Published: 1 September 2025PIBEconomy
56th GST Council Approves GST 2.0 Reforms: Two-Slab Structure to Replace Four-Slab System
The 56th GST Council meeting held on September 3, 2025 approved the landmark GST 2.0 reforms, paving the way for a simplified two-slab tax structure. The reformed framework replaces the existing four-slab system (5%, 12%, 18%, 28%) with primarily two slabs of 5% and 18%, effective from September 22, 2025. Nearly 90% of items previously taxed at 28% have been moved to 18%, while approximately 99% of items in the 12% bracket shift to 5%. A new 40% slab has been introduced for sin goods such as tobacco and luxury items.
The government had announced three pillars of GST 2.0 on Independence Day (August 15, 2025): structural reforms, rate rationalisation, and ease of living. Essential items including toothpaste, umbrellas, pressure cookers, sewing machines, and bicycles are moved to the 5% slab. White goods such as ACs, TVs, refrigerators, and washing machines are shifted from 28% to 18%. Economists estimate that the reform could boost India's GDP growth by 0.1 percentage points by reducing the tax burden on consumers and easing compliance for businesses.
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Frequently asked questions
What are the key changes introduced under GST 2.0 approved by the 56th GST Council?
The 56th GST Council approved GST 2.0 on September 3, 2025, replacing the existing four-slab tax system (5%, 12%, 18%, 28%) with two primary slabs of 5% and 18%, effective September 22, 2025. A separate 40% luxury slab was introduced for select premium items.
When did the 56th GST Council meet and when did GST 2.0 come into effect?
The 56th GST Council met on September 3, 2025 and approved GST 2.0 reforms. The new two-slab tax structure came into effect across India from September 22, 2025.
What is the tax treatment of essential items like milk and roti under GST 2.0?
Under GST 2.0, essential items such as milk and roti continue to remain at zero tax rate (exempt from GST), ensuring that basic necessities remain affordable for common citizens.
What was the previous GST slab structure before GST 2.0 reforms?
Before the GST 2.0 reforms, India's GST system had four primary slabs — 5%, 12%, 18%, and 28% — along with a cess on certain luxury and sin goods. The 56th GST Council replaced this with a simplified two-slab structure of 5% and 18%.
What luxury slab was introduced under GST 2.0?
Under GST 2.0, a 40% luxury slab was introduced for select premium or luxury items, in addition to the two primary slabs of 5% and 18%.
