Quick answer
Since 22 September 2025, GST has two main rates, 5% and 18%, plus a 40% rate for demerit goods. Annual returns GSTR-9 and 9C for FY 2025-26 are due by 31 December 2026, and the 57th GST Council on 8 October 2026 recommended lower penalties, a higher prosecution threshold, automated refunds and wider input tax credit, which still need to be notified.
Key takeaways
- GST 2.0 (from 22 September 2025): slabs of 5% and 18%, plus 40% for demerit goods.
- GSTR-9 / 9C for FY 2025-26 due 31 December 2026; the year straddles the rate change.
- 57th GST Council (8 October 2026) recommended lower penalties, no arrest powers and automated refunds.
- The GST Appellate Tribunal has accepted e-filed appeals since 24 September 2025.
Table of contents
GST has changed more in the last year than at any time since 2017. Here is what businesses in Kerala need to know heading into the FY 2025-26 annual return season.
GST 2.0: the new rate structure
On the recommendation of the 56th GST Council (3 September 2025), rates were rationalised from 22 September 2025:
- Two main slabs: 5% and 18%, replacing 12% and 28% for most items.
- A 40% rate for demerit and luxury goods.
- Individual life and health insurance exempted.
- Small cars, two-wheelers up to 350 cc, air conditioners and cement moved from 28% to 18%.
- Hotel rooms up to ₹7,500 a night at 5%.
Check your item master and invoice templates: rates on many products changed mid-year.
GSTR-9 and 9C for FY 2025-26
The annual returns are due by 31 December 2026. Because FY 2025-26 straddles the rate change, reconcile before and after 22 September 2025 separately: outward supplies, input tax credit and credit notes. Start with your books, GSTR-1, GSTR-3B and GSTR-2B, and resolve differences before filing.
57th GST Council: relief on the way
On 8 October 2026, the Council recommended:
- Withdrawing arrest powers and raising the prosecution threshold from ₹1 crore to ₹5 crore.
- Cutting the general penalty from ₹25,000 to ₹10,000, and no show-cause notice for amounts below ₹10,000.
- Automated refunds and refund of ITC on input services under an inverted duty structure.
- Relaxing blocked credits under section 17(5).
- Late-fee waiver for small taxpayers who file within the month.
These need legal changes before they apply. Until then, the current rules continue.
GST Appellate Tribunal
The GSTAT began accepting e-filed appeals on 24 September 2025, with a Principal Bench and State Benches. If you have pending disputes, check the filing time limits with us.
Need help with GSTR-9, reconciliations or a notice? See our GST services in Kochi.
Sources: PIB releases on the 56th and 57th GST Council meetings; GSTN advisories; GSTAT launch release.
Frequently Asked Questions
01.What are the GST rates after GST 2.0?
From 22 September 2025, most goods and services fall into two rates, 5% and 18%, with a special 40% rate for luxury and sin goods. Individual life and health insurance became exempt.
02.When is GSTR-9 for FY 2025-26 due?
The annual return GSTR-9 and the reconciliation statement GSTR-9C for FY 2025-26 are due by 31 December 2026. The forms were enabled on the GST portal in October 2026.
03.Are the 57th GST Council decisions already in force?
Not yet. The Council's recommendations of 8 October 2026 need amendments to the CGST Act or notifications before they apply. We will update clients as they are notified.
04.How do I file an appeal before the GST Appellate Tribunal?
Appeals are filed online on the GSTAT portal, which has been live since 24 September 2025 with a Principal Bench and State Benches.
