The Union Government’s comprehensive overhaul of the Goods and Services Tax (GST), referred to as ‘GST 2.0’, came into effect on Monday, coinciding with the onset of Navratri. The new regime introduces a simplified tax structure, featuring reduced rates on essential goods and steeper levies on luxury and demerit items.
Prime Minister Narendra Modi, in a message posted on X (formerly Twitter), described the rollout as the beginning of a ‘GST Savings Festival’, and framed it as a step towards economic self-reliance and the promotion of indigenous manufacturing.
“This Navratri is particularly special. With the GST Savings Festival, the mantra of Swadeshi (Made in India) will be further energised,” PM Modi said.
“Let us unite in our efforts towards the vision of a developed and self-reliant India.”
The new tax regime, approved at the 56th meeting of the GST Council earlier this month, reduces the existing four-slab structure, 5%, 12%, 18%, and 28% to two primary slabs of 5% and 18%.
A separate 40% 'demerit rate' has been introduced for luxury items and so-called "sin goods" such as tobacco and high-end vehicles. The compensation cess applicable to such goods has been subsumed under the new rate.
The revised structure will make several everyday essentials, including ghee, paneer, butter, dry fruits, jam, ketchup, snacks, coffee, and ice cream, more affordable.
Certain consumer durables such as televisions, washing machines, and air conditioners will also attract lower taxes, potentially reducing retail prices.
Finance Minister Nirmala Sitharaman stated that the revised GST regime could add Rs 2 lakh crore to the economy by increasing household savings and spurring consumption-led growth.
The move, she said, was aimed at reducing compliance burdens for businesses while improving revenue buoyancy through enhanced compliance and widening of the tax base.
In a 19-minute televised address delivered on the eve of the rollout, PM Modi characterised the reforms as “next-generation GST” and a key component of the government’s broader push for Aatmanirbhar Bharat (Self-Reliant India).
“This is a double bonanza,” PM Modi said, referring to the combined impact of lower indirect taxes and existing income tax exemptions.
“The poor, middle class, neo-middle class, youth, farmers, women, small traders and shopkeepers will benefit the most.”
He also urged State governments to increase local manufacturing under the twin banners of Atmanirbhar Bharat and Swadeshi, underscoring the importance of domestic value addition in India’s long-term economic trajectory.
The Opposition, however, dismissed the reforms as cosmetic and accused the Centre of deflecting responsibility for the economic hardship caused by the original GST framework.
Describing the new measures as a “band-aid on deep wounds,” several Opposition leaders reiterated their demand for an apology for taxing essential goods in the first place.