India’s GST 2.0 rate changes are already in effect: revised rates for services and most goods began on 22 September 2025. The reform made 5% and 18% the principal GST slabs, while exemptions and a 40% rate for specified luxury and demerit goods remain part of the system. A defined group of tobacco-related products was excluded from the initial rollout and stayed under its existing GST and compensation-cess rates pending a later notified transition.
When did the GST 2.0 rate changes take effect?
The GST Council’s 56th-meeting press release said the changes to service rates would take effect on 22 September 2025; the Ministry of Finance FAQ and official summaries give that date for the revised rates covering services and most goods. This is a retrospective explainer, not a notice of a future rollout. GST Council releases and meeting materials and the Ministry of Finance FAQ and PIB explainers provide the official context.
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What is the new rate structure?
The Council described 5% and 18% as the simplified principal slabs. That does not mean every supply is taxed at one of those two rates: exemptions remain, and specified luxury and demerit goods are subject to a 40% rate. The reform rationalised rates across categories including household essentials, packaged foods, medicines, consumer durables, vehicles, farm equipment and services.
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Which tobacco products were excluded from the initial rollout?
The Council release and Ministry FAQ list pan masala, gutkha, cigarettes, chewing tobacco products such as zarda, unmanufactured tobacco and beedi as exceptions to the 22 September 2025 implementation date. They were to continue at their existing GST and compensation-cess rates until the specified compensation-cess loan and interest obligations were discharged and a later transition date was notified. Do not assume those products moved to the new rates on the general rollout date.
How do you find the rate for a specific item?
Use the applicable current CBIC notification and confirm the item’s tariff classification. The Council’s press-release annexures identify changes by classification: Annexure I covers goods and Annexure III covers services; sector-level changes appear in Annexures II and IV. A broad consumer category or an example in a summary is not enough to establish the current rate for a particular product.
The official releases and annexures are available through the GST Council; consumer-facing summaries are published by the Press Information Bureau. Check CBIC’s latest rate notification before applying a rate, especially if a later amendment may affect the supply.
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How do the new rates apply to business transactions around the change?
For a transaction that straddles a rate change, the supply date alone may not settle the tax rate. Apply the statutory time-of-supply provisions to the actual supply, invoice and payment dates. The Ministry FAQ summarizes Section 14(a)(i) of the CGST Act for a supply made before a rate change but invoiced afterward:
- Payment received after the change: the FAQ says the time of supply is the earlier of the payment-receipt date or invoice date.
- Payment received before the change: the FAQ says the time of supply is the payment date.
For advances, the FAQ likewise directs taxpayers to the time-of-supply provisions in Section 14. These are summaries of the stated rules; determine the treatment from the full statutory provisions and the facts of the transaction.
What about stock bought earlier or goods already in transit?
GST is levied on supply. According to the Ministry FAQ, the revised rate applies to outward supplies made on or after the relevant notified rate change, even if the seller bought the stock earlier. The purchase date of inventory does not, by itself, determine the rate on a later outward supply.
An e-way bill already in use for goods in transit does not have to be cancelled and generated again solely because rates changed. The FAQ says it remains valid through its original validity period.
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A registered person may claim input tax credit for tax properly charged at the rate prevailing when the supply occurred, subject to the Act’s conditions. The FAQ says credit already availed in the electronic credit ledger may be used under applicable provisions. If an outward supply becomes exempt, input tax credit treatment changes: credit must be reversed for supplies made on or after the exemption takes effect, as required by the Act.
For imported goods, the FAQ says IGST follows the notified GST rate unless IGST has been separately exempted.
Do the reforms establish how much consumers will save?
No. The official materials describe rate changes and give product examples, but they do not establish actual household savings or how much of a tax reduction businesses pass through to prices. A lower notified rate is not, by itself, evidence of a particular retail-price change.
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