GST Council’s 56th Meeting: What the ELCINA Webinar Revealed for the Electronics Industry

The GST is a framework that was specifically introduced to harmonize taxation across India. However, over the years, it has somehow evolved into a complex system that businesses, particularly small and medium-sized ones, struggle to navigate. We are now about to witness one of the most drastic changes GST has seen since its inception as the government attempts to rationalize tax slabs and make compliance less of a burden, while not compromising on revenue generation.

ELCINA, India's oldest electronics industry association, brought in Shashank Shekhar Gupta, Founding Partner at Marg Tax Advisors, as the speaker for its webinar on the 56th meeting of the GST Council. The expert shared his analysis, breaking down GST rate rationalization and the implications that it has on businesses at a granular level. The webinar was moderated by Rajoo Goel, Secretary General at ELCINA, and Sasikumar Gendham, President of the organization, delivered the opening remarks

Sasikumar expressed his appreciation for the council’s progressive efforts under the GST 2.0 reforms. He called attention to India’s ambition of achieving electronics manufacturing worth $500 billion by 2030 and also highlighted how the move promoted digital inclusion and quality of life. A washing machine or TV costing roughly ₹3000 to ₹5000 less is a noticeable difference that can really drive demand through sheer affordability. 

56th GST Council Meeting Overview

The meeting was chaired by Union Finance Minister Nirmala Sitharaman and largely focused on the common man. The council has approved Next-Gen GST reforms to make doing business easy for all citizens, as stated by Prime Minister Narendra Modi in his Independence Day speech. He said, “The government will bring Next-Generation GST reforms, which will bring down the tax burden on the common man. It will be a Diwali gift for you.” Aligning with his aspirations, the council proposed a reform package that put forward a relatively painless two-slab structure. The council reached this proposal through consensus. This change will take effect on September 22, 2025.

Expert Analysis: Key Changes and Industry Impact

The GST Council’s proposed changes are set to take effect from September 22, 2025. While these changes are significant, it is important to note that these reforms have not been notified yet. Meaning, they are still subject to official notification by the government. Shashank illustrated the changes using a slide deck presentation, and I have a table below that is reproduced from that.

GST Rate Applicability During the Transition Period (Not Yet Notified)

Goods/Services Supplied Before 22.09.2025

Goods/Services Supplied After 22.09.2025

Slab Changes

At the time of writing this article, there are primarily four tax slabs in GST: 5%, 12%, 18%, and 28% respectively. Coming September 22nd, this will be simplified to just 5%  and 18%, setting the focus on efficiency and making compliance easy. To speak of the electronics industry, this almost creates an even distribution between 5% and 18% slabs, with 18% taking the edge. The speaker touched on the journey from the complex pre-GST era, when there were numerous taxes, including central excise, service tax, VAT, and entry tax.

Note: A separate 40% rate will apply to luxury and sin goods.

Mid-Month Timing Concerns

While Shashank welcomed the reforms, he voiced his concerns about the implementation timelines. He believed that September 22 being the effective date would cause compliance challenges, and ideally, the change should have been planned at the beginning of a month. The current timing creates complications for businesses that are to deal with transactions that span the changeover date. An example would be when a business raises an invoice before the 22nd and receives the payment after. Looking back at the opening, Sasikumar did acknowledge temporary challenges. He said, “I’m sure we'll face a little bit of challenges in the interim period, both before and after. But I think that is just a pass through. It would just be there for few days. But if you really look at the long-term impact, I'm sure this is going to be one of the biggest beneficiaries to our industry.”

The Inverted Duty Structure Dilemma

The most contentious issues to come from the reforms will involve the companies that are currently operating under an inverted duty structure. It is when the tax rate on inputs exceeds that on output. A lot of electronics manufacturers have accumulated a good amount of input tax credits under the structure. So the dilemma is whether eventual refunds can still be expected. Transitioning out of the inverted duty bracket due to the new rate structure, Shashank clarified that there would be no refunds in such a scenario based on government FAQs. 

"Industry at large, especially where they were already under inverted duty structure, but are coming out of it going forward, are very displeased because for the past period, they are sitting on an accumulated input tax credit, and they have no clear visibility that whether they will be able to liquidate this input tax credit," he explained. This is a significant challenge for the companies that are affected, as accumulated credits may become stranded without a clear path of recovery except through constitutional remedies like approaching high courts.

Credit Protection and Transition Rules

Shashank confirmed that existing input tax credits will stay protected during the transition. "The credit, once availed, remains indefeasible, and that credit would continue with you. You can utilize that credit towards payment of your any outward tax liability," he assured attendees. This protection applies to scenarios where tax rates have been reduced, but some tax remains applicable, as opposed to cases where goods have become entirely exempt.

Faster Refunds

We are to see some significant procedural improvements that should benefit the electronics industry. For exports, the government has proposed an implementation of automatic release of 90% of refund claims within set timeframes, provided the exporter has not been classified as high-risk. Similar provisions will also apply to refunds under inverted structured duty for the industries that continue to qualify. Only 10% is to be withheld pending detailed scrutiny.

GST Appellate Tribunal

After eight years of delays, the GST Appellate Tribunal is set to become operational. In the same way as industries, the speaker noted that this is something that even GST consultants, practitioners, and lawyers have been eagerly waiting for. The announced timeline includes accepting appeals before the end of September 2025. Hearings should begin before December 2025, and the limitation period for filing appeals is extended to June 30, 2026. This is a development that should significantly reduce litigation uncertainty and offer quicker resolution of tax disputes.

Intermediary Services

The government has announced that they are eliminating the “intermediary” category from the GST law. This addresses a long-standing source of litigation dating back to the service tax era. This is a change that will greatly benefit Indian service exporters who were previously denied export benefits due to the complexity of place-of-supply rules.

Market Impact and Industry Outlook

As far as the electronics industry is concerned, these reforms fundamentally align with India’s manufacturing ambitions.  Through these changes, increased affordability should support the country’s digital inclusion objectives while potentially boosting domestic manufacturing. One of the stumbling blocks is that some electronic components will continue to attract 18% GST while their finished products will move to lower rates, and this could create a new inverted duty situation.

While broadly welcoming the reforms, ELCINA has urged the GST Council to provide “practical transition support and correction of any anomalies.” The timing concerns highlight the need for better coordination in future policy implementations. As businesses prepare for the September 22 changeover, many are calling for clearer guidelines and more generous transition provisions for all the companies caught between the old and new regimes.

As the electronics industry prepares for this landmark shift in India’s tax landscape, complete focus is set on managing short-term transition challenges while positioning for the long-term benefits of a simplified, more competitive tax structure. The success of these reforms certainly cannot be measured by revenue collection, but by their ability to boost manufacturing, increase exports, and make electronics more affordable for Indian customers.