GST 2.0 — The Two-Slab Reform
Eight years after GST replaced a maze of central and state levies with one national tax, the 56th GST Council meeting tore up its own four-slab structure and rebuilt it around just two rates — a 5 per cent merit rate and an 18 per cent standard rate — with a steep 40 per cent band reserved for sin and luxury goods. Billed by the government as a Diwali gift for the common man and pitched as demand-led growth, the reform went live for services and most goods from 22 September 2025, while tobacco products were deliberately held back at old rates to protect a compensation-cess account still working off pandemic-era loans. That carve-out is a tell: even a reform this popular has to work around the Centre-state fiscal plumbing underneath GST, and how that plumbing holds up is the debate to watch through 2026.
- GST Council
- GST 2.0
- Nirmala Sitharaman
- two-slab GST
- compensation cess
- GSTAT
- fiscal federalism
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