The soon-to-be-rolled-out GST 2.0 reforms mark a landmark new phase for India. The new GST regime will come into effect on September 22, 2025, just ahead of the festive season. This represents one of the biggest overhauls since GST was first introduced in 2017.
Prior to these upcoming reforms, the GST structure included multiple tax slabs—5%, 12%, 18%, and 28%—which made the taxation system complex and difficult to manage. Businesses often struggled with uneven pricing on everyday items, highlighting the urgent need for a simplified tax system.
The new GST reform addresses this issue. With only three tax slabs, the government aims to reduce complexity and lower consumer costs in essential categories. Here are all teh changes at a glance.
GST Reforms
| Items | From | To |
| Daily Essentials | ||
| Hair oil shampoo, Toothpaste, toilet soap toilet tissues | 18% | 5% |
| Butter Ghee, pre-packaged namkeens, feeding bottles, napkins, Sewing machines, parts | 12% | 5% |
| Individual health care insurance premium/ Thermometer | 18% | Nil 5% |
| Medical Grade Oxygen, all diagnostic glucometers, and corrective spectacles | 12% | 5% |
| Affordable Education | ||
| Maps, charts, pencils, sharpeners, crayons, exercise books, erasers | 12% | Nil |
| Uplifting Farmers and Agriculture | ||
| tractor, specified bio pesticides, drip irrigation, Tarctor Tyres and Parts, | 18% 12% | 5% 5% |
| tractor, specified bio pesticides, drip iirrigation , agr | 12% | 5% |
| Electronics | ||
| Monitors and projectors nd dishwashing machines | 28% | 18% |
| Air Conditioners | 28% | 18% |
| Television ( above 32″), Including LED and LCD TVs) | 28% | 18% |
| Automobiles | ||
| Pterol and Petrol Hybrid, LPG, CNG Cars not exceeding 1200cc and 4000mm Diesel and Diesel Hybrid cars, 3-wheeled vehicles, bikes and motor vehicles for commercial use | 28% | 18% |
The Current System and Why It Needed Reform
Until now, GST has been structured into four slabs — 5%, 12%, 18%, and 28%. However, the GST Council observed that revenue from the 18% slab alone contributed about two-thirds of total GST income, nearly 67%, over the last eight years. By contrast, the 12% slab yielded the least, accounting for only around 5% of collections. The 5% and 28% slabs contributed about 7% and 11% respectively. Given this imbalance, the council decided to remove two slabs: 12%, as its revenue contribution was negligible, and 28%, in the hope that cutting levies on luxury goods would encourage manufacturers to reduce prices. The 5% and 18% slabs together generated nearly three-fourths (74%) of the GST revenue, which amounted to ₹11.37 lakh crore in 2020–21,
Benefits For Businesses
Under the earlier system, there was a lower threshold for registration. Previously, any business with a turnover of more than Rs 5 lakh was liable to pay VAT, and this limit varied from state to state. Additionally, service tax was exempted for service providers with a turnover of less than Rs 10 lakh.
Under the new GST regime, the registration threshold has been increased to Rs 20 lakh (and Rs 40 lakh for the supply of only goods), which exempts many small traders and service providers. Beyond these benefits, business owners will also gain from improved efficiency, better logistics, and reduced compliance requirements, making it easier to operate.
