What changed in GST 2.0 from September 2025?

GST 2.0 effective September 22, 2025 simplified rates to three slabs: 5% for essential goods, 18% for most goods and services, and 40% for luxury goods. The old 12% and 28% slabs were completely abolished. This was the biggest GST reform since GST launched in 2017.

What is the GST rate on restaurants after GST 2.0?

Restaurant GST after GST 2.0: Non-AC restaurants and standalone restaurants: 5% (no ITC). AC restaurants inside hotels with room tariff above Rs 7,500: 18% with ITC. Fast food chains: 5%. This is unchanged from before GST 2.0.

Is there GST on rent in India?

Residential rent is completely exempt from GST. Commercial property rent is taxable at 18% GST. If a GST-registered business rents residential property, 18% GST applies under reverse charge mechanism (RCM) from 2022.

GST 2.0 Complete Guide 2025 – New Rates 5% 18% 40% Explained

🧾 GST Update — September 2025

GST 2.0 Complete Guide: New Rates 5%, 18%, 40% — What Changed?

📅 March 28, 2026⏱ 6 min read✅ Sep 2025 Effective

📢 GST 2.0 Effective September 22, 2025: India's biggest GST reform since 2017. The 12% and 28% slabs have been abolished. Only 3 rates remain: 5%, 18%, and 40%. This simplifies GST for businesses and consumers.

The New GST 2.0 Rate Structure

Essential Goods

Food items • Medicines • Basic clothing • Education materials • Agricultural goods

18%

Most Goods & Services

Electronics • Software • Professional services • Restaurants (AC) • Financial services

40%

Luxury Goods

Luxury cars • Tobacco • Aerated drinks • Casinos • Pan masala

What Was Abolished in GST 2.0?

Old Rate	Status in GST 2.0	Moved To
12% slab	❌ Abolished	Items moved to either 5% or 18%
28% slab	❌ Abolished	Items moved to 18% or new 40%
5% slab	✅ Retained	Essential goods continue at 5%
18% slab	✅ Retained	Becomes the standard rate
0% (exempt)	✅ Retained	Basic food, healthcare, education exempt

Impact on Common Items — Before vs After

Item	Before GST 2.0	After GST 2.0	Change
Packaged foods (12% items)	12%	5% or 18%	Many items cheaper
Electronics (laptops, phones)	18%	18%	No change
Restaurants (AC)	18%	18%	No change
Restaurants (non-AC)	5%	5%	No change
Luxury cars, tobacco	28%	40%	More expensive
Medicines & healthcare	5–12%	5%	Cheaper
Professional services (CA, lawyer)	18%	18%	No change

GST on Restaurants — Complete Rules 2025

Restaurant Type	GST Rate	ITC Available?
Standalone restaurant (non-AC)	5%	No
Standalone restaurant (AC)	5%	No
Restaurant in hotel (room rate < ₹7,500/night)	5%	No
Restaurant in hotel (room rate > ₹7,500/night)	18%	Yes
Cloud kitchens / Zomato / Swiggy	5%	No
Outdoor catering	18%	Yes (if registered)

How to Calculate GST — Quick Formula

Adding GST to price: GST Amount = Base Price × Rate ÷ 100. Total = Base Price + GST Amount

Removing GST from inclusive price: Base Price = Total ÷ (1 + Rate ÷ 100)

Example: Laptop for ₹50,000 + 18% GST = ₹50,000 × 1.18 = ₹59,000 total

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The New GST 2.0 Rate Structure

What Was Abolished in GST 2.0?

Impact on Common Items — Before vs After

GST on Restaurants — Complete Rules 2025

How to Calculate GST — Quick Formula

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