GST 2.0 is the September 2025 overhaul of India's GST rate structure that replaced the old four-slab system with three working rates — 0%, 5%, and 18% — plus a 40% rate for select luxury and sin goods. The 12% and 28% slabs were abolished from 22 September 2025, moving most daily-use goods down to 5% or nil.
In practice, most items that sat at 12% moved to 5%, and most 28% items moved to 18%, with a short list of luxury and sin goods parked at 40%. For businesses this meant repricing overnight: updating billing software rate masters, reprinting rate cards, revisiting contracts that quoted tax-inclusive prices, and handling stock purchased at old rates but sold at new ones.
Nearly a year in, the Aug 2026 task is hygiene: verify every SKU's current rate from its HSN code rather than pre-September-2025 memory, and check that long-running contracts, quotations, and e-commerce listings aren't still carrying dead 12% or 28% rates. Anything signed before the change and still running deserves a rate-clause review.
The lingering mistake is charging an abolished rate. Charge 28% where 18% applies and you've overcharged the customer — but the tax collected must still be deposited, and refunding customers is on you. Charge 12% where 18% now applies and you're short-paying, which surfaces as a demand with interest. Both trace back to stale rate masters, which take an afternoon to fix.
Frequently asked
- What is GST 2.0?
- GST 2.0 is the September 2025 overhaul of India's GST rate structure that replaced the old four-slab system with three working rates — 0%, 5%, and 18% — plus a 40% rate for select luxury and sin goods. The 12% and 28% slabs were abolished from 22 September 2025, moving most daily-use goods down to 5% or nil.
- When did GST 2.0 take effect?
- The 12% and 28% slabs were abolished from 22 September 2025, leaving three working rates — 0%, 5%, and 18% — plus a 40% rate for select luxury and sin goods.
- What happens if you still charge an abolished GST rate?
- Charge 28% where 18% applies and you've overcharged the customer — the tax collected must still be deposited, and refunding customers is on you. Charge 12% where 18% now applies and you're short-paying, which surfaces as a demand with interest.
Reviewed to the law in force in FY 2026-27. General information, not advice — confirm the position for your facts before acting.
