In a move set to impact every Indian household, the Government of India today launched GST 2.0, ushering in one of the biggest reforms to the country’s indirect tax system since the GST was first introduced in 2017.
Approved by the GST Council earlier this month, the new regime replaces the complex four-slab structure with a simpler two-tier tax system, aiming to ease inflationary pressure, encourage consumption, and make taxation more transparent.
What’s New in GST 2.0?
Under the revised structure, most goods and services will now fall under either the 5% or 18% tax bracket. The 40% rate has been reserved solely for ultra-luxury items, sin goods (like tobacco and alcohol), and other demerit products.
Importantly, essential goods like food grains, medicines, and daily-use items will remain under the 5% slab—offering continued price relief for the common man. The removal of the 12% slab will also lead to cost reductions on a wide range of everyday items.
Some of the items that will now become more affordable include:
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Ghee, butter, paneer
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Coffee and snacks
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Jams, ketchup, and dry fruits
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Ice cream
These rate cuts are well-timed, coming just ahead of the festive season, and are expected to bring relief particularly to urban and semi-urban families.
“Festival of Savings” Begins
Announcing the rollout, Prime Minister Narendra Modi described the reforms as a “festival of savings” during a special national address on the eve of Navratri.
“Next-gen GST reforms are being implemented from tomorrow. It is like a GST saving festival,” said PM Modi.
“From September 22, people will be able to buy their favourite items at lower prices. The poor and the new middle class are getting double benefits after the GST rate cuts.”
To mark the occasion, the government has launched a countrywide campaign named “GST Utsav”, encouraging citizens to make use of reduced rates while also highlighting the government’s commitment to ease of living.
What This Means for You
The revised Central GST (CGST) and corresponding State GST (SGST) rates will apply starting today, with state governments also releasing updated notifications.
Beyond price drops, GST 2.0 is also expected to:
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Simplify compliance for small businesses and traders
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Encourage spending during the festive season
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Boost growth in MSMEs, agriculture, and rural markets
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Create opportunities for youth, women entrepreneurs, and start-ups
