Here’s the latest on India's GST reforms—“GST 2.0”—announced in September 2025:
Key GST Reforms & New Rates
1. Simplified GST Structure
- The GST Council approved a major overhaul, reducing the previous four-tier system (5%, 12%, 18%, 28%) to a streamlined two-tier structure: 5% and 18%. https://www.arc-worldwide.com/worldwide-transport.html
- Additionally, a new 40% “sin/super-luxury” slab has been introduced for items like high-end cars, tobacco, IPL tickets, casinos, and carbonated beverages.
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2. Effective Date
- These changes are set to take effect from September 22, 2025, coinciding with the start of Navratri.
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What Gets Cheaper, What's Exempted, and What's Taxed Higher
Reduced GST to 5% (from 12% or 18%)
- Common consumer goods like toothpaste, shampoo, soaps, hair oil, toothpaste, toothbrushes.
- Packaged foods: sauces, pasta, coffee, chocolates, instant noodles, cornflakes, bhujia, namkeen.
- Dairy & breads: UHT milk, chena (paneer), pizza bread, khakhra, chapati/roti—some are now GST-free.
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Zero GST (0%)
- Individual life and health insurance policies, including term, ULIP, endowment, floater, and senior citizen plans.
- Lifesaving and rare-disease drugs (33 specific drugs), including certain cancer therapies.
- Educational stationery: maps, globes, pencils, notebooks, erasers, crayons.
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Reduced GST to 18%
- Items previously taxed at 28%: small cars (≤ 4m, petrol ≤ 1200cc or diesel ≤ 1500cc), motorcycles ≤350cc, buses, trucks, ambulances, auto parts.
- Electronics and appliances: ACs, TVs, consumer electronics.
- Cement: cut from 28% to 18%—a massive relief for real estate and infrastructure sectors. https://www.arc-worldwide.com/ocean-freight-forwarding.html
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New 40% Slab
- Applied to super-luxury and sin goods including cigarettes, high-capacity cars, carbonated drinks, lotteries, casinos, online gaming, and IPL tickets.
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Broader Impact & Supporting Measures
- “GST 2.0” aims to reduce complexity, support consumption, and improve ease of business. Many consumer essentials are now cheaper or GST-free. https://www.arc-worldwide.com/air-freight-forwarding.html
The Economic Times+1Reuters+1The Indian Express - Reforms are expected to spur demand during the festive season and cushion the impact of global trade pressures. https://www.arc-worldwide.com/city/sea-freight-forwarding-delhi.html
Reuters+3Reuters+3Reuters+3 - The tax shift may result in a revenue loss of ₹480 billion, but economists anticipate it could reduce inflation by up to 1.1 percentage points.
Reuters+1 - Farmers and infrastructure sectors benefit via lower taxes on tractors, bio-pesticides, cement, and auto parts. https://www.arc-worldwide.com/import/sea-freight-from-china-to-haryana.html
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Summary Table
| Category | New Rate | Notes |
|---|---|---|
| Essential consumer goods | 5% | Includes soaps, shampoos, packaged foods |
| UHT milk, paneer, breads | 0% | Fully exempt |
| Insurance & lifesaving drugs | 0% | GST-free |
| Small cars, electronics, cement | 18% | Reduced from higher slabs |
| Luxury vehicles, sin goods | 40% | New highest tier |
| Effective date | Sept 22, 2025 | Across most items and services |
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