TFP Bureau, New Delhi, September 16, 2025: The Goods and Services Tax (GST) Council has issued a detailed set of Frequently Asked Questions (FAQs) to provide clarity on several tax-related matters following its 56th meeting earlier this month. The clarifications cover a wide range of sectors including pharmaceuticals, unmanned aircraft systems, construction materials, hospitality, insurance, beauty services, transportation, and leasing. Officials said the move is aimed at easing compliance and ensuring uniform implementation of GST across industries.
On the pharmaceutical sector, the National Pharmaceutical Pricing Authority (NPPA) confirmed that while manufacturers and marketing companies must revise the Maximum Retail Price (MRP) of medicines and medical devices in line with new GST rates, recalling or re-labelling of stocks already released in the market before September 22, 2025 will not be mandatory. Instead, compliance will be ensured at the retailer level by issuing revised or supplementary price lists to dealers, retailers, state drug controllers, and consumers.
In a major rationalisation step, the Council recommended a uniform 5 percent GST rate on all types of drones. Previously, unmanned aircraft for personal use attracted 28 percent, drones with cameras carried 18 percent, and other categories were taxed at 5 percent. The new uniform rate is expected to encourage drone usage across sectors including agriculture, logistics, and surveillance.
For the construction industry, the Council decided to retain the special composition scheme on bricks that has been in place since April 2022. Under this scheme, bricks attract GST at 6 percent without input tax credit (ITC) and 12 percent with ITC, with a lower threshold limit of ₹20 lakh turnover. The only change approved was a reduction in GST on sand lime bricks from 12 percent to 5 percent.
The Council also clarified tax treatment in the insurance sector. Individual life and health insurance policies will remain exempted when provided to individuals or families. Additionally, reinsurance services will also be exempted, although insurers availing exemptions must reverse ITC on commissions, brokerage, and other input services.
In the hospitality sector, hotels charging up to ₹7,500 per room per day must apply a mandatory GST of 5 percent without ITC. They cannot opt for the higher 18 percent rate with ITC. Similarly, beauty and wellness services will continue to attract 5 percent GST without ITC, leaving no option for providers to choose the 18 percent slab.
The FAQs also addressed transportation services. Multimodal transport of goods will attract 5 percent GST with restricted ITC if no part of the journey is by air, while inclusion of an air leg will bring the service under the 18 percent bracket with full ITC. Job work related to bus body building will be taxed at 18 percent with ITC, whereas job work on certain types of bricks will fall under 5 percent with ITC.
For e-commerce platforms, local delivery services provided through operators will be taxed at 18 percent. In cases where the delivery provider is unregistered, the e-commerce operator will be responsible for paying the GST under Section 9(5) of the CGST Act. The Council clarified that such services do not fall under the definition of Goods Transport Agency (GTA).
The leasing and rental segment will continue to be taxed at the same rate as the supply of the underlying goods. For instance, if motor vehicles are taxed at 18 percent, leasing them without an operator will attract the same rate. Leasing with an operator, such as a driver, may now be taxed either at 5 percent with limited ITC or at 18 percent with full ITC.
Officials said these clarifications were necessary to remove ambiguity and reduce litigation. They are expected to ease business operations across multiple sectors while providing consumers with transparent pricing. The decisions mark a continuation of the Council’s efforts to rationalize tax rates and streamline GST compliance.
