The Finance Ministry of India has officially notified the new Central GST (CGST) rates, marking a major reform in the country’s taxation system. The revised rates will come into effect from September 22, 2025, introducing a two-tier structure aimed at simplifying compliance and ensuring ease of doing business.

Under the new GST structure, the majority of goods and services will attract tax rates of either 5 percent or 18 percent. This move is expected to rationalize the existing GST slabs, reduce confusion among taxpayers, and streamline tax administration. Officials highlight that the two-tier system will cover a large portion of consumables, services, and everyday products, thereby benefiting both businesses and consumers.

Finance Minister Nirmala Sitharaman explained that this reform, popularly being referred to as GST 2.0, will not only simplify taxation but also unlock liquidity for businesses and increase disposable income for consumers. With clear and consolidated rates, businesses can better plan pricing and compliance, while the government aims to improve revenue collection efficiency.

Experts believe that by reducing multiple tax slabs to a simplified two-tier system, the compliance burden on small and medium enterprises (SMEs) will decrease significantly. This is likely to result in faster filing of GST returns, fewer disputes, and better integration of indirect tax data.

The move also aligns with the government’s broader economic reforms, including measures to promote Make in India initiatives, boost domestic manufacturing, and attract foreign investments. By keeping a lower slab of 5 percent on essential goods and services and 18 percent on other products, the tax system becomes more equitable and transparent.

Businesses are advised to update their accounting and billing systems to accommodate the new rates before the effective date. Tax professionals have also been requested to guide clients on transition procedures, ensuring smooth compliance with the revised CGST structure.

The Finance Ministry emphasized that the GST 2.0 initiative is designed to benefit the common man, stimulate economic activity, and provide a uniform tax experience across India. By consolidating tax rates, the government expects improved market efficiency, reduced cascading effects of taxes, and enhanced compliance culture.

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