New Delhi, September 19: India’s Finance Ministry has notified revised Central Goods and Services Tax (CGST) rates, moving to a two-tier structure that will take effect from Sept. 22, in a major reform aimed at simplifying the indirect tax regime and easing the burden on consumers.
Under the new structure, most goods and services will attract tax rates of 5% and 18%, replacing the current four-slab system of 5%, 12%, 18% and 28%. Ultra-luxury items will face a 40% levy, while tobacco and related products will continue to be taxed at 28% plus a cess.
States are expected to issue notifications for corresponding State GST (SGST) rates shortly. Revenues from GST are shared equally between the Centre and the states.
The decision to rationalise rates was taken by the GST Council, comprising the Centre and states, at its meeting on Sept. 3. Officials said the move is expected to streamline compliance and pass on benefits of lower rates to consumers.
“With this clarity in place, the ball is now in the industry’s court. Businesses must promptly update their systems, revise pricing, and ensure smooth implementation of the new rates across supply chains,” said Rajat Mohan, senior partner at AMRG & Associates.
EY Tax Partner Saurabh Agarwal said companies needed to align ERP systems, pricing decisions and supply chains to ensure consumers benefit from the rate cuts. The government has urged businesses to swiftly comply to ensure transparency and effective rollout, adding that the reform is aimed at making GST simpler, more efficient, and consumer-friendly.
