GST 2.0, explained: what actually changed

Effective 22 September 2025, the GST Council carried out the biggest simplification of India’s GST slab structure since the tax launched — cutting the number of main rates, eliminating two slabs entirely, and adding a new top rate for a narrow list of luxury and sin goods.

What actually changed

Before the reform, GST ran across four main slabs: 5%, 12%, 18%, and 28%. The reform eliminated the 12% and 28% slabs entirely, leaving 5% and 18% as the two main rates — along with a new 40% rate reserved for a short list of goods like aerated drinks, tobacco products, luxury cars, large motorcycles, and personal aircraft or yachts. About 99% of items that were taxed at 12% moved down to 5%, and about 90% of items taxed at 28% moved down to 18%, with only a small remainder shifting up to the new 40% rate instead. Gold, silver, and precious metal jewellery kept their own separate 3% rate throughout, untouched by the restructuring.

The same price, before and after

Take a ₹1,00,000 item in each of the two most common cases:

The reform wasn’t only a reduction, though. A ₹10,00,000 luxury item that moved from 28% to the new 40% rate instead goes from ₹2,80,000 GST (₹12,80,000 total) to ₹4,00,000 GST (₹14,00,000 total) — ₹1,20,000 more expensive, for the narrow list of goods the higher rate actually applies to.

What it means day to day

For most everyday purchases, the practical effect is simple: fewer rates to keep track of, and lower tax on the large majority of goods that used to sit at 12% or 28%. The one calculation habit worth double-checking hasn’t changed with the reform: figuring out the GST already included in a price still means dividing by (1 + rate), not subtracting the rate directly — a ₹1,05,000 price including 5% GST has a ₹1,00,000 base, not ₹99,750. The rates moved; the arithmetic for adding or removing GST from a price is exactly the same as before.