IMPLICATIONS OF CHANGE IN GST RATE ON GYMNASIUM SERVICES W.E.F 22ND SEP 2025

[Kush Kalra]

Respected Sir/Madam,

The GST council has reduced the GST Rate on Gymnasium services (Beauty and Wellness Services) w.e.f 22.09.2025 from 18% with ITC to 5% without ITC. Following clarification are required for ITC in this case:

1) What will be the treatment of balance in electronic credit Ledger as on 21.09.2025. Should it be reversed or same can be used to discharge the output liability after 21.09.2025.

2) The GST Rate w.e.f from 22.09.2025 is 5% without ITC, If ITC is not used to discharge output liability can we claim refund of this ITC as on 21.09.2025 as same will not be used further.

Regards

Kush Kalra  

[Sadanand Bulbule]

GST-02 Reforms do not affect the existing  Input Tax Credit balance, it remians intact.

You are allowed to carry forward and utilise the same to pay Output Tax at the reduced rate as per law.

[Kush Kalra]

Thanks sir for your reply, the new gst rate w.e.f 22/09/2025 is 5% without itc, so the tax liability needs to be discharged in cash. In this case can ITC be used.

[Sadanand Bulbule]

Valid ITC (upto 21/09/2025) need not be reversed but cannot be used for or refunded against gym services taxed at 5% without ITC from 22/09/2025.

Therefore tax is to be paid in cash.

[KASTURI SETHI]

I concur with the views at Serial No.2 expressed by Sh.Sadanand Bulbule, Sir.

[Shilpi Jain]

W.r.t. ITC on capital goods whose useful life has not crossed 5 years, there could be requirement of reversing credit in terms of rule 43. 

Any ITC left over, cannot be claimed as refund. Use it to pay off your 5% liability.

AI Summary

Gymnasium GST change: existing ITC cannot be used against 5% no-ITC services; refunds not available. GST reclassification of gymnasium services to 5% without ITC does not require reversal of valid ITC balances as of 21.09.2025, but such ITC cannot be used against supplies taxed at 5% without ITC nor refunded for that reason. Reversal obligations may apply for capital goods under rule 43 where useful life criteria are unmet. Taxpayers should carry forward and apply remaining ITC to other allowable output tax liabilities or follow statutory reversal rules.