The Goods and Services Tax (GST) Reform, called as GST 2.0, was officially announced during the GST Council Meeting held on 2nd September 2025.
Chaired by Union Finance Minister Nirmala Sitharaman, the Council approved a significant revision to the GST rate structure, marking a major milestone since the original implementation of GST in 2017.
Under the new structure, several goods and services previously taxed at 12% and 28% have been moved to lower slabs of 5% and 18%. Additionally, a new 40% GST slab was introduced specifically for sin and luxury goods, such as tobacco, high-end vehicles, and aerated drinks.
The reform came into effect on 22nd September 2025 and aims to simplify the tax system, reduce the burden on essential and commonly used goods, and improve compliance across sectors.
Notably, the 3% rate on gold and jewellery has not been changed. These items were not included in the slab restructuring (5%, 18%, 40%) to maintain stability in the jewellery sector, which is price-sensitive and already bears high customs duties.
GST 2.0 – Key GST Rate Reductions across Sectors
Essential Goods
| Item | Previous GST | New GST |
| Hair oil, shampoo, toothpaste, soap, shaving cream | 18% | 5% |
| Butter, ghee, cheese, and packaged snacks | 12% | 5% |
| Napkins, baby feeding bottles, and diapers | 12% | 5% |
Agricultural Products
| Item | Previous GST | New GST |
| Tractors, pesticides, micronutrients | 12% | 5% |
| Tractor tyres and spare parts | 18% | 5% |
| Drip irrigation systems and sprayers | 12% | 5% |
| Sewing machines and spare parts | 12% | 5% |
| Agricultural, harvesting, and horticultural machinery | 12% | 5% |
Healthcare Sector
| Item | Previous GST | New GST |
| Personal life insurance/health insurance | 18% | Nil |
| Thermometers | 18% | 5% |
| Oxygen and diagnostic medical equipment | 12% | 5% |
| Glucometers, test strips, eyeglasses | 12% | 5% |
Automobiles
| Item | Previous GST | New GST |
| Petrol, LPG, and CNG cars (below 1200cc & 4000mm) | 28% | 18% |
| Diesel and diesel-hybrid cars (below 1500cc & 4000mm) | 28% | 18% |
| Motorcycles (350cc and below) | 28% | 18% |
| Three-wheelers and goods transport vehicles | 23% | 18% |
Education-related Products
| Item | Previous GST | New GST |
| Maps, charts, miniature globes | 12% | Nil |
| Pencils, sharpeners, crayons, notebooks | 12% | Nil |
| Erasers | 5% | Nil |
Electronic Appliances
| Item | Previous GST | New GST |
| Air conditioners, dishwashers | 28% | 18% |
| Televisions (above 32″, including LED and LCD TVs) | 28% | 18% |
| Computer monitors and projectors | 28% | 18% |
