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GST 2.0 Takes Effect Monday, Cutting Rates on 375 Items and Introducing a 40% Luxury Band

Officials project ₹2 lakh crore in household savings, with companies rolling out MRP cuts under enforcement to pass through the new rates.

Earlier this month, the 56th GST council meeting decided to rationalise GST rates to two slabs of 5 per cent and 18 per cent by merging the 12 per cent and 28 per cent rates.
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Overview

  • The new structure consolidates GST into two main slabs of 5% and 18% from September 22, with a separate 40% band for demerit and ultra‑luxury goods as petroleum remains outside GST.
  • About 99% of goods previously at 12% move to 5% and roughly 90% of items at 28% drop to 18%, covering staples, medicines, appliances, autos and several services.
  • The Centre notified revised rates on September 17 and asked states to align SGST; authorities issued labelling and pharmacy guidance to ensure revised MRPs and lower bills.
  • Major brands announced immediate price cuts, including Amul reducing prices across 700+ packs, appliance makers trimming ACs and dishwashers, Railways lowering Rail Neer, and automakers revising tags.
  • Finance Minister Nirmala Sitharaman estimates a near‑term revenue impact of about ₹48,000 crore for the government, offset by higher consumer purchasing power during the festive season.