As of late 2025 and moving into 2026, India implemented major GST 2.0 reforms, simplifying the tax structure to a two-main-slab system (5% and 18%), down from the previous four, with a 40% rate for luxury/sin goods. Key changes include reduced rates on consumer durables, cement, and insurance, aiming to reduce compliance burdens and lower costs on essential items.
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. Many essentials, including certain medicines and foods, are now zero-rated, while several items see reduced rates.
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).
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.
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%.
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.
Base year and payment period
For example, GST/HST credit payments calculated on the 2024 tax return will start being issued in July 2025, which is the beginning of the payment period.
India's GST regime is undergoing a landmark transformation with the 56th GST Council meeting unveiling GST 2.0 - next-generation reforms simplifying tax slabs to 5%, 18%, and 40%. Effective from September 22, 2025, these reforms aim to ease compliance, boost consumption, and fuel economic growth.
Types of GST in India
CGST (Central Goods and Services Tax) SGST (State Goods and Services. IGST (Integrated Goods and Services Tax) UTGST (Union Territory Goods and Services Tax)
Maximum marginal rate is the highest rate of tax at any income level. This means for those with incomes between Rs 2 crore and Rs 5 crore, 39% will be the highest applicable tax rate, and for those with incomes above Rs 5 crore, it will be 42.74% — the highest tax rate since 1992.
20th August 2025
Due to the incessant rains in various parts of Maharashtra, the government has extended GSTR-3B due date for July 2025 from 20th August to 27th August 2025.
3. Which is better, GST or VAT? The consolidated and streamlined taxing structure of the GST makes it better than VAT. It also lowers the tax burden by eliminating the cascading impact of taxes.
India's Goods and Services Tax (GST) system has entered a new era with the rollout of GST 2.0, effective from September 22, 2025. The Council has simplified the structure into a 5% slab for essentials, 18% for standard goods, and 40% for luxury/sin items, replacing the earlier complex categories.
The shift to a two-slab system of 5% and 18%, removing the earlier 12% and 28% rates, will make taxation more transparent and easier to follow. At the same time, a 40% on luxury and sin goods such as pan masala, tobacco, aerated drinks, high-end cars, yachts, and private aircraft ensures fairness and revenue balance.
The New GST Rate Structure
The old four-slab structure (5%, 12%, 18%, 28%) has been simplified. The 12% and 28% slabs were eliminated and replaced with a new structure, which is now primarily 0%, 5%, 18%, and a 40% rate for luxury and “sin” goods.
Demonstrating a sustainable financial momentum, India's GST collection for September 2025 soars to ₹1.89 lakh Crore, depicting a 9.1% YoY rise.
List of exempted goods under GST in India:
The GST/HST credit payment period begins in July and ends in June of the following year: January and April payments. Based on your adjusted family net income from your 2024 tax return. July and October payments.
If your GST turnover is below the $75,000 threshold, you may choose to register. But if you do, regardless of your turnover, you must: include GST in the price of most goods and services you sell. claim GST credits for most business purchases you make.
As of 2025, the GST rate in Singapore is 9% for all taxable goods and services (except for nil-rated). With the GST rate change, as laid out by the Inland Revenue Authority of Singapore (IRAS), it has become even more important to be at par with the recent amendments.
GST refund can be claimed by registered taxpayers as well as the unregistered taxpayers like international tourists can claim a tax refund while leaving the country.
Hungary has the highest tax rate at 27 per cent, while Canada has the lowest tax rate at 5 per cent. All four Asian countries have a tax rate below the OECD average of 19.2 per cent.