GST rate changes on services 2025
GST Rate Changes on Services from September 22, 2025 – Complete Sector-Wise Breakdown
Author: AirFinac
The 56th GST
Council Meeting has introduced significant revisions in GST rates on services, impacting multiple
sectors such as construction, transportation, hotel accommodation, job work,
beauty & wellness, insurance, entertainment, and more.
These changes, effective from 22nd September 2025, are aimed at rationalising the indirect tax structure,
reducing tax burdens in essential sectors, and aligning GST rates with the
current economic environment.
Below is a comprehensive
sector-wise guide to the new GST rates:
1. Construction & Works Contracts
The construction sector faces upward revisions
in works contracts, especially linked to government projects and oil & gas
exploration.
|
Entry |
Old Rate |
New Rate |
|
Offshore oil & gas works contracts |
12% with ITC |
18% with ITC |
|
Works contracts with >75% earthwork for Govt. |
12% with ITC |
18% with ITC |
|
Sub-contractor services for Govt. projects |
12% with ITC |
18% with ITC |
2. Transportation Services
Transport services have undergone wide-ranging
GST adjustments, affecting both passenger
and goods transport.
|
Entry |
Old Rate |
New Rate |
|
Air travel (excluding economy class) |
12% with ITC |
18% with ITC |
|
Passenger transport by motor vehicle |
5% with ITC (restricted) |
12% / 18% with ITC |
|
Goods transport in containers by rail (non-IR) |
12% with ITC |
5% without ITC / 18% with ITC |
|
Pipeline transport of petroleum products |
5% without ITC |
12% / 18% with ITC |
|
Goods Transport Agency (GTA) services |
5% without ITC |
12% / 18% with ITC |
|
Renting passenger vehicles (with fuel) |
5% with ITC (restricted) |
12% / 18% with ITC |
|
Renting goods carriages (with fuel) |
12% with ITC |
5% with ITC / 18% with ITC |
|
Multimodal transport |
12% with ITC |
5% (restricted ITC) / 18% with ITC |
3. Job Work Sector
Relief has been extended to several industries
under job work services,
lowering rates to 5%.
|
Entry |
Old Rate |
New Rate |
|
Job work for umbrellas |
12% |
5% |
|
Printing of Ch. 48/49 goods |
5% / 12% |
5% |
|
Job work for bricks |
12% |
5% |
|
Job work for pharma goods (Ch. 30) |
12% |
5% |
|
Job work for hides, skins & leather |
12% |
5% |
|
Residual job work (others) |
12% |
18% |
4. Local Delivery Services
Local delivery remains largely unchanged,
except for the inclusion of e-commerce platforms.
|
Entry |
Old Rate |
New Rate |
|
Local courier/postal delivery |
18% |
18% (no change) |
|
Local delivery via e-commerce operators (ECO) |
Not covered |
18% under Sec. 9(5) |
5. Other Key Services
Essential services such as healthcare, hotels,
waste management, and beauty have received rationalised GST rates.
|
Entry |
Old Rate |
New Rate |
|
Third-party insurance of goods carriage |
12% |
5% |
|
Exhibition of films (ticket ≤ ₹100) |
12% |
5% |
|
Effluent treatment (CETP) |
12% |
5% |
|
Biomedical waste treatment |
12% |
5% |
|
Hotel stays ≤ ₹7500/day |
12% |
5% without ITC |
|
Oil & gas professional/technical services |
12% |
18% |
|
Oil & gas support services |
12% |
18% |
|
Beauty & wellness services (SAC 99972) |
18% |
5% without ITC |
6. High Tax Bracket Services (28% → 40%)
To compensate for the removal of compensation cess, luxury and
non-essential services have been moved to the 40% GST slab.
|
Entry |
Old Rate |
New Rate |
|
Admission to casinos, race clubs, IPL etc. |
28% |
40% |
|
Licensing of bookmakers by race clubs |
28% |
40% |
|
Leasing/rental of specified goods |
28% |
40% |
|
Actionable claims (betting, gambling, online gaming,
lottery, horse racing) |
28% |
40% |
7. GST Exemptions in Insurance
Major relief has been extended to individual policyholders under health
and life insurance.
|
Entry |
Old Rate |
New Rate |
|
Individual health insurance (and reinsurance) |
18% |
Exempt |
|
Individual life insurance (and reinsurance) |
18% |
Exempt |
READ MORE
Key Takeaways – GST Services Rate Changes
2025
The GST rate changes highlight two clear
policy objectives:
✅ Relief
for essential services – Healthcare, affordable hotel stays, beauty
& wellness, waste management, and several job work categories now attract
lower GST or exemptions.
✅ Higher
levy on luxury/non-essential services – Casinos, online gaming,
betting, and high-value leasing are now taxed at 40% to boost government
revenue.
Overall, these revisions aim to create a simplified, equitable, and revenue-neutral GST structure, balancing consumer affordability with fiscal stability.
🔹 FAQs on GST Rate Changes from September 22, 2025
Q1. When will the new GST rate changes on services come into effect?
The revised GST rates will apply from September 22, 2025, as announced in the 56th GST Council Meeting.
Q2. Which services are included in the GST rate changes 2025?
The changes cover construction, transportation, hotel accommodation, local delivery, job work, beauty & wellness, insurance, and entertainment services.
Q3. What are the new GST rates for hotels under ₹7,500 per day?
Hotel accommodation up to ₹7,500/day will now attract 5% GST without ITC, reduced from the earlier 12%.
Q4. Has GST been reduced for beauty & wellness services?
Yes. Beauty and wellness services (SAC 99972) will now be taxed at 5% without ITC, down from the earlier 18%.
Q5. What is the GST rate on casinos, online gaming, and betting?
Luxury and demerit services such as casinos, race clubs, betting, gambling, and online gaming will now be taxed at a higher rate of 40%.
Q6. Is health and life insurance exempt under the new GST rules?
Yes. Individual health insurance and life insurance (including reinsurance) have been fully exempted from GST.
Q7. Why were these GST changes introduced?
The revisions aim to reduce burden on essential services while increasing revenue from luxury/non-essential sectors, ensuring a more balanced GST structure.
DISCLAIMER- Airfinac.com, its author/writer and associates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.