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GST 2.0 Takes Effect With Two Rates as Prices Drop on Essentials and Autos

The government frames the simplified tax as a festive savings push paired with this year’s income‑tax relief.

Overview

  • India’s revamped GST now taxes most goods and services at 5% or 18%, with a separate 40% band for luxury and sin items, following approval at the GST Council’s 56th meeting.
  • Reduced rates cover about 375 items, with FMCG and dairy majors announcing cuts such as Amul butter falling to ₹58 from ₹62 and UHT milk to ₹75 from ₹77.
  • Reclassifications lower costs across sectors, including moving many two‑wheelers and small cars to 18%, tractors to 5%, cement to 18%, and hotel rooms up to ₹7,500 a night to 5%.
  • Prime Minister Narendra Modi calls the rollout a ‘GST bachat utsav’ and urges purchases of Made‑in‑India goods, reinforcing a swadeshi push in a letter to citizens and public events.
  • Opposition leaders label the reform inadequate and raise revenue concerns, with Congress criticizing the move as a ‘band‑aid’ and West Bengal’s chief minister warning of state‑level losses.