New GST rule (GST reforms)

Here’s a detailed breakdown of the new GST rule (GST reforms or “GST 2.0”) in India as of September 2025 — what changed, how it works, who gains or loses, and what to watch out for. If you want, I can also focus on your state (West Bengal) or your business type — to show local impact.

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What changed: The Key Reforms

1. New GST Slab Structure
   • The earlier structure with multiple GST slabs (5%, 12%, 18%, 28%) has been simplified. (ClearTax)
   • Now, most goods and services fall under two main rates: 5% and 18%. (Press Information Bureau)
   • For luxury and sin goods (high-end, harmful, or indulgent items), a new 40% rate (de-merit rate) has been introduced. (India Briefing)
   • Also, there are nil / zero-GST exemptions for certain essentials. (The Economic Times)
2. Effective Date
   • These new rates came into force on 22 September 2025. (www.ndtv.com)
3. What Gets Cheaper / Benefited
   Some of the categories/items that saw tax reductions or moved to lower slabs:

   Category	What Changed / Moved From → To
   Household essentials (soaps, toothpaste, etc.), daily use items	From higher slabs like 12% or 18% → 5% or even 0% in some cases. (ClearTax)
   Medicines, health-related items, medical devices	Many moved from 12% → 5% or to exempt status. (Press Information Bureau)
   Small cars / two-wheelers / auto parts	Some were taxed at 28% earlier; now many shifted to 18%. (ClearTax)
   Electronics, white goods (TVs, ACs, fridges etc.)	Moved to 18% from 28% in many cases. (Press Information Bureau)
   Agricultural machinery, irrigation equipment etc.	Lowered to 5%. (Press Information Bureau)
   Life insurance policies	Now exempt (no GST) for individual life insurance. (www.ndtv.com)

4. What Becomes More Expensive / Higher Taxed
   Not everything got cheaper. Some items moved into higher rates:
   • Luxury items, “sin” goods (like aerated drinks, some high-end cars, tobacco etc.) now attract 40% GST. (India Briefing)
   • Some clothing / apparel that is priced above certain thresholds now may move from lower slabs into the 18% slab. (The Economic Times)
5. Other Simplifications / Compliance Measures
   • Rate notifications will be provided via official Gazette / CBIC (Central Board of Indirect Taxes & Customs). (Press Information Bureau)
   • The “time of supply” rules determine which rate applies depending on when supply/payment/invoice etc. occur. (Press Information Bureau)
   • If an advance was received before the rate change, the old rate may apply depending on timing. (Press Information Bureau)

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Why the Changes: Objectives & Rationale

• Simplicity: Fewer slabs → easier for businesses, less confusion over which rate applies for a given item. (ClearTax)
• Relief for Consumers: Especially on essentials, medicines, health and daily-use items. Lowering inflation / cost of living pressures. (Press Information Bureau)
• Boost to Demand / Consumption: With lower taxes on goods people buy regularly, demand is expected to increase — helpful for sectors like FMCG, consumer durables, autos etc. (ClearTax)
• Fairness / Equity: Luxury items (non-essentials) taxed more heavily; essentials taxed less. Helps progressive taxation via indirect tax. (Press Information Bureau)
• Revenue Balance: Though some revenue loss is expected from rate cuts, additional revenue is expected from the 40% slab, plus more compliance, possibly more consumption to compensate. (India Briefing)

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What to Watch Out / Implications

• Revenue Loss: States whose income depends heavily on GST may feel a short‐term strain. Some fear significant drops in collections. (The Times of India)
• Price Adjustments Lag: Even though rates change, it takes time for producers, distributors, retailers to change MRP, clearance of old stocks etc. So benefits may not show immediately to end consumers. (The Times of India)
• Classification Disputes: Some goods might straddle categories; similar items might be taxed under different slabs depending on small differences. Even with simplification, this issue may persist.
• Effect on Luxuries & Sin Goods: For manufacturers/importers of luxury cars, alcohol, tobacco, etc., the higher 40% rate may reduce demand.
• GST Credit / Input Tax Credit (ITC): Businesses need to manage ITC carefully, especially when supplying items whose tax status changes (e.g. becomes exempt). (Press Information Bureau)
• E-way Bills: Existing e-way bills remain valid; no need to cancel/reissue for goods in transit as of the change date. (Press Information Bureau)

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Examples: What Changed for Popular Goods

To make it more concrete, here are a few examples:

• A TV or AC that was earlier taxed at 28% now may attract 18%. So big appliances become noticeably cheaper. (www.ndtv.com)
• Shampoo, soaps, toothpaste (daily essentials) move down to 5% (from 18% or 12%) in many cases. (ClearTax)
• Clothes above a certain price may now pay 18%. So if you buy expensive branded clothes, tax might go up. (The Economic Times)
• A small petrol car (less than a threshold) may now attract 18% instead of 28% GST, which could reduce its cost. (ClearTax)

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Important Dates / Timing Rules

• All supplies (goods/services) supplied on or after 22 September 2025 will be under the revised rates. (Press Information Bureau)
• If you received advance payment before that date, the old rate might apply (depending on supply/invoice timing). (Press Information Bureau)
• If stock was purchased earlier, that doesn’t matter for the new rate; what matters is date of supply. (Press Information Bureau)

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Assessment: Benefits vs Risks

Benefits:

• Relief to consumers, especially for essential goods — could reduce inflation pressures.
• Easier compliance and possibly lower costs of doing business due to fewer rate classifications.
• Potential boost in demand for consumer durables, autos, and related sectors.
• More progressive: non-essentials / harmful goods taxed more.

Risks / Challenges:

• States may lose revenue; may require adjustments or compensatory measures.
• Some segments (luxury, high-priced goods) will likely see price increases, possibly reducing sales.
• Implementation glitches: mismatches in MRPs, stock clearance, retailer awareness etc.
• Need to ensure businesses pass on the benefit to consumers (MRP adjustment).

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If you want, I can send you a full list of what categories in your area changed, and how much price reduction you might see for goods you often buy. Do you want me to do that for Siliguri / West Bengal?

• The Times of India
• The Times of India
• The Economic Times