India's GST Undergoes Major 2025 Overhaul: Simpler Rates, Lower Taxes

• India implemented "GST 2.0" in 2025, a significant indirect tax reform announced by PM Narendra Modi and rolled out by FM Nirmala Sitharaman.
• The four-slab structure was simplified to three: 5% (merit), 18% (standard), and 40% (luxury/sin goods).
• Essential items, vehicles, and large appliances saw rate cuts, while medicines and insurance premiums became nil/zero-rated.
• Reforms aim to revive consumption and leverage strong GST collections, averaging ₹2 lakh crore monthly.
• Tobacco and pan masala reforms are deferred but expected to move to the 40% slab later.

Why It Matters: GST 2.0 in 2025 simplified India's tax system, cutting rates for essentials and boosting consumption.