India’s tax landscape has undergone a major shift with the Goods and Services Tax (GST) Council approving a series of reforms during its 56th meeting on September 3, 2025.
Chaired by Union Finance Minister Nirmala Sitharaman, the meeting introduced what is being termed as GST 2.0, a simplified tax regime with a two-slab structure that will officially come into effect from September 22, 2025.
One of the most significant highlights of this reform is the complete removal of GST on personal health and life insurance policies, making essential financial protection more affordable and accessible for the public.
GST slabs have been rationalized to just 5% and 18%.
This move is aimed at simplifying tax compliance, reducing confusion, and promoting stability for both consumers and businesses.
Ultra-High Temperature (UHT) milk – reduced from 5% to nil.
Pre-packaged and labelled chena or paneer – reduced from 5% to nil.
Pizza bread – reduced from 5% to nil.
Khakhra, chapathi or roti – reduced from 5% to nil.
Paratha, parotta and other Indian breads – reduced from 18% to nil.
Healthcare has been prioritized with zero GST on critical drugs:
Agalsidase Beta, Imiglucerase, Eptacog alfa activated recombinant coagulation factor VIIa – reduced from 5% to nil.
33 additional life-saving medicines – reduced from 12% to nil.
Students and educational institutions will benefit from exemptions on several key learning tools:
Erasers – reduced from 5% to nil.
Uncoated paper and paperboard for exercise books, graph books, etc. – reduced from 12% to nil.
Exercise books, graph books, laboratory notebooks, etc. – reduced from 12% to nil.
Pencils, crayons, pastels, chalk (drawing/writing/tailor’s) – reduced from 12% to nil.
Pencil sharpeners – reduced from 12% to nil.
To encourage learning and accessibility, the following items are now zero-rated:
Maps, atlases, wall maps, topographical plans, and globes – reduced from 12% to nil.
Briefing reporters after the marathon Council meeting, Finance Minister Nirmala Sitharaman stressed that the decisions were taken unanimously with full support from all states.
She highlighted that the reforms were not merely about rate reductions but structural in nature:
“It’s also on structural reforms and for ease of living. We have corrected the inverted duty structure problems. We have resolved classification-related issues, and we have ensured that there is stability and predictability about the GST.”
| Item | Previous GST Rate | New GST Rate |
|---|---|---|
| UHT milk | 5% | Nil |
| Chena or paneer (pre-packaged and labelled) | 5% | Nil |
| Pizza bread | 5% | Nil |
| Khakhra, chapathi or roti | 5% | Nil |
| Paratha, parotta and other Indian breads | 18% | Nil |
| Agalsidase Beta, Imiglucerase, Eptacog alfa activated | 5% | Nil |
| 33 life-saving drugs | 12% | Nil |
| Erasers | 5% | Nil |
| Uncoated paper/paperboard for exercise books | 12% | Nil |
| Exercise books, graph books, notebooks | 12% | Nil |
| Maps, atlases, wall maps, globes | 12% | Nil |
| Pencil sharpeners | 12% | Nil |
| Pencils, crayons, pastels, chalks | 12% | Nil |
The introduction of GST 2.0 marks a historic step in India’s taxation framework. By rationalizing slabs, eliminating GST on essentials, and addressing inverted duty structures, the government has delivered a people-friendly reform that benefits households, students, patients, and businesses alike.
With personal insurance, education tools, food essentials, and critical medicines brought under the nil tax rate, GST 2.0 is expected to boost affordability, encourage compliance, and drive economic inclusivity. This reform not only simplifies taxation but also strengthens the vision of “Ease of Living” for every Indian citizen.