The 56th GST Council, meeting on 3 September 2025, approved the most significant restructuring of GST since 2017. The 12% and 28% slabs were abolished, leaving two principal rates — a 5% merit rate and an 18% standard rate — with a special 40% de-merit rate for a narrow set of luxury and sin categories. The revised rates took effect on 22 September 2025. For foreign suppliers of OIDAR services the practical answer is that nothing changed on rate: services continue to sit in the 18% standard slab, so IGST on supplies to Indian consumers remains 18%. The more consequential item for cross-border suppliers was separate. The Council also recommended changing the place of supply for intermediary services from the location of the supplier to the location of the recipient — the reform later given effect through the omission of Section 13(8)(b) of the IGST Act.
What the reform actually did
The 56th GST Council meeting on 3 September 2025 rationalised a four-tier structure into two principal rates: a merit rate of 5% and a standard rate of 18%, with a special 40% rate reserved for a small set of luxury and sin categories. The 12% and 28% slabs were removed. The revised rates for goods and services took effect from 22 September 2025.
Most of the public attention went to consumer goods — cars, electronics, insurance, household essentials. Very little of it addressed cross-border digital services, which is why foreign suppliers have asked us whether their position moved.
What it means if you supply OIDAR services
On rate, nothing. Services generally remained in the 18% standard slab, so IGST on OIDAR supplies to Indian consumers continues at 18%. If you have been charging 18% at checkout, that remains correct, and no repricing is required on account of GST 2.0.
What the reform does change is the environment. A simplified rate structure was presented alongside compliance and trade-facilitation measures, and the direction of travel is towards fewer classification arguments and tighter administration — not lighter enforcement for unregistered foreign suppliers.
The item that did matter for cross-border suppliers
Alongside the rate changes, the Council recommended that the place of supply for intermediary services shift from the location of the supplier to the location of the recipient. That is the reform subsequently given effect by the omission of Section 13(8)(b) of the IGST Act.
For platforms and intermediaries, this is the more consequential development, because it changes where a service is treated as supplied rather than what rate applies to it. It also has a dated dimension: the position for periods before the omission took effect is not the same as the position after it, which matters in any retrospective assessment.