GST Rate Changes on Services – works contracts, passenger and goods transport, hotel, local delivery, job work, beauty & wellness, entertainment, insurance etc.

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The 56th GST Council meeting has brought a series of important changes in the services sector, covering works contracts, passenger and goods transport, hotel accommodation, local delivery, job work, beauty & wellness services, entertainment, insurance, and more.

These rate revisions, effective from 22nd September 2025, are designed to rationalise taxation, reduce burden in essential sectors, and align GST with economic realities. Below is a detailed sector-wise breakdown.

1. Construction Sector

S. No.	Entry	From	To
1	Composite supply of works contract and associated services in respect of offshore oil & gas exploration and production	12% with ITC	18% with ITC
2	Works contract predominantly involving earth work (>75%) provided to Government	12% with ITC	18% with ITC
3	Sub-contractor services to main contractor for above works to Government	12% with ITC	18% with ITC

2. Transportation Sector

S. No.	Entry	From	To
1	Air transport of passengers (other than economy class)	12% with ITC	18% with ITC
2	Passenger transport by motor vehicle (fuel cost included)	5% with ITC of input services	12% with ITC → 18% with ITC
3	Transport of goods in containers by rail (other than Indian Railways)	12% with ITC	5% without ITC / 18% with ITC
4	Transportation of petroleum crude, natural gas, HSD, ATF through pipeline	5% without ITC	12% / 18% with ITC
5	GTA services	5% without ITC	12% / 18% with ITC
6	Renting of passenger motor vehicle (with fuel cost included)	5% with ITC of input services	12% / 18% with ITC
7	Renting of goods carriage (with fuel cost included)	12% with ITC	5% with ITC of input services / 18% with ITC
8	Multimodal transport within India	12% with ITC	5% (restricted ITC) / 18% with ITC

3. Job Work Sector

S. No.	Entry	From	To
1	Job work for umbrellas	12% with ITC	5% with ITC
2	Printing of goods under Ch. 48/49 (12% goods)	5% / 12% with ITC	5% with ITC
3	Job work in relation to bricks (5% goods)	12% with ITC	5% with ITC
4	Job work for pharma goods (Ch. 30)	12% with ITC	5% with ITC
5	Job work for hides, skins, leather (Ch. 41)	12% with ITC	5% with ITC
6	Residual job work not elsewhere covered	12% with ITC	18% with ITC

4. Local Delivery Services

S. No.	Entry	From	To
1	Local delivery services (courier/postal type)	18% with ITC	18% with ITC (no change)
2	Local delivery via E-Commerce Operator (ECO)	Not notified under Sec. 9(5)	To be notified @18%

5. Other Services

S. No.	Entry	From	To
1	Third-party insurance of goods carriage	12% with ITC	5% with ITC
2	Exhibition of films (ticket ≤ ₹100)	12% with ITC	5% with ITC
3	Effluent treatment by CETP	12% with ITC	5% with ITC
4	Biomedical waste treatment	12% with ITC	5% with ITC
5	Hotel accommodation ≤ ₹7500/day	12% with ITC	5% without ITC
6	Professional/technical services for oil & gas exploration	12% with ITC	18% with ITC
7	Support services for oil & gas exploration	12% with ITC	18% with ITC
8	Beauty & physical well-being services (SAC 99972)	18% with ITC	5% without ITC

6. High Tax Bracket (28% → 40%)

S. No.	Entry	From	To
1	Admission to casinos, race clubs, IPL, etc.	28% with ITC	40% with ITC
2	Licensing of bookmakers by race clubs	28% with ITC	40% with ITC
3	Leasing/rental services of goods (previously 28%)	28% with ITC	40% with ITC
4	Specified actionable claims (betting, gambling, online gaming, lottery, horse racing)	28% with ITC	40% with ITC

7. Exemptions

S. No.	Entry	From	To
1	Individual health insurance (and reinsurance)	18% with ITC	Exempt
2	Individual life insurance (and reinsurance)	18% with ITC	Exempt

The services sector rate changes reflect two clear policy directions:

Relief measures have been provided in essential services like health insurance, hotel accommodation, beauty services, effluent treatment, biomedical waste treatment, and certain job work.
At the same time, luxury and non-essential services such as casinos, online gaming, race clubs, and high-value leasing have seen rates increase to 40%, ensuring higher revenue neutrality after abolition of compensation cess.

Overall, these rationalisations aim to balance affordability for consumers with revenue needs of the government, while simplifying the tax structure.

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