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- By PTI
- Tue, 16 Sep 2025 02:12 PM (IST)
- Source:JND
The Finance Ministry on Tuesday issued a list of frequently asked questions (FAQs) to provide a more detailed explanation on the tax rate cuts that have been announced as part of the GST 2.0 reforms.
Q1. Is it required to recall and re-label MRP on medicines already in the supply chain before September 22, 2025?
No, it is not mandatory to recall and re-label the MRP on medicines already in the supply chain before September 22, 2025. However, manufacturers and marketing companies must ensure the revised, lower price is enforced at the retail level.
Q2. How will the re-labelling be implemented?
Manufacturers and marketing companies must issue a revised or supplementary price list to dealers, retailers, and the government, reflecting the new GST rates and MRP. The National Pharmaceutical Pricing Authority (NPPA) has clarified that re-labelling or re-sticking on existing stock is not required if price compliance is ensured at the retailer level.
Drones and Bricks
Q3. The 56th GST Council had recommended a 5% GST rate on drones. Will this 5% GST rate apply to all types of drones?
Yes, the GST Council has recommended a uniform GST rate of 5% on all types of drones.
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Q4. What is the current GST rate on bricks?
The GST rate for sand-lime bricks has been reduced from 12% to 5%. All other types of bricks continue to be taxed at 6% without Input Tax Credit (ITC) or 12% with ITC, with a threshold limit of Rs 20 lakh.
Insurance Services
Q5. What are the insurance services covered within the ambit of the exemption granted to individual life and health insurance?
The exemption applies to individual health and life insurance services provided by insurers to a single person or to an individual and their family. The insured must not be part of a group.
Q6. In addition to exempting services of individual health and life insurance supplied by insurers, will any input services of insurers be also exempted?
Yes, reinsurance services will also be exempted. However, insurers must reverse the Input Tax Credit (ITC) for other inputs or input services because their output services are now exempt.
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Accommodation and Personal Services
Q7. Do hotels which supply units of accommodation having a value of Rs 7,500 or less per unit day have the option of supplying such units at 18% with ITC?
No, suppliers of hotel accommodation with a value of Rs 7,500 or less per unit per day must charge a mandatory GST rate of 5% without ITC. The option to pay 18% with ITC is not available for these services.
Q8. Will hotels supplying units of accommodation having a value of Rs 7,500 or less per unit per day be able to avail of ITC in relation to such units?
No, hotels supplying units of accommodation with a value of Rs 7,500 or less per unit per day will not be able to avail of ITC because the prescribed GST rate for these services is 5% without ITC.
Q9. Is the 5% without ITC rate on beauty and physical well-being services mandatory? Can service providers charge 18% with ITC?
The 5% without ITC rate on beauty and physical well-being services is mandatory. Service providers do not have the option to charge 18% with ITC.
Q10. How should a service provider deal with Input Tax Credit (ITC) in cases where GST is payable at a rate of 5% without ITC?
In such cases, a service provider must:
Not take ITC on goods or services used exclusively for providing the 5% services.
Reverse the proportionate ITC on goods or services used partly for the 5% services and partly for other taxable supplies. This is done as if the 5% supply is an exempt supply, following the rules of Section 17(2) of the CGST Act, 2017.
Job Work Services
Q11. What is the GST rate applicable on job work services in relation to bus body building?
Job work services for bus body building are now taxed at a uniform GST rate of 18% with ITC. This specific category has been subsumed under the residual job work services.
Q12. What is the GST rate applicable on job work services in relation to bricks?
Job work services for bricks that attract a 5% GST (e.g., sand-lime bricks) will also be taxable at 5% with ITC.
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Transportation and Leasing
Q13. What is the GST rate applicable on multimodal transport of goods?
The GST rate for multimodal transport depends on the modes used:
5% with restricted ITC (only on input services of transportation of goods, limited to 5% of the value) when no leg of the transport is by air.
18% with full ITC when at least one leg of the transport is by air.
Q14. Can ITC be taken on multimodal transport services, where no leg of transport is by air and the applicable rate is 5%?
Yes, ITC can be taken, but it's restricted. You can only avail of ITC on input services for goods transportation, and it's limited to 5% of the value. ITC for other inputs or services is not allowed.
Q15. What is the tax treatment if multimodal transportation involves transport of goods through air also?
If at least one part of the transport is by air, the entire service is taxed at 18% with full ITC.
Q16. Who is liable to pay GST for Local Delivery Services provided through an ECO?
If the person providing the local delivery service is not required to register under GST, the liability to pay GST falls on the e-commerce operator (ECO).
Q17. At what rate are local delivery services taxable?
Local delivery services are taxable at a rate of 18%.
Q18. Whether an ECO providing the local delivery services is covered within the scope of GTA? What will be the effect if the local delivery services are provided through an ECO?
No, an e-commerce operator is not considered a Goods Transport Agency (GTA). The term "Goods Transport Agency" does not include an ECO that provides or facilitates local delivery services.
Q19. What is the tax treatment for leasing or renting services without an operator?
The tax rate for leasing or renting services without an operator remains the same as the GST rate applicable to the supply of similar goods. For example, if a car is taxed at 18%, leasing it without an operator is also taxed at 18%.
Q20. What is the applicable tax rate on leasing/renting a car with an operator?
Suppliers of car leasing/renting services with an operator now have two options:
Charge 5% GST with ITC on input services in the same line of business.
Charge 18% GST with full ITC.