New Delhi: India’s much-anticipated Goods and Services Tax (GST) reforms, dubbed GST 2.0, came into effect today, bringing significant changes to the tax structure on hundreds of items. The overhaul aims to simplify compliance, reduce the tax burden on daily essentials, and ensure luxury goods contribute more to revenue.

The new system has restructured GST slabs into 0%, 5%, 18 %, and a newly introduced 40 % bracket. While essentials, food products, and personal care items have largely shifted to lower rates, luxury and sin goods face higher taxation.

According to official data, nearly 375 goods and services now fall under cheaper tax categories. Items like soaps, shampoos, toothpaste, shaving creams, butter, ghee, cheese, namkeens, and pre-packaged snacks have seen their rates cut from 12–18 % to just 5 %. Basic stationery such as notebooks, pencils, and exercise books have either been moved to nil or minimal tax rates.

Electronics and appliances also benefit from the reform, with televisions above 32 inches, air conditioners, dishwashers, monitors, and projectors shifting from the 28% slab to 18 %. In the automobile sector, smaller motorcycles up to 350cc and mid-range cars will now be taxed at 18% instead of 28 %, bringing relief to buyers.

The insurance sector has also been given a boost, as life and health insurance premiums have been moved into lower slabs, in some cases even exempted from GST.

However, not all consumers will benefit. The government has introduced a steep 40 % GST rate for luxury and sin goods. This includes high-end motorcycles, luxury cars, tobacco products, pan masala, and sugary aerated beverages. Officials stated this move balances revenue needs while making essential goods more affordable.

With these reforms, nearly all products earlier under the 12 % slab have been shifted to 5 %, while many goods once taxed at 28 % have dropped to 18% unless classified as luxury or sin items.

Finance experts have called the GST 2.0 rollout a step toward simplification and fairness, especially as it eliminates inverted duty structures and encourages consumption during the festive season. The government expects the new regime to stimulate demand while ensuring fiscal balance through higher rates on luxury consumption.