Quick Summary
Finance Minister Nirmala Sitharaman on Sunday said the next-generation GST reforms have simplified India's indirect tax system by resolving long-standing classification disputes and streamlining rates to make goods and services more affordable. Speaking at 'Tax Reforms for Rising Bharat', a conclave organised by the Chennai Citizens' Forum, FM Sitharaman highlighted how businesses had struggled under the earlier system. "Business people didn't really understand the exact bracket under which an
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FAQ :
GST 2.0 offers faster refunds, simplified compliance, lower tax rates on essential goods and services, and resolution of classification disputes, making the system more affordable and easier to navigate.
Previously, the same item could attract different tax rates depending on how it was sold. GST 2.0 has resolved these anomalies, ensuring that goods of the same type are now taxed at the same rate, with most food items taxed at 5% or exempt.
The 12% and 28% GST slabs have been scrapped, and the compensation cess abolished. Over 300 items, including dairy, medicines, and consumer goods, have been moved to the 5% or nil GST bracket, with about 99% of items previously taxed at 12% now at 5%.
All the changes under GST 2.0 will come into effect from September 22, 2025.
Businesses will receive 90% provisional refunds automatically, and new GST registrations have been simplified to take just three days. This aims to empower businesses with faster compliance and refunds.
The guiding principles include rate cuts on daily-use essentials, relief for consumers, support for farmers, lower input costs for MSMEs, and growth in critical economic sectors.
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