On September 3, 2025, India's GST Council approved a landmark 'GST 2.0' reform to simplify the tax structure. The existing complex four-rate slab system (5%, 12%, 18%, 28%) was rationalized into a streamlined two-rate structure: 5% for essentials and 18% for standard goods and services, with a 40% rate retained for sin and luxury goods. Nearly 90% of items in the 28% slab were moved to 18%, and 99% of items in the 12% slab were moved to 5%. The reform was announced by Finance Minister Nirmala Sitharaman, with new rates effective from September 22, 2025. Experts projected a 0.1 percentage point boost to GDP growth and significant reduction in compliance burden for businesses.
GST Council Approves GST 2.0 Reform with Simplified Two-Slab Structure
AQuick answer
India's GST Council on September 3, 2025 approved GST 2.0, simplifying the tax structure to two main slabs — 5% and 18% — effective September 22, 2025, aiming to reduce compliance burden and boost consumption.
Key facts
- GST Council approved GST 2.0 on September 3, 2025.
- Tax structure simplified to two main slabs of 5% and 18%.
- Reform effective from September 22, 2025.
- Aims to reduce compliance burden for businesses nationwide.
- Expected to boost consumer spending and economic growth.
- Multiple tax tiers consolidated to improve tax administration.
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Under the GST 2.0 reform approved on September 3, 2025, what percentage of items in the 12% slab were moved to the 5% slab?
Explanation · Correct answer A
According to the GST Council decision, 99% of items in the 12% slab were moved to 5%, while nearly 90% of items in the 28% slab were moved to 18%.
Source: PIB / IBEF / Razorpay Learn
Frequently asked questions
What is GST 2.0 and when did it come into effect?
GST 2.0 is a reform approved by the GST Council on September 3, 2025 that simplified India's tax structure into two main slabs — 5% and 18%. It came into effect on September 22, 2025.
What were the objectives of the GST 2.0 reform?
GST 2.0 aimed to reduce the compliance burden for businesses by consolidating multiple tax tiers into two slabs. It was also expected to boost consumer spending and support overall economic growth.
How many tax slabs existed before GST 2.0 and what changed?
Before GST 2.0, India's GST structure had multiple tax tiers. The reform consolidated these into two main slabs of 5% and 18%, simplifying tax administration across the country.
Which body approved the GST 2.0 reform in India?
The GST Council — India's apex indirect tax body comprising the Union Finance Minister and state finance ministers — approved the GST 2.0 reform on September 3, 2025.
How is GST 2.0 relevant to the RPSC exam syllabus?
GST 2.0 is relevant to topics covering Indian Economy, fiscal policy, and tax reforms. It represents a major structural change in India's indirect taxation system, a key area in competitive exam preparation.
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