The 56th GST Council meeting rolled out “GST 2.0”, simplifying India’s GST structure from four main slabs down to two, effective 22nd September 2025. Here’s what changed and what it means for your business.
The new, simpler rate structure
- 0% — Essential items: UHT milk, paneer, Indian breads, life-saving drugs, school supplies and more.
- 5% — Priority and everyday goods. Most items earlier taxed at 12% (household goods, soaps, shampoos, toothpaste, bicycles) have moved here.
- 18% — The standard rate for most goods and services. Several items earlier at 28% (TVs, ACs, dishwashers) have moved down to 18%.
- 40% — Luxury and “sin” goods: tobacco products, pan masala, aerated drinks, large passenger vehicles, high-capacity motorcycles, yachts, online gaming and betting.
There are also special rates of 3% on precious metals and finished jewellery, and 0.25% on rough diamonds and unworked precious stones.
What this means for you
If you sell goods that moved between slabs, you’ll need to update your billing software, price lists and any HSN-wise rate mapping used for GST returns. Input tax credit positions may also shift, especially where a product moved from 12% to 5% or 28% to 18%.
Not sure how the new rates apply to your specific products or services? Talk to us — we can review your HSN codes and billing setup.
GST rate classifications can be updated through further Council notifications. Always confirm the applicable rate for your specific goods/services on the GST portal before filing.