The much talked about GST Rate Rationalization has finally take-off with the support of States in the last convened 56^th GST Council Meeting held on 03.09.25.

This is highly revolutionary in the GST since its implementation, and the result is yet to seen. While the Industries, Service Providers, Suppliers, Buyers all are hailing the GST rate rationalization, which is a biggest reform in the GST since its implementation.

But, taking the biggest leap, still certain anomalies persist in the understanding.

1. Goods that are currently under 18% GST bracket, when supplied to lower rate of goods (as per the rate rationalization), does not have the clarify in respect of GST For example, “Conveyor or Transmission Belts or Belting of vulcanized rubber Belts” falling under HSN 40101110 to 4010 39 99 (classified for the rubber compound content contains in the belts), is chargeable @18% GST as per the classification of goods. But the issue is that when the goods are supplied to “Tractors” (HSN 8701), which attracts 5% GST as per the reduced GST rate. But, the parts and accessories, when supplied as individual items, required to be charged @18%. Thus, the industries are expecting a directions from CBIC (may be in the form of clarification), clarifying the applicable GST rate, to deal such type of goods which is part and parcel of the principal goods which attracts @5% GST.
2. Further to the above, another anomaly is in the case of machinery used in the agriculture ie. “Aerator” falling under 8436 80 90 which attracts 5% as per the rate rationalization. But, parts, accessories like Gear Motor (8501), Gear Box (HSN No.8483), which attracts 18% GST. Hence, when these goods are supplied as individual items, it would be treated as parts of the principal goods for charging principal rate of goods @5%.
3. Normally, when the final goods rates are reduced, their parts and accessories are also to be considered as per the principal rate of goods. If this is not followed, the producer of goods will have to accumulate more Input Tax Credit (ITC) and would face cash flow problem in his working capital.
4. If these anomalies are not removed, the chances of disputes in respect of GST rate applicability is apparent. Perhaps, the intention of reforms is to mitigate the chances of disputes between the Assessee(s) and the GST Department for the classification of goods
5. Since goods that are used in “Automotive” (as parts, acessoires of Motor Vehicles) and “Non-Automotives” (other industries) the GST rate 28% rate is abolished, In nutshell, the reforms is to minimize the classification disputes between the assessee and department and keep the disputes at bare minimum level  as the goods in both applications  are considered @18% GST. This is highly appreciable and certainly moved from complexity to clarity except in the few cases as stated in the supra, wherein the clarity is required to be given.

Conclusion:

The reforms approved with the whole hearted support of  States and Central in the 56^th GST Council Meeting, is definitely a game-changer. Further, the reforms (2.0 Rate Rationalization) would certainly reflect a pro-growth and pro-business approach, and market has already echoed its sentiments welcoming the reforms proactively.

We strongly believe that the GST reforms benefits would reach to common man in the form of reduction of prices of and true reflection of Govt. intention of ease of doing business.