GST 2.0 and Kashmir’s Second Chance at Growth

The government's tax reset is changing how Kashmir buys cars, runs hotels, and sells its crafts. The reform could revive hopes of prosperity, if it reaches the people who need it most.

- Khalid Mustafa

When India launched the Goods and Services Tax (GST) in 2017, the promise was bold: ‘one tax to replace the messy patchwork of levies that burdened businesses and confused consumers.

It was marketed as a historic simplification, a single umbrella that would bring order to chaos.

What arrived instead was a jungle of slabs, cesses, and compliance struggles. The spirit was right, but the execution left small traders overwhelmed and customers disillusioned.

Eight years later, the government has returned with what it calls GST 2.0. Unlike earlier tweaks, this one feels like a full reset.

By 2025, the tax landscape has been reshaped into something far simpler. Instead of five rates and a string of hidden surcharges, most products now fall under two slabs: 5 percent and 18 percent. Luxury goods stand at a flat 40 percent.

Gone are the compensation cesses that once turned car purchases into ransom notes. For businesses, the paperwork is lighter, and for consumers, prices are easier to understand.

On paper, the change looks neat and efficient. The real test, though, is in places like Jammu and Kashmir, where the economy leans on two sectors, automobiles and tourism, that are deeply sensitive to tax shifts.

Take the car industry. For years, it has staggered under heavy levies. A regular passenger vehicle attracted 28 percent GST and, if it looked too fancy, another 22 percent cess.

Cars were already a stretch in Kashmir, where incomes are uneven and disruptions frequent. Dealers often saw their showrooms empty, and families held onto aging vehicles because buying new ones felt like a luxury.

Now, with GST 2.0 lowering rates on passenger cars to 18 percent and scrapping most cesses, showrooms in Srinagar and Jammu are reporting something unusual: genuine interest.