New Delhi, September 22, 2025 – The Modi government’s next-generation Goods and Services Tax (GST) reforms, popularly referred to as GST 2.0, officially came into effect today, coinciding with the beginning of the Navratri festival. The new structure brings major changes for households, the automobile industry, FMCG players, e-commerce platforms, and banking schedules in select regions.
GST 2.0 Brings Relief for Consumers
The updated GST system consolidates tax slabs into just two main categories, 5% and 18%. This simplified structure aims to make the taxation system more citizen-friendly while easing the burden on consumers. Essential household goods, food items, two-wheelers, cars, and electronic appliances such as televisions are now available at lower prices.
Several popular food items, including roti, paratha, paneer, and khakhr, have been moved to the 0% GST category. In contrast, many daily-use items, such as soaps, shampoos, toothpaste, diapers, and packaged food products, have become cheaper as FMCG companies announced immediate price cuts to pass on the benefits to customers.
Also Read: GST 2.0 Live 2025: India’s Next Big Tax Reform Explained
Impact on Automobiles
The automobile sector is witnessing one of the biggest shifts under GST 2.0. Small petrol-hybrid cars have seen their GST rate fall from 28% to 18%, boosting affordability and supporting green mobility. Manufacturers such as Tata Motors and Maruti Suzuki are expected to gain from this rationalisation.
Meanwhile, luxury electric vehicles priced above $46,000 will now attract up to 40% GST, impacting brands like Tesla and Mercedes-Benz. At the same time, the sub-₹10 lakh SUV market is set to heat up further as models such as Tata Punch, Maruti Brezza, Hyundai Venue, Kia Sonet, Mahindra XUV 3XO, and Skoda Kylaq now become relatively more affordable compared to hatchbacks.
Higher GST on Premium Goods
While many items have moved to lower slabs, premium categories are facing steeper taxes. Clothing priced above ₹2,500 per piece will now be taxed at 18% instead of 12%. Similarly, aerated drinks with added sugar, high-end motorcycles with engines above 350cc, and private aircraft will attract 40% GST.
Banking Holiday Updates
While GST reforms dominate headlines, banking schedules in certain regions have also been affected today. Banks in Jaipur, Rajasthan, are closed on September 22 for Navratra Sthapna. This closure applies to all public and private sector banks. Tomorrow, September 23, banks in Jammu and Srinagar will also remain shut. In addition, the regular fourth Saturday and Sunday holiday falls on September 27 and 28.
E-Commerce Platforms Begin Festival Sales
India’s largest online retailers Amazon and Flipkart, have launched their flagship sales, The Great Indian Festival and Big Billion Days, respectively. These coincide with GST 2.0 implementation and are expected to generate record demand, with festive season sales typically contributing up to one-fourth of annual revenues for these platforms.
Political Reactions and State Initiatives
Prime Minister Narendra Modi described the launch of GST 2.0 as a “GST Savings Festival”, highlighting that the reforms will bring relief to every section of society, from farmers to shopkeepers. He also tied the move to the “Swadeshi” spirit, calling for collective efforts toward a self-reliant India.
Delhi Chief Minister Rekha Gupta praised the reforms, calling them an early Diwali gift for traders and a crucial step in easing inflation. Rajasthan Chief Minister Bhajanlal Sharma announced a week-long “GST Savings Festival” in the state, beginning today and running until September 29, to spread awareness about the benefits of the new tax structure.
Sectoral Impact
Stock Market Reaction – The equity markets erased their morning losses today, with Nifty climbing above 25,300. While IT stocks dragged indices lower, power sector shares saw notable gains as investors reacted to the GST rollout.
FMCG Companies – Leading fast-moving consumer goods players have slashed prices across product lines. Revised MRPs have been issued for daily essentials like soaps, razors, diapers, tea, coffee, chocolates, namkeen, and sweets. The move comes after months of weak demand and is expected to spur festive-season consumption.
Imports – The new GST rates will also apply to imported goods through Integrated GST (IGST), except where exemptions exist.
Passenger Transport – Road transport will continue to attract 5% GST without input tax credit, though operators can opt for 18% with ITC. Air travel remains taxed at 5% for economy class and 18% for business class.
Insurance – All life insurance policies, including term, endowment, and ULIPs, are now exempt from GST, along with reinsurance of these policies.
Key Categories Under GST 2.0
0% GST Slab: Everyday foods like roti, paratha, paneer, khakhra; essential stationery like erasers and sharpeners; certain life-saving medicines and medical supplies.
5% GST Slab: Dairy items like butter and cheese, nuts and dried fruits, pasta, chocolates, breakfast foods, pickled vegetables, fruit juices, toiletries, fertilizers, natural oils, and basic household goods.
18% GST Slab: Cement, coal, tyres, paper products, apparel above ₹2,500, engines, pumps, ACs, dishwashers, and several industrial goods.
40% GST Slab: Sugary aerated drinks, luxury motorcycles, and private aircraft.
Conclusion
The rollout of GST 2.0 from today marks one of the biggest tax reforms in recent years, timed with the onset of the festive season. With a simplified two-slab system, lower taxes on essentials, and targeted hikes on luxury and premium items, the new GST framework aims to ease inflationary pressure while boosting consumption. The immediate impact is already visible across automobiles, FMCG goods, online retail, and even the stock markets. For consumers, the festive season of 2025 has begun with cheaper goods and services across a wide spectrum, reinforcing the government’s pitch of “savings and simplicity” under GST 2.0.
