On 22 September 2025, India rolled out the biggest GST change since 2017. The 56th GST Council meeting rationalised the old four-slab system (5%, 12%, 18%, 28%) into a cleaner structure: 5%, 18% and a new 40% slab for luxury and sin goods, with 0% for essentials. This is "GST 2.0".
What changed
- The 12% slab was abolished — most of its items moved down to 5%.
- The 28% slab was restructured — around 90% of items moved to 18%; only luxury/sin goods went up to the new 40%.
- Compensation cess was scrapped for most categories (tobacco and a few others transition separately).
- Individual health and life insurance premiums and 33 lifesaving medicines moved to nil (0%).
What it means for your business
If you sell goods or services, your rate mapping may have changed. Review every product's HSN/SAC and confirm the new rate, update your invoices and pricing, and check stock-in-hand around the 22 September cut-off. A wrong rate on invoices leads to notices and ITC mismatches later.
Do you need to reverse ITC?
Only where your supply became exempt from 22 September 2025. A simple rate reduction does not, by itself, require an input tax credit reversal — a point many businesses get wrong.
The upside
Fewer slabs mean fewer classification disputes and simpler filing. For most MSMEs, everyday inputs got cheaper and compliance got lighter. If you're unsure which slab your product now falls under, get it confirmed before your next invoice cycle.
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This article is for general information based on rules current at the time of writing and is not professional advice. Rules change — confirm specifics with a GovYapar expert before acting.
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