Announced on September 3, the reform is now in implementation mode, with Finance Minister Nirmala Sitharaman pushing rate notifications, faster registrations and refunds, and instructions to companies to display revised prices in time for the festive rush.
From August 15 to September 3, while the move looked quick, the GST Council had already been weighing these changes. Prime Minister Narendra Modi’s signal from the Red Fort only sped up a decision that was waiting to be taken, pushing the GST Council to lock it in before the festive season.
The reform cuts four GST slabs into just two, 5% and 18%, with exemptions on essentials and health insurance. While the announcement itself promised relief, the real test is delivery.
With Navratri starting September 22, the finance ministry has rolled out multiple measures to ensure customers actually see lower bills and not just policy headlines.
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GST 2.0: What changed
The GST Council, chaired by Sitharaman, approved sweeping rationalisation. Staples like parathas, paneer, UHT milk, biscuits, sauces and dry fruits now attract either 5% GST or are fully exempt. Personal care products such as hair oil and toothpaste have also moved down to 5%.Big-ticket durables like air conditioners, refrigerators, large televisions and washing machines have been shifted from the highest 28% slab to 18%. Smaller vehicles up to 350cc, auto parts and cement now also fall under 18%.
Health and life insurance premiums, a long-standing demand from the middle class, are now fully exempt from GST, removing the earlier 18% levy.
In all, about 400 commonly used items will face lower tax rates.
“We have reduced slabs… corrected the inverted duty structure … These reforms have been carried out keeping in mind the common man,” Sitharaman said after the Council’s approval.
According to the Finance Minister, while the government will bear a fiscal implication of ₹48,000 crore, the move will leave ₹2 lakh crore in the hands of the people. For instance, a report by Grant Thornton shows GST 2.0 could shave ₹400-600 off the monthly grocery bill for a middle-class family that spends about ₹10,000 on staples, frozen foods, edible oils and packaged items. For an annual health cover, too, families could save nearly ₹7,000-8,000 once life and health insurance are exempt from GST.
These may seem small individually, but added together with multiple items, the relief accumulates, making staples, sweets and even gadgets more affordable just ahead of the festive shopping rush.
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Sitharaman & Co working on ground
Since the announcement of GST 2.0, the finance ministry has focused on execution to make sure rate cuts translate into lower consumer prices before the festive season. It can be said that unlike the RBI rate cuts, the tax reforms appear to be reaching the common man at a much quicker pace and in reality.
Finance Minister Nirmala Sitharaman has been travelling across cities, holding interactive sessions with traders, industry bodies, and consumers. In Visakhapatnam, she said the GST cut would inject about ₹2 lakh crore into the economy, while in Kolkata she tied the rollout to Durga Puja and highlighted benefits for local sectors such as garments, handicrafts, and Malda mangoes.
The town-hall meetings have a clear purpose: they help shopkeepers and small manufacturers understand the new GST rates, answer practical questions about compliance, and resolve issues with billing or inventory updates. Beyond just explaining the rules, these sessions show that the ministry is actively following up to make sure the reforms are actually implemented on the ground.
Politically, the outreach sends a signal that the government is directly engaged with businesses and consumers, reinforcing the image of hands-on governance associated with “Brand Modi.” It also helps build trust among small traders, retailers, and local communities.
Alongside outreach, Sitharaman chaired three separate high-level meetings with GSTN officials, ERP vendors, and ministry teams to check system readiness for the new slabs. These sessions were crucial to prevent glitches in filing, invoicing, and refunds, coordinate timelines with states and vendors, and ensure that businesses, from large manufacturers to MSMEs, could transition smoothly.
“It is only after making sure, just in case it gets passed, because I wouldn’t know whether the council passes it or not. I said, in case the council gets this through, will my GSTN system be ready for it? How long will you take to get ready?” she told PTI.
Other steps by the government
Notification of new rates
On September 17, the ministry issued formal notifications for the revised GST structure, with effect from September 22. States are aligning their own SGST notifications with the central decision. Businesses have been given just under two weeks to update billing systems and re-label products.
Display and Labelling Requirements
To ensure transparency under GST 2.0, manufacturers must provide revised or supplementary price lists to dealers, retailers, and regulators. For medicines and medical devices already in the market before September 22, 2025, re-labelling is not mandatory; retailers can sell existing stock using the revised price lists.
Industry Outreach
The Central Board of Indirect Taxes and Customs (CBIC) has been holding consultations with manufacturers, retailers and e-commerce platforms to smoothen transition issues, from ERP system updates to invoicing across supply chains.
Faster Registration and Refunds
The GST Council cleared process reforms alongside rate cuts. Non-risky businesses can now expect registrations within three days. Refunds in sectors such as textiles, chemicals, fertilisers and pharmaceuticals must be processed within seven days. Exporters with small claims below ₹1,000 will receive instant refunds. Auto-refunds and pre-filled returns are also planned from October.
The ifs & buts and how industry is responding
Every good story has a “but,” and GST 2.0 is no different. While the reforms promise significant savings, a slew of challenges could test their rollout. Small and medium businesses must rapidly upgrade ERP and billing systems, and retailers with large inventories face logistical hurdles in updating price lists. Some shopkeepers in remote towns may still be unclear on the new rates, and coordination between central and state GST systems could create temporary confusion for multi-state operations.
Even consumers might not immediately see the benefits if discounts are not clearly displayed, showing that while the story of GST 2.0 is one of relief, its impact depends on careful execution at every step.
However, the industry is already responding. Consumer-facing sectors are expanding staffing and sharpening promotional campaigns. According to an ET Bureau report, temporary hiring in retail, electronics and FMCG is up by 20-25% compared to last year, as businesses prepare for a surge in festive demand post-GST cuts.
Major online platforms like Amazon and Flipkart are also preparing for big sales. Amazon’s Great Indian Festival begins September 23, a day after the new GST slabs become effective. Retailers are negotiating with brands to reset pricing, stock up inventory, and plan discounts so that lower GST translates into visible savings.
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