The Goods and Services Tax (GST) 2.0 regime, set to come into force on September 22, 2025, will bring sweeping changes to India’s indirect tax system, but several key items will remain untouched.
The 56th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, approved a restructuring of the tax slabs by merging the 12% and 28% brackets into two simplified rates of 5% and 18%. A new 40% de-merit slab has been created for luxury and sin goods, while essentials such as food staples will continue at a nil (0%) rate.
However, certain categories have been deliberately kept out of the reform. Precious metals such as gold, silver, and jewelry remain taxed at 3%, while items already aligned with the new structure, such as fresh produce at 0% and mobile phones at 18%, are unchanged. Sin goods like cigarettes, bidis, and chewing tobacco will continue under the existing 28% plus compensation cess until state borrowing obligations are cleared, delaying their eventual shift to 40%.
Essentials Hold Steady
Unpacked grains, milk, eggs, fruits, vegetables, salt, and sanitary napkins will continue to be exempt. “Maintaining the 0% slab for daily-use essentials ensures no additional burden is placed on lower-income households,” an official said, citing affordability as a key reason for stability.
Industry bodies have broadly welcomed the move. The Federation of Indian Chambers of Commerce and Industry (FICCI) described GST 2.0 as “a long-awaited simplification,” while the Confederation of Indian Industry (CII) noted that unchanged rates on electronics and telecom services could limit the broader consumption stimulus.
Key Unchanged Items Under GST 2.0
| Slab | Item/Category | Old Rate (%) | New Rate (%) |
|---|---|---|---|
| 0% | Fresh fruits, vegetables, unpacked grains, milk, eggs, salt, sanitary napkins | 0 | 0 |
| 3% | Gold, silver, precious stones, jewelry | 3 | 3 |
| 5% | Sugar, tea, coffee (unpackaged), edible oils, spices (unpackaged), electric vehicles | 5 | 5 |
| 18% | Mobile phones, laptops, liquid handwashes, telecom services, banking services, hotel rooms above ₹7,500/night | 18 | 18 |
| 28% + Cess | Cigarettes, bidis, chewing tobacco, pan masala | 28 + Cess | 28 + Cess |
Experts say the unchanged slabs reflect the government’s balancing act. While over 375 items are set to become cheaper from Monday, holding certain categories steady protects tax revenues. “This is a pragmatic approach. It brings relief for households without undermining state finances,” said a tax policy analyst.
However, billed as a “Diwali gift” for the middle class, GST 2.0 offers simplification and relief, even as debates continue over deferred hikes on tobacco and other de-merit products.