Savings or Strain?

GST 2.0 brings a simpler tax structure with two slabs, but states fear rising revenue losses may shrink welfare spending and deepen inequality

- DIPANKAR DEY

India’s Goods and Services Tax (GST) Council has implemented the simplification of GST rates from 22 September 2025, consolidating the existing four rates ~ 18 per cent, 12 per cent, 5 per cent, 28 per cent - to two rates: 18 per cent and 5 per cent.

There is also now a higher rate of 40 per cent on a limited range of “sin’ goods, including tobacco, replacing the existing higher rate of 28 per cent. About 99 per cent of goods under the 12 per cent GST slab have been moved to 5 per cent. This rejig also resulted in 90 per cent of items under the 28 per cent tax slab coming down to the 18 per cent bracket. Since the introduction of the Goods and Services Tax (GST) on July 1, 2017, businesses and individuals have been required to comply with GST registration and tax regulations. However, certain goods and services remained outside the GST framework, falling under the exemption list. This means that suppliers of these goods or services are not required to charge GST from buyers, nor remit any such tax to the government. GST exemptions are periodically revised, and on September 3, 2025, the 56" GST Council expanded this list to include more essentials.