September 21, 2025 12:39 PM IST First published on: Sep 21, 2025 at 12:39 PM ISTIndia’s Goods and Services Tax (GST) journey has been nothing short of transformative. Dismissed at its inception in 2017 by critics as the “Gabbar Singh Tax”, it was accused of burdening citizens and businesses alike. In reality, the chaotic pre-GST regime was the real Gabbar Singh Tax, a fragmented mesh of excise, VAT, and service taxes that bred inefficiency, rent-seeking, and inflated costs. Trucks idled at state borders, small firms juggled multiple filings, and consumers paid the price. GST replaced this with a unified system, which lowered taxes on essentials and created a more rational framework. And now, with GST 2.0, which comes into effect on September 22, India has taken a decisive step forward, streamlining slabs and cutting rates.Why GST 2.0, and Why NowWhen it was launched in 2017, GST carried a four-slab design (5 per cent, 12 per cent, 18 per cent, 28 per cent), which reflected a compromise that was necessary to secure consensus among states, all of whom were not willing to bear revenue losses that could have occurred under the new regime. That compromise helped India transition into the GST era, but it also bred complexity and disputes that ran against GST’s founding philosophy of simplicity. GST 2.0 represents a natural course correction — two main slabs (5 per cent and 18 per cent) plus a demerit rate of 40 for luxury and sin goods. The Council’s ability to streamline now reflects both maturity and confidence that compliance and revenues have stabilised.AdvertisementThis reform is well-timed. Global uncertainties and tariff wars are creating headwinds for businesses. By reducing compliance burdens, lowering working capital locks, and easing tax rates across mass-consumption and labour-intensive sectors, GST 2.0 provides supply-side support, when firms need support. It amplifies positive externalities — fewer disputes, simpler processes, and a lighter compliance load free up managerial capacity for investment and growth. Together with other structural reforms, GST 2.0 is part of a broader push for positioning India as a competitive and stable production base amid global volatility.What Changed Under GST 2.0Everyday essentials and mass-consumption goods have shifted to the 5 per cent slab, while key industrial inputs moved to 18 per cent, reducing costs for households and firms alike. Over 33 lifesaving drugs were exempted entirely, alongside staples like milk, paneer, and chapatis. Automobiles, cement, and electronics saw sharp tax cuts, driving affordability and sectoral growth. The rolling out ahead of the festive season also ensures maximum impact on household spending. ParticularsPre-GST RatesGST (2017-25)GST 2.0 (Rates from Sept 22, 2025)1Tooth Powder17 per cent12 per cent5 per cent2Hair Oil, Shampoo and Toilet Soaps27 per cent18 per cent5 per cent3Utensils18.5 per cent12 per cent5 per cent4Sewing Machines16 per cent12 per cent5 per cent5Fertilisers18.5 per cent5 per cent -18 per cent5 per cent6Tractors18.5 per cent12 per cent5 per cent7Tractor Tyres and Parts18 per cent-20 per cent18 per cent5 per cent8Pre packaged Namkeens16-18 per cent12 per cent5 per cent9Pencil Sharpners18.5 per cent12 per centNil10Small Cars