GST 2.0 Explained: New Rates from September 22, 2025 – What It Means for You
05 Sep, 2025
GST 2.0: Simplifying Taxes for the Common Indian
Introduction
India's GST system has been undergoing a major update since its introduction in 2017. The government has announced new tax rates that will kick in on September 22, 2025. This blog breaks down the changes in clear, straightforward terms, making it easy for students, families, and everyday people to understand.
What Just Changed?
✅ Only Three Tax Slabs Now
5% → Essentials
18% → Most goods and services
40% → Luxury and sin goods
✅ Cheaper Essentials
Everyday items like:
Toothpaste, shampoo, soaps, and hair oil
Packed food items
These were taxed at 18% but will now be just 5%.
✅ Insurance Made Affordable
Life and health insurance premiums → No GST at all (0%).
✅ Electronics and Appliances
TVs, ACs, refrigerators, washing machines, mobile phones → 18% GST (previously up to 28%).
✅ Vehicles and Mobility
Small cars and two-wheelers (≤350cc) → 28% ➝ 18%
Tractors and parts → 5%
Buses and commercial vehicles → Lower GST
❌ Sin Goods Stay Costly
Cigarettes, gutkha, and tobacco still face higher rates.
Why These Changes Matter
Easy to remember – Just 3 main slabs: 5%, 18%, 40%.
Savings on essentials – Families will spend less on daily purchases.
Affordable upgrades – Cheaper TVs, fridges, mobiles, and vehicles.
Health and security – Life and health insurance are now tax-free.
Boost to the economy – Lower inflation will lead to increased consumer spending and economic growth.
Quick Snapshot Table
Category
Old Rate
New Rate
Essentials (toiletries, food)
18%
5%
Electronics and appliances
Up to 28%
18%
Small cars and two-wheelers
28%
18%
Tractors and parts
12–28%
5%
Life and health insurance
18%
0%
Luxury/sin goods
Varied
40%
How to Explain to Family and Friends
Teenagers → “That shampoo you use now has only 5% GST!”
Parents → “Your new TV or fridge will cost less starting this month.”
Budget planners → “No GST on life insurance means better returns.”
Final Word
The new GST structure is being celebrated as GST 2.0—a simplified version that aims to clear up confusion, save households money, and boost the economy. Prices may take a few days to adjust, but starting September 22, 2025, invoices will show the new GST rates.
