The Central Board of Indirect Taxes and Customs (CBIC) has released FAQ-2 to clarify important GST matters effective September 2025. This includes updates on MRP changes for medicines, GST rates on drones and bricks, exemptions for insurance services, hotel accommodations, multimodal transport, local delivery services, and leasing/renting services.
These FAQs help businesses, manufacturers, and service providers ensure GST compliance and accurate Input Tax Credit (ITC) management.
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Q1: Do manufacturers need to recall and re-label MRP on medicines before 22nd September 2025?
Answer: According to the National Pharmaceutical Pricing Authority (NPPA), recalling or re-labelling is not mandatory if manufacturers/marketing companies ensure compliance at the retailer level. Revised price lists (Form V/VI) must be shared with dealers, retailers, and State Drug Controllers.
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Q2: Will all types of drones attract 5% GST?
Answer: Yes. Previously, drones for personal use had 28% GST, and drones with cameras had 18%. After the 56th GST Council meeting on 3rd September 2025, all drones now attract a uniform GST rate of 5%.
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Q3: GST on bricks
Answer:
Bricks (except sand lime bricks): 6% without ITC or 12% with ITC, threshold ₹20 lakh.
Sand lime bricks: 5% GST.
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Q4: Exemption for insurance services
Answer: Individual life and health insurance services (not group insurance) are exempt from GST. Coverage includes services provided to an individual or the individual with family members.
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Q5: Input services exemption for insurers
Answer: Only reinsurance services are exempt. ITC on other inputs must be reversed if the output services are exempt.
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Q6 & Q7: GST on hotel accommodation up to ₹7,500/unit/day
Answer: Mandatory 5% without ITC. Hotels cannot opt for 18% with ITC and cannot claim ITC on these units.
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Q8: GST on beauty and physical well-being services
Answer: 5% without ITC is mandatory; service providers cannot charge 18% with ITC.
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Q9: Managing ITC when GST is 5% without ITC
ITC on goods/services used exclusively for 5% without ITC supplies cannot be claimed.
Proportionate ITC on partly used inputs must be reversed as per Section 17(2) of the CGST Act, 2017.
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Q10: Job work services – bus body building
Answer: 18% with ITC. All residual job work/manufacturing services are now aligned to 18% with ITC.
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Q11: Job work services – bricks
Answer: Job work for bricks attracting 5% (e.g., sand lime bricks) → 5% with ITC.
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Q12–14: Multimodal Transport of Goods
Without air leg: 5% with restricted ITC (input services allowed only up to 5% of value).
With air leg: 18% with full ITC.
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Q15–17: Local Delivery Services via E-commerce Operator (ECO)
ECO liable under Section 9(5) of CGST Act.
Tax rate: 18%.
Local delivery through ECO is not considered GTA.
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Q18: Leasing/Renting services without operator
Answer: Taxed at the same rate as supply of like goods (e.g., if cars are 18%, leasing cars without operator → 18%).
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Q19: Leasing/Renting services with operator
Answer: Option to charge 5% with ITC of input services in same line of business or 18% with full ITC.
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Key Takeaways
All updates are sourced from official CBIC and NPPA notifications.
GST rates have been rationalized for drones, bricks, hotels, and multimodal transport.
Businesses must follow these FAQs to maintain accurate GST compliance and ITC management.
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Official Sources
NPPA Notifications on MRP
CBIC GST FAQ-2 (September 2025)
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Disclaimer
This content is for informational purposes only. All information is sourced from official CBIC and NPPA notifications. While every effort has been made to ensure accuracy, readers are advised to refer to the original documents before taking any action. No copyright infringement is intended.