Why in News?
The Centre’s proposed GST 2.0 reforms aim at rate rationalisation and behavioural nudges. Exemptions for staples like milk, roti, paneer, and lower GST on consumer durables like ACs, TVs, and motorcycles are designed to boost consumption and simplify compliance.
Description:
| Aspect | Before GST (Pre-GST/Old GST) | After GST 2.0 (From Sep 22, 2025) | Notes / Significance |
| GST Slabs | 4 Slabs: 5%, 12%, 18%, 28% | 2 Slabs: 5% (merit/essential), 18% (standard) + 40% (demerit/luxury) | Simplified tax structure, easier compliance, reduces cascading effect |
| Luxury & Sin Goods | 28% | 40% | Discourages consumption of harmful goods like tobacco, pan masala |
| Essential Goods | GST applied on many essentials | GST nil on UHT milk, paneer, Indian breads, life & health insurance | Reduces cost for basic items, improves affordability |
| Consumer Goods | 28% on small cars, TVs, ACs, cement | GST reduced to 18% | Boosts domestic consumption, manufacturing |
| Renewable Energy Devices | 12% | 5% | Promotes green energy adoption |
| Medical / Health Devices | 12% on 33 lifesaving drugs; 5% on some critical drugs | Nil GST on all above | Improves access to healthcare, reduces treatment cost |
| Agriculture & Rural Machinery | 12% GST on tractors, harvesters, composters | GST reduced to 5% | Lowers cost for farmers, encourages mechanization |
| Fertilizer Inputs | 18% | 5% | Reduces input cost, supports agriculture productivity |
| Labour-Intensive Goods | 12% | 5% | Supports handicrafts, leather, marble sectors |
| Ease of Doing Business | Refunds, registrations slow, litigation common | GSTAT operational by Dec 2025; faster refunds & registration, reduced disputes | Improves predictability and reduces compliance burden, especially for MSMEs |
| Revenue Collection | Rs 22.08 lakh crore in 2024–25 (highest so far) | Expected growth due to better compliance and tax base expansion | Strengthens government revenue while promoting economic growth |
| Dual GST Structure | CGST + SGST for intra-state; IGST for inter-state | Same dual structure retained | Maintains federal structure, ensures Centre-State revenue sharing |
| Small Business Threshold | Exemption below turnover limit | Threshold exemption continues | Protects micro enterprises from heavy compliance |
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