New GST 2.0 Tax Slabs 2025 – What’s Cheaper, What’s Costlier, and How It Affects You
- Gajraj Associates
- Sep 29, 2025
- 3 min read
When GST was first introduced in 2017, it was called a “Good & Simple Tax.” But over the years, many citizens felt it was too complicated, with multiple slabs, confusing classifications, and high rates on daily-use products.
Now, on 22nd September 2025, the government launched GST 2.0 — a revamped tax system that aims to simplify rates, reduce the burden on essentials, and make the middle-class life more affordable.
This reform is being seen as a festival gift for the common man, and here’s why.
What's Changed in GST 2.0?
✅ Slabs Made Simple
Old GST had four slabs – 5%, 12%, 18%, and 28%.New GST 2.0 brings it down to just three:
5% → Essentials & common-use items
18% → Standard rate for most goods & services
40% → Luxury and sin goods
This reduces confusion and classification disputes that troubled businesses and consumers alike.
Before vs After GST 2.0 (Sector-wise Comparison)
Category | Earlier GST | Now (GST 2.0) | Impact on You |
Groceries & Essentials | 5–12% | 5% or NIL | Lower grocery bills |
Medicines & Healthcare Devices | 12–18% | 5% | Cheaper treatment |
Health Insurance Premiums | 18% | 0% (GST-free) | Saves families ₹1,500–5,000 yearly |
Home Appliances (TV, Fridge, AC, Washing Machine) | 28% | 18% | Affordable lifestyle upgrade |
Two-Wheelers & Small Cars | 28% | 18% | Mobility within reach |
Luxury Cars, SUVs, High-end Bikes | 28% | 40% | Costlier for the rich |
Textiles, Footwear, Toys, Handicrafts | 12–18% | 5–12% | Cheaper + MSME job boost |
Alcohol, Tobacco, Pan Masala, Sugary Drinks | 28% | 40% | Discourages consumption |
Gyms, Salons, Fitness Services | 18% | 12–18% | Affordable lifestyle services |
Air Travel (Economy) | 5% | 5% | No change |
Air Travel (Business Class) | 12% | 18% | Slightly higher for corporates |
How It Benefits the Middle Class?
1. Everyday Savings
From groceries to milk, daily-use items are cheaper. A typical middle-class family could save ₹1,200–₹2,500 a month just on essentials.
2. Affordable Healthcare
Insurance premiums are GST-free, and medicines are cheaper — making healthcare more accessible and reducing financial stress in emergencies.
3. Lifestyle Within Reach
Electronics and appliances are now taxed at 18% instead of 28%. That means buying a refrigerator, TV, or AC is no longer a luxury but a practical investment.
4. Mobility for All
Two-wheelers and small cars are cheaper, encouraging young professionals, women, and students to invest in personal mobility.
5. Boost for MSMEs & Jobs
Lower GST on textiles, toys, leather goods, and handicrafts makes them affordable while boosting small businesses and generating employment.
6. Fair Taxation
The wealthy pay more for luxury cars and sin goods, while the common man enjoys relief on essentials. A fairer distribution of the tax burden.
Why GST 2.0 Matters
Consumers → More savings and better purchasing power.
Businesses → Fewer disputes, easier billing, higher demand.
Government → Revenue stability via higher luxury/sin taxes + boosted consumption.
This is not just a tax reform — it’s a middle-class relief package.
Example: How Much You Can Save
Imagine a family of four living in a metro city.
Monthly groceries → Save ₹800–1,000
Insurance premium (₹30,000 yearly) → Save ₹5,400 instantly (18% GST removed)
Refrigerator worth ₹30,000 → Save ₹3,000 (GST cut from 28% to 18%)
Two-wheeler worth ₹1.2 lakh → Save ₹12,000 (GST cut from 28% to 18%)
👉 Total savings in one year: ₹20,000–30,000
That’s a holiday trip or a year of school fees — all thanks to GST 2.0.
FAQs on GST 2.0
Q1. Will GST 2.0 make everything cheaper?
Answer: No. Essentials and mid-range items are cheaper, but luxury/sin goods are more expensive.
Q2. Do I need to do anything as a consumer?
Answer: No. Benefits will reflect automatically in bills, MRPs, and insurance policies.
Q3. How soon will prices drop in shops?
Answer: It may take a few weeks for old stock to clear, but new prices will reflect soon in MRPs.
Q4. Who gains the most?
Answer: Middle-class families, salaried professionals, and MSMEs.
Final Takeaway
GST 2.0 isn’t just about tax — it’s about relief, fairness, and growth.
The middle class saves more.
Businesses grow faster with simpler slabs.
The economy gets a push as consumption rises.
In short: Everyday India gets cheaper, while luxury living gets costlier.
👉 For the middle class, GST 2.0 is truly a Good & Simple Tax 2.0.
💼 Need help with GST filing or tax planning?At Gajraj Associates, we provide expert GST registration, GST return filing, and complete tax solutions to individuals, professionals, and businesses.📞 Contact us today and make the most of the new GST 2.0 reforms with hassle-free compliance.
Visit www.gajrajassociates.com
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