Effective October 1, 2025, India has implemented major "GST 2.0" reforms, introducing a new 3-tier rate structure (5%, 18%, 40%) to replace old slabs, aiming to reduce burdens on essentials while lowering rates on services like gyms and hotels. Key changes include a new Invoice Management System (IMS) for stricter Input Tax Credit (ITC) claiming, mandatory track & trace (UIM) for specific goods, and improved compliance processes.
The October 2025 GST amendments introduce two key compliance tightening measures — a new penalty for Track & Trace violations and revised pre-deposit rules for appeals.
GST Rate and Slab Changes in September 2025
GST rate cuts on 200 items happened from 22nd September 2025. 90% of items in the current 28% slab are moved to the 18% slab. Almost 99% of the items in the 12% slab are moved to the 5% slab.
GST Revenue Rises to Rs. 1.96 Lakh Crore in October 2025 | Press Release.
Effective October 2025 period onwards, a new section for "Import of Goods" has been introduced in IMS wherein the Bill of Entry (BoE) filed by the taxpayer for import of goods including import from SEZ, will be made available in the IMS for taking allowed action on individual BoE.
For any standard-rated supplies of goods or services that you make on or after 1 Jan 2024, you must charge GST at 9%. For instance, if you issue an invoice and receive payments for your supply on or after 1 Jan 2024, you must account for GST at 9%.
One of the key GST updates under 2.0 reform is that it simplified the GST tax structure from a 4-slab (5%, 12%, 18% and 28%) to a 3-slab (5%, 18% and 40%). GST Council, however, meets every quarter to improve the system. The last GST Council meeting took place on September 3rd, 2025, which was the 56th meeting.
The CRA will make these payments on the 5th day of July and October 2025, and of January and April 2026.
Payment amounts are recalculated every July
For example, the information from your 2024 tax return determines the GST/HST credit amount you get for the payment period from July 2025 to June 2026. You could get up to: $533 if you are a single individual. $698 if you are married or have a common-law partner.
The total of lifetime gifts and the estate are eligible for a lifetime exemption, which is set at $13.99 million in 2025. The exemption amount is indexed for inflation, and was scheduled to be reduced by half after 2025. The higher exemption level was made permanent and slightly increased to $15 million in 2026 by P.L.
GST Notification 5/2025-Central Tax dt. 10-January-2025
05/2025 extends the due date for registered persons who are required to deduct tax at source (TDS) under Section 51 of the CGST Act, 2017. These taxpayers must file their GSTR-7 return for December 2024 by January 12, 2025.
Tax changes for 2025, largely driven by the "One Big Beautiful Bill" (OBBBA) Act, introduce significant deductions for seniors, tips, overtime, and auto loan interest, expand the Child Tax Credit, and raise the SALT deduction cap to $40,000, while making several 2017 Tax Cuts and Jobs Act provisions permanent, including the seven tax brackets. Key changes include a $2,200 Child Tax Credit, a $6,000 senior deduction, deductions for qualified tips and overtime, and a permanent standard deduction increase.
What are the new changes in GST 2025? Starting September 22, 2025, GST in India will be simplified to primarily two rates: 5% and 18%, with a special 40% rate on luxury and sin goods like tobacco and high-end vehicles.
Key Categories of Goods under 40% GST Slab
Key items exempted from GST:
In order to qualify for this, you have to have worked in 2023 and had an income below $150,000. You also qualify if you received Employment Insurance, paid EI premiums or made CPP contributions. You should receive this via cheque or direct deposit by April 2025.
If you are eligible for the 2025 GST Voucher (GSTV) – Cash and/or GSTV – MediSave and have signed up for a previous Government payout (e.g., 2024 GSTV), you will automatically receive your 2025 GSTV – Cash and/or GSTV – MediSave in August 2025. No further action is required on your part.
Total Net GST revenue for October 2025 stands at ₹1,69,002 crore, which is 0.6% higher(monthly growth) and 7.1% higher (yearly growth) than the corresponding period last year at ₹1,68,054 crore.
Effective October 1st, 2025, a new set of rules for GST return filing will come into effect. This marks the first filing cycle under the GST 2.0 reforms, aimed at improving transparency, control, and accuracy in Input Tax Credit (ITC) management through the Invoice Management System (IMS).
Taxes on aerated drinks, tobacco and luxury goods will now come under the 28 percent tax bracket under GST, so it will get costlier.
For the July 2025–June 2026 benefit year, the maximum annual GST amounts are: $533 – Single individual. $698 – Married or common-law couples. $184 – Per eligible child under 19.
How to Avoid GST on Overseas Purchases Legally
The GST Council's latest reforms have reshaped the GST tax slab for the travel and hospitality sector. With international and domestic travel steadily rising, these changes will directly affect how much you spend on air tickets, hotel bookings, dining, and even luxury travel.