For eight years, GST ran on five different tax slabs. In September 2025, the GST Council cut that down to two. This article covers the GST Council, and the rate rationalisation reform it calls “GST 2.0.”
From Council to GST 2.0.
The Four Key Dates.
- 12 September 2016. The GST Council is constituted under Article 279A of the Constitution.
- 1 July 2017. The Goods and Services Tax is launched nationwide, replacing multiple central and state indirect taxes.
- 3 September 2025. The 56th GST Council meeting approves “GST 2.0,” simplifying the rate structure.
- 22 September 2025. The new, simplified GST rates come into effect across most goods and services.
Must Know
GST’s Founding Facts.
The Council and the Launch.
- Council. The GST Council was constituted on 12 September 2016, under Article 279A of the Constitution, added by the 101st Constitutional Amendment.
- Launch. GST itself launched nationwide on 1 July 2017, replacing a patchwork of central and state indirect taxes with one unified tax.
GST 2.0’s Rate Simplification.
- GST 2.0. On 3 September 2025, the 56th GST Council meeting approved “GST 2.0,” a major rate rationalisation reform.
- New slabs. The old 0%, 5%, 12%, 18%, and 28% slab structure was simplified mainly into just 5% and 18%, effective 22 September 2025.
Good to Know
Rate Structure and Origins.
Where Goods Sit Under GST 2.0.
- 40% Rate. A new 40% rate applies to select luxury and “sin” goods. Examples include pan masala, aerated and caffeinated beverages, and luxury vehicles.
- Nil Rate. Essential items, including dairy products and 33 lifesaving drugs, moved to a nil GST rate. Individual health and life insurance were also exempted.
- 5% and 18%. Daily essentials, agricultural goods, and healthcare equipment moved to the 5% slab. Small cars, motorcycles, and appliances moved to 18%.
- Niche Rates. A few niche rates, like 3% (on items such as gold and jewellery) and 0.25%, continue to exist outside the main structure.
GST’s Real Advantage, vs. Popular Myths (UPSC 2017 PYQ).
- The real advantage. GST’s genuine, achieved effect was creating a single national market, by replacing multiple central and state taxes with one unified tax.
- Not a CAD fix. GST was never a tool to drastically cut India’s Current Account Deficit or sharply boost forex reserves. That claim is a common exam distractor, not a real GST objective.
- Not an “overtake China” plan. GST was also never designed to let India’s economy “overtake China” in the near future. This claim appeared as a distractor in UPSC’s 2017 Prelims GST question, and both it and the CAD claim are incorrect.
- Origins. The idea of a unified GST predates the Council by 14 years. It was first formally proposed in 2002, by the Kelkar Committee task force on indirect taxes.
Exempted vs Taxable: Basic Food Items Under GST (UPSC 2018 PYQ).
- Exempt. Hulled cereal grains carry a nil GST rate. So do birds’ eggs in shell, whether fresh, preserved, or cooked.
- Exempt. Newspapers, journals, and periodicals are nil-rated too, even ones that carry advertising content.
- Taxable. Fresh, chilled, or frozen fish is exempt, but that exemption stops once fish is processed and canned. Canned fish is a value-added product, and it’s taxed.
Test Yourself
Great to Know
Design and Federal Structure.
Why Fewer Slabs, and a Progressive Design.
- Compliance. GST 2.0’s core idea is compliance simplicity: fewer slabs mean fewer classification disputes over which rate applies to a given good or service.
- Progressive design. Moving essentials to nil or 5%, while pushing luxury and sin goods to 40%, reflects a deliberate progressive design. It puts a lower burden on necessities, and a higher burden on discretionary or harmful consumption.
- Timing. An eight-year gap separates GST’s 2017 launch from this first major rate simplification. Tax reform often needs years of real-world data, before a government risks restructuring it.
A Rare Federal Body.
- Structure. The GST Council’s structure has Union and State finance ministers voting together. That makes it a rare federal body, where states have real weighted influence over a national tax policy.
- Recommendation, not command. That influence works through recommendation, not command. Under Article 246A, Parliament and every State Legislature hold their own independent GST law-making power.
- Mohit Minerals case. In Union of India v. Mohit Minerals Pvt. Ltd. (2022), the Supreme Court held that GST Council recommendations are not binding on any of them.
- Constitutional lineage. GST is often called the modern fulfilment of a much older constitutional promise: free trade across state lines. See Polity0224 — Article 301: Freedom of Trade, Commerce and Intercourse.
Current Affairs
GST Appellate Tribunal and Nine-Year Milestones.
GSTAT Deadline Extension (30 June 2026).
- Extension. On 30 June 2026, the government extended the deadline for GST Appellate Tribunal appeals, to 31 July 2026. The original deadline was 30 June. (Source: PIB)
- Why. The extension came after portal congestion. In just the last 15 days before the deadline, 30,000 appeals were filed, peaking at 5,500 in a single day. (Source: PIB)
Nine Years of GST.
- Anniversary. The same day, PIB marked Nine Years of GST, with a detailed backgrounder. GST launched on 1 July 2017, subsuming 17 taxes and 13 cesses into one framework. (Source: PIB)
- Growth. GST taxpayers have grown from 66.5 lakh in 2017, to 1.65 crore by May 2026. Gross collections rose from about ₹7.4 lakh crore in 2017-18, to ₹22.27 lakh crore in 2025-26. (Source: PIB)
Previous Year Questions.
Previous Year Questions.
Asked as: “Consider the following items: 1. Cereal grains hulled 2. Chicken eggs cooked 3. Fish processed and canned 4. Newspapers containing advertising material. Which of the above items is/are exempted under GST (Goods and Services Tax)?” (UPSC CSP 2018, GS Paper I). The correct answer is 1, 2 and 4 only — hulled cereal grains, eggs in shell (even cooked), and newspapers (even with ads) are all nil-rated, but processed and canned fish is taxed. View this question.
Asked as: “What is/are the most likely advantages of implementing ‘Goods and Services Tax (GST)’?” (UPSC CSP 2017, GS Paper I). The correct answer is 1 only — GST’s real advantage was replacing multiple taxes with a single national market. Claims that it would sharply cut the Current Account Deficit or let India overtake China’s economy were never part of its actual objectives.
Related reading: for the constitutional basis of GST’s single-market design, see Polity0263 — Article 246A: Special Provision for GST Law-Making Power.
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