New Delhi: Starting today, Indian consumers will experience a major shift in their shopping bills as GST 2.0 officially replaces the older system. The revamped tax framework introduces a simpler, three-tier structure with slabs at 5%, 18%, and 40%, marking one of the biggest overhauls since the Goods and Services Tax was launched in 2017.
The government has positioned the reform as a move to make taxation more transparent, reduce litigation, and bring down everyday household expenses. Prime Minister Narendra Modi described the rollout as the beginning of a “Bachat Utsav” (festival of savings), assuring citizens that essential items will become cheaper. The announcement followed the 56th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, where the final approvals were granted.
What Has Changed?
Until now, GST had four primary slabs – 5%, 12%, 18% and 28% – which often led to classification disputes. The new system collapses this into two broad rates for essentials and regular goods, while a steep 40% has been reserved for luxury and so-called “sin” products.
•5% slab: Everyday-use products such as food grains, medicines, school supplies, basic dairy items, and economy air tickets.
•18% slab: Most consumer services and manufactured products, including appliances, electronics, and standard transport services.
•40% slab: Tobacco products, pan masala, high-end cars, large motorbikes, casinos, and online gaming platforms.
What Gets Cheaper?
Shoppers are likely to notice price drops across several categories:
•Groceries & dairy: UHT milk, butter, paneer, and packaged foods like pasta, biscuits, and namkeens move to lower tax bands.
•Healthcare & education: Life-saving drugs, medical devices, and books will either be exempt or taxed minimally.
•Consumer durables: Appliances such as washing machines and televisions will now attract 18% instead of 28%.
•Transport & housing: Small cars, bikes up to 350cc, and affordable hotels fall under the reduced slabs, while fertilisers and construction materials shift to 5%.
What Gets Costlier?
While many essentials turn cheaper, certain categories will become more expensive:
•Cigarettes, gutkha, and sugary aerated drinks are set at 40%.
•Luxury cars and superbikes above 350cc also move into the top bracket.
•Coal, previously taxed at 5%, now falls under the 18% slab, which could increase costs in energy-heavy sectors.
•Leisure activities like casinos, lotteries, and horse racing are also hit with the maximum tax rate.
