GST 2.0: The Big Reform You Need to Know
GST 2.0 simplifies India’s tax system with new 5%, 18% & 40% slabs. Know what’s cheaper, costlier, key compliance updates & how MyFinFlow helps you.
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GST 2.0: The Big Reform You Need to Know
The Indian taxation landscape is going through its most significant overhaul since GST was first introduced in 2017. The government has rolled out GST 2.0, effective from September 22, 2025, with the aim of simplifying the tax structure, boosting demand, and making compliance smoother for businesses and individuals alike.
So, what exactly is GST 2.0, and how will it affect you? Let’s break it down.
What is GST 2.0?
GST 2.0 is a revamped version of the Goods and Services Tax that:
Simplifies the tax structure into just two main slabs – 5% and 18%, along with a special 40% slab for sin and luxury goods.
Makes everyday essentials cheaper by reducing or removing GST.
Expands compliance rules to ensure transparency and ease of doing business.
Strikes a balance between reducing consumer burden and maintaining government revenues by increasing tax on non-essential and luxury products.
What Comes Under GST 2.0?
Here’s a quick look at the categories under GST 2.0:
| Category | GST Rate | Examples |
|---|---|---|
| Essentials (0–5%) | 0% / 5% | Packaged food, soaps, shampoos, toothpaste, medicines, fertilizers, diagnostic kits, irrigation systems |
| Standard (18%) | 18% | Consumer durables (TVs, ACs, refrigerators), small cars, motorcycles ≤350 cc, tractors, auto parts |
| Luxury/Sin (40%) | 40% | Cigarettes, pan masala, aerated drinks, luxury cars, yachts, gambling services |
Key Compliance Changes
Multi-Factor Authentication (MFA) mandatory for GST portal login.
E-way Bill rules tightened – expiry limits capped at 360 days.
Mandatory ISD Registration for companies with multiple GSTINs under one PAN.
New GSTR-7 & GSTR-8 formats with invoice-level reporting.
Updated e-invoicing and sequential invoicing rules for better compliance.
Summary
GST 2.0 is designed to simplify taxation, reduce costs for households, and push economic growth. Essentials and healthcare are cheaper, white goods and vehicles are more affordable, and insurance premiums are now GST-free. On the other hand, luxury indulgences will be taxed higher to balance government revenues.
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