GST 2.0, which went into effect on September 22, increases taxes on soft drinks, luxury vehicles, and tobacco while lowering rates on food, medications, cement, and gadgets. What changes is as follows.
The government’s redesigned Goods and Services Tax (GST) system, known as the Next-Generation GST or the GST Bachat Utsav, will go into effect on September 22, 2025. By giving consumers more money, the reform would boost the economy by Rs 2 lakh crore, according to Finance Minister Nirmala Sitharaman.
The change lowers taxes on cement, electronics, and services, lowers rates on necessities and medications, and places more than 50 products in the zero tax (Nil GST) band. At the same time, it combines the GST and cess to levy a 40 percent tax on sinful and luxury items including tobacco, carbonated beverages, and big automobiles.
What is less expensive with GST 2.0?
Everyday necessities
– Prepackaged paneer, chena, and UHT milk
– Every kind of Indian bread, including pizza bread, khakhra, roti, paratha, parotta, and chapati
Life-saving medications
– 33 medications and treatments, including those for uncommon illnesses and cancer (e.g., Risdiplam, Onasemnogene abeparvovec, Eptacog alfa, Daratumumab, Imiglucerase, and Agalsidase Beta).
– Many medications that were previously subject to a 12% GST tax will now be exempt.
Office and school stationery
– Chalk, charcoal, crayons, pencils, sharpeners, and erasers
– Maps, atlases, globes, graph books, and notebooks
Additional consumer goods
– Sausage, namkeen, butter, biscuits, ketchup, jams, juices, dried fruits, ghee, ice cream, and pastries
– Toiletries such as face creams, shave creams, shampoos, hair oils, and soaps
– Electronics and appliances for the kitchen, such as air conditioners, televisions, washing machines, and dishwashers (down from 28 percent to 18 percent)
– Medical equipment including glucometers and diagnostic kits (down to 5 percent)
– Residence cement (from 28 percent to 18 percent)
Services
– There are now reduced GST rates for hair cuts, salon services, yoga studios, gyms, and fitness clubs.
What increases in price with GST 2.0
Sin items with a 40% GST rate
– Pan masala, gutka, cigarettes, bidis, chewing tobacco, and reconstituted tobacco products
– Online betting and gambling
High-end automobiles
– SUVs and MPVs longer than 4 meters and larger than 1,200 cc (petrol) or 1,500 cc (diesel) are now subject to a 40 percent tax (formerly 28 percent + 22 percent cess).
– Motorcycles above 350cc are subject to 40% GST (increased from 28% + 3% cess).
Aerated beverages and soft drinks
– Now at 40% (previously at 28%) are carbonated beverages such as Coca-Cola, Pepsi, Mountain Dew, Fanta, and others.
18% of slab goods
– Dining at restaurants at AC/premium establishments
– High-end smartphones and foreign devices
– Consumer durables such as air conditioners, refrigerators, and washing machines (down from 28 percent, but still higher than necessities)
– Services for grooming and beauty in upscale salons and spas