GST Council Meeting Decisions

During the 55th GST Council meeting in mid June 2025, the Centre and state finance ministers reached a series of agreements aimed at simplifying compliance and rationalizing rates. Key reforms include major structural changes to hotel and restaurant taxation, expanding exemption to motor vehicle insurance contributions, and refining reverse charge provisions.
Major Tax Reforms
Sponsorship services will now fall under forward charge (supplier tax) instead of reverse charge, easing compliance for corporates and non profits.


Motor vehicle insurance contributions to accident funds are exempt from GST, supporting road accident victims.


Hotel and restaurant GST will align tariffs with actual accommodation costs 18% with ITC for stays above ₹7,500; 5% without ITC for others. Businesses must choose annually.


Renting under Composition Scheme Developers using reverse charge GST won't be penalized for a defined period.


Implications & Benefits
These changes aim to rationalize cascading and simplify compliance costs. SMEs and lodging businesses, in particular, will benefit from tariff clarity. Exempting motor vehicle accident fund contributions encourages welfare among insurance providers.
Political & Industry Response
Industry bodies like FICCI and CII backed the move, calling it a step toward stabilizing the regime. Opposition lawmakers cautiously welcomed parts of the reforms, though the opposition demanded larger simplification across slabs.
Next Steps
Implementation is slated for 1 April 2026 (start of fiscal year). Ministries will issue guidelines on regime choices, pricing, and returns. State revenue impact will be monitored at successive meetings, with further alignment expected in the next annual session.