Centre notifies two-rate GST overhaul to 5% and 18%

The Centre on Wednesday formally notified sweeping changes to the goods and services tax that will take effect on September 22, 2025, simplifying the levy and cutting rates on a wide range of everyday items. Union Finance Minister Nirmala Sitharaman said the next generation GST reforms will leave about Rs 2 lakh crore in the hands of consumers and boost liquidity, while the finance ministry released multiple notifications on September 17 to operationalise the changes nationwide.

Under the revised structure, most goods and services will attract two primary rates of 5 percent and 18 percent, officials said, with a separate 40 percent slab for ultra luxury and sin items and tobacco products remaining in the 28 percent plus cess category. The notifications supersede earlier schedules and require state governments to issue parallel State GST notifications before the new rates come into force. The Central Board of Indirect Taxes and Customs has also issued FAQs and guidance to ease transition issues.

Sitharaman described the overhaul as aimed at easing the tax burden on households and simplifying compliance. "With this New Gen Tax regime, with only two slabs 5 percent and 18 percent,...