GST 2.0 Rolled Out Before Festivals, Brings Relief

In a historic move, the Indian government has rolled out GST 2.0—an extensive reform to the Goods and Services Tax regime, effective September 22, 2025. The overhaul replaces the previous four-tier system (5%, 12%, 18%, 28%) with a streamlined two-slab model of 5% and 18%, with a separate 40% rate reserved for luxury and sin goods. Essential staples like bread and milk are now completely tax-free, a move designed for maximum benefit to households.

“GST 2.0” was developed through consensus in the 56th GST Council meeting, aiming to support the common man, bolster MSMEs, manufacturers, and state revenues, while also driving greater economic growth. Exemptions or 0% GST now apply to all Indian breads and UHT milk, significantly lowering the cost of living for millions.

In addition to simplification, GST 2.0 will continue India’s model of concurrent Central and State GST for intra-state supplies, and Integrated GST for inter-state and import goods. The reform is expected to make business digitalization, e-filing, and refunds easier, reducing compliance costs and speeding up the process for businesses of all sizes.

Importantly, the new GST regime preserves states’ revenue shares and is seen as supporting the government’s $30 trillion economic goal by promoting consumption, manufacturing, and equitable taxation. Relief on items like spectacles and medical lenses (tax cut to 5%) underlines a health-conscious approach.

The government expects the new GST to increase confidence among global investors, improve India’s ease of doing business, and further drive growth in export-oriented sectors. GST 2.0 is being widely hailed by economists and the business sector for making India’s tax framework modern, fair, and flexible.