On September 22, 2025, India entered a new era of its Goods and Services Tax (GST) system, often referred to as "GST 2.0".
This reform represents one of the most significant revisions to India's tax system in history. The new regime simplifies the GST by replacing multiple slabs. It now includes just two primary rates of 5% and 18%, while items considered "luxury - sin" will be taxed at 40%.
The purpose of this reform is transparent. It decrease the tax burden on items indicated as essential. It is aimed at promoting affordability, and increase rates on non-essential and luxury goods. From common grocery items to consumer electronics, the new GST rates will be implemented by millions of consumers .
GST 2.0: What Has Changed?
The change in the tax structure has been approved by the GST Council during its 56th meeting held on September 3, 2025, and it has come into effect on September 22nd. The new tax structure completely removes the earlier 12% had 28% tax slabs. Under GST 2.0, the tax system has changed from a 12% and 28% flat rate to predominantly two rates for all products (with a higher slab rate for luxury), that makes the whole system easier to navigate and to engage with.
Here is a Full Breakdown of GST 2.0 Tax Structure
5% GST – Basic Necessities and Goods That Support Life
Includes basic staples like rice, wheat, milk, curd, as well as vegetables and fruits. It provides basic health care services and personal health insurance, as well as prescription medications. It is aimed at lowering household expenses and offering a variety of benefits for middle- and low-income families.
18% GST – Goods and Services Generally
These include consumer electronics, convenience foods, clothing and footwear, and household and kitchen appliances. It offers a model for appropriate access and revenue generation that offers balance that provides businesses competitiveness while allowing consumers reasonable access to goods and services.
For example, consumer electronics such as televisions, refrigerators, and air conditioners have gone from 28% GST to 18% GST.
40% GST – Goods Considered Luxuries and Sins
Includes luxury automotive cars, luxury motorcycles, tobacco products and aerated beverages. Also makes sure that high-income individuals contribute more in taxes, while essentials remain affordable.
Large SUVs and luxury imports can now cost an additional ₹2–5 lakh reduced due to fewer exempt items.
Other Changes:
Over 50 items have shifted to the zero-tax (Nil GST) category, which include certain stationery, school supplies and household items. The cess on some goods have merged into GST to improve compliance for businesses.
Why It Matters:
Reforms are trying to stimulate consumer spending, especially on essential goods and electronics, while maintaining strong taxable revenues from more expensive products. Businesses will have to modify their accounting, pricing calculation, and invoicing systems to account for the new rates.
What’s Cheaper Now?
Food and Daily Essentials
Items like milk and curd, and khakra no longer have a tax, this will translate immediately into cheaper prices. In Indore, for instance, the price of well-known snacks, Ratlami sev and laung sev at the time of catalogue ticked from 7%-10% in price to the benefit of consumer and seller alike.
There is a particular benefit with reduction in prices as some families budget every household expense; in this case, that just allows more disposable income to spend on other categories.
Healthcare Products
There has been a drop in prices for medications for a range of conditions including rare disease and cancer, as well as the price of medical devices. Because of the revised GST rates, individual health insurance now has a 0% GST, and therefore has become cheaper and more available to the general population.
These changes encourage better health coverage and affordability, particularly for low- and middle-income families.
Consumer Electronics and Appliances
Electronics and appliances (for example, TVs, refrigerators, air conditioners) have been shifted from the 28% slab to the 18% GST slab, reducing prices. This is likely to spur consumer spending, which is most likely to be seen in the festive season.
These new rates also apply to other standard items such as laptops, computers, and kitchen appliances.
What’s More Expensive Now?
Luxury and Non-Essential Items
Luxury electronics, high-end cars, and luxury motorcycles are now in the 40% GST bracket and have increased in retail pricing. Example: Large SUVs and luxury imported cars have increased by ₹2–5 lakh more expensive based on the new tax structure.
Sin Goods
The consumption of sin goods such as tobacco products, aerated drinks, and other non-essential indulgence items is now taxed at 40% GST. Example: Cigarettes, cigars, soda brands, etc. have all increased in cost, affecting consumption.
Gold and Jewellery: What is the Impact?
Gold continues to be subject to 3% GST tax as split between 1.5% Central GST (CGST) and 1.5% State GST (SGST).The overall GST has remained unchanged, but the prices went up.The price for 22 carat gold per 10 grams on 22nd September 2025 went to ₹1,03,200, an overnight price increase from ₹1,02,800. Price increased by ₹400 overnight.
So in short, and while the tax itself does change or does not change, gold investors and buyers of gold jewellery should account for a very small total purchase price hike.
How to Pay GST Online - API Checklist
With the new rate becoming effective from NOW, we want to suggest to all taxpayers and businesses to remain compliant for GST. It's easy to make GST ONLINE PAYMENT:
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Go to the GST website: Open up your Internet browser and go to https://www.gst.gov.in
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Log In: Enter your log-in credentials (Username and Password).
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Click: the Services -> Payments -> Create Challan
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Select Tax Type: CGST, SGST, or IGST, depending on your nature of transaction.
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Submit Payment: Enter the payment information as required (amount, etc.)
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Select Payment Method: Net Banking, Debit/Credit Card, or pay via NEFT / RTGS.
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Complete Payment: You will see the confirmation of details on the process.
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Download Challan: Upon completion, you can download your challan for record purpose.
We also advise businesses to plan to update invoicing and accounting systems, based on the new rates.
Income Tax Update: Stay Informed
The ongoing GST reforms are taking the spoiler into the news, but income tax developments are also meaningful. The government is likely to announce revisions on income tax slabs and exemptions in the upcoming budget sessions. Taxpayers should stay vigilant for new notifications regarding personal finances and business finances.
Combining completion of GST returns while updating changes to income tax is good preparation of your personal and business finances.
Conclusion
GST 2.0 a comprehensive and simplified tax structure for India. Necessities such as groceries, healthcare, and electronics will be cheaper whilst luxuries and sin goods will be taxed at higher rates. Gold will remain stable. Businesses will need to revise systems to remain compliant. Ultimately, these reforms are trying to increase consumer spending, relieve household pressure, and produce a streamlined and transparent GST structure for both consumers and businesses.
