What Is India’s GST 2.0 and How Does It Affect You?
Thank you for reading this post, don't forget to subscribe!India’s tax system is getting a major upgrade with the GST 2.0 reforms, set to roll out on September 22, 2025. This overhaul aims to simplify taxes, ease inflation, and put more money back in your pocket. Here’s a breakdown of what’s changing and how it will impact your daily life.
New Tax Rates: What’s In, What’s Out
The new framework scraps the old 12% and 28% tax slabs, streamlining the system into three main rates:
- 5%: For essentials like butter, ghee, and soaps.
- 18%: The new standard rate for most goods.
- 40%: A new “demerit” rate for luxury and “sin” goods.
This change means big savings for most consumers. According to reports, over 80% of affected goods will see a tax reduction.
How Your Shopping Cart Is About to Change
You’ll save money on everyday items.
- Kitchen Staples: Things like butter, ghee, paneer, and hair oil are dropping from 18% to just 5% GST.
- Snacks and Treats: Biscuits, chocolates, and ice cream will also become more affordable, with their tax rate cut from 18% to 5%.
- Household Electronics: If you’re planning to buy a new TV, AC, or refrigerator, you’re in luck. The GST on these items is being reduced from 28% to 18%.
- Motorcycles: Two-wheelers will get cheaper, with the GST on bikes dropping from 28% to 18%.
You’ll pay more for a few items.
- Soft Drinks: Non-alcoholic beverages will now be taxed at 40%, up from 18%.
The Bigger Picture: Easing Inflation and Boosting Spending
Experts believe this tax cut could significantly ease retail inflation. HSBC, for example, estimates that the reforms could lower the headline CPI inflation by up to 1 percentage point if companies fully pass on the savings to consumers.
With lower prices on necessities, you’ll have more disposable income. This extra cash could stimulate spending on other goods, helping to boost the economy. Major companies like Hindustan Unilever and Maruti Suzuki have already announced price cuts, showing that they’re ready to pass on the benefits to you.
Overall, GST 2.0 is designed to make essential goods more affordable and simplify the tax system. While prices will vary across categories, the general outlook for consumers is positive.
