GST reduced from 12% to 5%.

D. Exemption for Individual Health & Life Insurance – What are the insurance services covered within the ambit of the exemption granted to individual life and health insurance? In addition to exempting services of individual health and life insurance supplied by insurers, will any input services of insurers be also exempted?

Clarified – Applies only to insurance for individuals or families (not groups). Reinsurance services will also be exempted. ITC reversal required on other input services.

E. Hotels with Accommodation ≤ ₹7,500/day – Do hotels which supply units of accommodation having value less than or equal to Rs7500/- per unit day have the option of supplying such units at 18% with ITC? Will hotels supplying units of accommodation having value less than or equal toRs7500/- per unit per day be able to avail ITC in relation to such units?

Clarified – Mandatory 5% GST without ITC. And No option to pay 18% with ITC. The hotels supplying units of accommodation which have value less than or equal to Rs7500/- per unit per day, shall not be able to avail ITC on such units, as the GST rate prescribed for such supplies is 5% without ITC. 

F. Beauty & Wellness Services – . Is the 5% without ITC rate on beauty and physical well-being services mandatory? Can service providers charge 18% with ITC?

Clarified – 5% GST without ITC is mandatory. Service providers cannot opt for 18% with ITC.

G. Job Work Services – What is the GST rate applicable on job work services in relation to bus body building? What is the GST rate applicable on job work services in relation to bricks?

Clarified – Bus body building: 18% with ITC.

Bricks attracting 5% GST (e.g., sand lime bricks): job work taxable at 5% with ITC.

H. Multimodal Transport – What is the GST rate applicable on multimodal transport of goods? Can ITC be taken on multimodal transport services, where no leg of transport is by air and the applicable rate is 5%?

Clarified – If no leg involves air transport: 5% GST with restricted ITC (limited to 5% of transport value).

If air transport involved: 18% GST with full ITC.

Input services of goods transportation limited to 5% of the value will be allowed even if supplier of such services has charged a higher rate of tax. ITC will not be allowed for other inputs or input services. 

I. What is the tax treatment if multimodal transportation involves transport of goods through air also?

Clarified – If at least one leg of transport is through air, the applicable GST rate will be 18%. In such cases entire ITC of inputs or input services is allowed.

J. Local Delivery through E-commerce Operators (ECOs) – . Who is liable to pay GST for Local Delivery Services provided through ECO? At what rate are local delivery services taxable?

Clarified – Services by way of local delivery provided through an e-commerce operator (ECO)where the person supplying such services is not liable to register under Section 22(1) will be covered under Section 9(5) of the CGST Act. In such cases, the liability to pay GST will be on the ECO. 

Taxable at 18%. If supplied through ECO by unregistered supplier → ECO liable under Section 9(5).

K. Whether an ECO providing the local delivery services are covered within the scope of GTA? What will be the effect if the local delivery services are provided through an ECO?

Clarified – GTA definition excludes ECO-based local delivery.

L. Leasing/Renting Services – What is tax treatment for leasing or renting services without operator? What is the applicable tax rate on leasing/renting a car with operator?

Clarified –  Without operator: taxed at same rate as supply of like goods.

With operator (e.g., cars with drivers): option of 5% with limited ITC (input services of same line) or 18% with full ITC.

To read the complete FAQs https://taxo.online/wp-content/uploads/2025/09/FAQs-2.pdf