Business
13 Key Points You Need To Know About GST 2.0 As Tax Cuts Kick In From Today 22 September 2025
New Delhi: Ahead of the beginning of GST rejig from Monday, the Finance Ministry issued another detailed explanation of the cut in tax rates on goods and services announced as part of the reforms, which aim to simplify rates, remove anomalies, and make the system easier for both businesses and consumers.
1. Which life insurance policies are covered under the GST exemption?
The exemption applies to all individual life insurance policies, including term plans, endowment policies, and ULIPs. Reinsurance of these individual policies is also exempt.
2. Which health insurance policies are covered under the GST exemption?
Individual health insurance policies, including family floater and senior citizen plans, are exempt from GST. Reinsurance of such individual policies is also exempt under this decision.
3. Will passenger transportation services be taxed at 18 per cent?
No. Passenger transport by road will continue at 5% without ITC, though operators may opt for 18 per cent with ITC. In the case of air travel, economy class is taxed at 5 per cent, while other classes remain at 18 per cent.
4. What is the applicable GST rate on multimodal transport of goods?
If the multimodal transport does not include any air leg, it is taxed at 5 per cent with limited ITC (restricted to 5 per cent of the value). If any portion involves air transport, the applicable rate is 18 per cent with full ITC.
5. Who is liable to pay GST on local delivery services provided through an ECO?
If local delivery services are provided through an e-commerce operator (ECO) by an unregistered person, the e-commerce operator is responsible for paying GST. If the service provider is registered, then that provider is liable to pay the tax.
6. What is the GST rate applicable on local delivery services?
Local delivery services are taxed at 18 per cent.
7. Is it necessary to recall and re-label the MRP on medicines already in the supply chain before September 22, 2025? How will the re-labelling be carried out?
No recall of stock is required. Manufacturers only need to issue revised price lists and share them with dealers, retailers, and regulators. Stock already in the market can continue to be sold, provided billing reflects the new prices.
8. Why haven’t all medicines been fully exempted from GST?
Exempting medicines would prevent manufacturers from claiming ITC on raw materials and inputs, raising their production costs. These costs would eventually be passed on to consumers. Keeping medicines at a concessional 5 per cent rate (except those specified at nil rate) ensures affordability while allowing ITC to flow through the supply chain.
9. Why hasn’t GST been removed on raw cotton?
Cotton is taxed under reverse charge, so farmers do not pay GST directly. This system keeps the input tax credit chain intact for the textile industry, which helps keep costs stable and benefits consumers.
10. What is the tax treatment for leasing or renting services without an operator?
Majority of leasing or renting without operator is taxed at the same rate as the goods themselves. For example, if a car is taxed at 18 per cent, then renting or leasing that car without a driver is also taxed at 18 per cent. The same rule applies to other goods; the tax on renting matches the tax on buying.
11. Will the revised GST rates also apply to imported goods?
Yes. IGST on imports will be levied at the revised GST rates from 22nd September, except where a specific exemption has been provided.
12. UHT (Ultra High Temperature) milk has been exempted. Does this exemption also apply to plant-based milk?
No. The exemption is only for dairy UHT milk. Plant-based milk drinks (like almond milk) earlier attracted 18 per cent GST, and soya milk drinks 12 per cent. Now all plant-based milk drinks, including soya milk, will be taxed at 5%.
13. Why has GST on face powders and shampoos been reduced, and will this not also benefit MNCs and luxury brands?
Face powders and shampoos are common household items used across all sections of society. While premium or luxury brands will also see the benefit, the main purpose of the rate cut is to simplify the GST system. Having separate rates based on brand or price would make the tax structure complicated and difficult to administer.
New GST Rates List Live Updates: GST 2.0, a major overhaul in the indirect tax system of the country, has come into effect today, September 22, decreasing tax on essential items to boost consumption nationwide and rationalising rates on other products. Termed as GST Bachat Utsav (savings festival), coinciding with the first day of Navratri, products from groceries to electronics have become cheaper from today on account of lower GST.
The 56th GST council, led by Finance Minister Nirmala Sitharaman, has merged the previous four slabs into two main categories with an additional “sin tax” bracket:
- 5% slab — for essential goods.
- 18% slab – for most other goods and services.
- 40% slab – for luxury and sin goods such as tobacco, alcohol, betting, and online gaming.
This consolidation is expected to make tax compliance easier and also reduce prices on many items currently taxed at 12% or 28%.
Prime Minister Narendra Modi, while addressing the nation on Sunday ahead of the implementation of GST 2.0, said that people will save Rs 2.5 lakh crore, with the combined benefit of the goods and services tax (GST) cuts and the earlier Income Tax reduction.
PM Modi congratulated people on the GST Bachat Utsav (savings festival) kicking off on September 22 — the first day of Navratri. “GST Bachat Utsav would lead to savings and people will be able to purchase things easily,” he said.
PM Modi said that since 2014, GST has been a top priority, as reforms are continuous and need to adapt to the nation’s evolving needs. Before the rollout of GST 2.0, goods transported across states in India faced multiple hurdles, including a maze of documentation, numerous check posts, and differing tax systems at every location, said the PM in his address. He emphasised that these complexities often slowed business and increased costs.
Gatwick Airport’s £2.2 billion second runway plan has been given the go-ahead by Transport Secretary Heidi Alexander.
In the privately-financed project, the West Sussex airport will move its emergency runway 12 metres north, enabling it to be used for departures of narrow-bodied planes such as Airbus A320s and Boeing 737s.
This will enable it to be used for about 100,000 more flights a year.
Ms Alexander backed the scheme as a “no-brainer” for economic growth, a Government source said, suggesting flights could take off from the new full runway before 2029.
The Cabinet minister is satisfied with adjustments made, covering issues such as noise mitigation and the proportion of passengers who would travel to and from the airport by public transport.
It comes after the Planning Inspectorate initially rejected the airport’s application and earlier this year recommended Ms Alexander should approve the project if the changes were made.
New commitments include Gatwick’s management setting its own targets for the proportion of passengers who travel to the airport by public transport, rather than a legally binding target.
Residents affected by more noise will be able to ask Gatwick to cover the costs for triple-glazed windows.
Homeowners living directly beneath the new flight routes who choose to sell could have their stamp duty and reasonable moving costs paid, as well as estate agent fees of up to 1% of the purchase price.
Gatwick says its plans will create £1 billion per year in economic benefits, and generate an additional 14,000 jobs.
A Government source told the PA news agency: “The Transport Secretary has cleared Gatwick expansion for take-off.
“With capacity constraints holding back business, trade and tourism, this is a no-brainer for growth.
“This Government has taken unprecedented steps to get this done, navigating a needlessly complex planning system, which our reforms will simplify in future.
“It is possible that planes could be taking off from a new full runway at Gatwick before the next general election.
“Any airport expansion must be delivered in line with our legally binding climate change commitments and meet strict environmental requirements.”
Local campaigners opposed to expansion are concerned about the impact on surface transport, noise, housing provision and wastewater treatment, but the airport insists it has conducted “full and thorough assessments” of those issues.
CAGNE, an umbrella aviation community and environment group for Sussex, Surrey and Kent, said it stands ready to serve a judicial review funded by residents and environmental bodies.
The group said: “We know this Government cares little for the environmental impact aviation is having on our planet and Gatwick’s neighbours, but not to demand that Gatwick pays for the infrastructure, the onsite wastewater treatment plant, and noise impact is unlawful in our book.”
The Labour Government’s backing of a third runway at Heathrow Airport in its bid to grow the economy has also drawn criticism from environmental groups and opposition politicians.
Green Party leader Zack Polanski described ministers’ support of a second Gatwick runway as a “disaster”.
He said in a statement: “It ignores basic climate science and risks undermining efforts to tackle the climate crisis.
“Labour keeps wheeling out the same nonsense about growth, but at what cost? What this really means is more pollution, more noise for local communities, and no real economic benefit.”
Stewart Wingate, Vinci Airports managing director for the UK and former Gatwick chief executive, said: “After a lengthy and rigorous planning process, we welcome the Government’s approval of plans to bring our Northern Runway into routine use, ahead of the expected deadline.
“This is another important gateway in the planning process for this £2.2bn investment, which is fully funded by our shareholders and will unlock significant growth, tourism and trade benefits for London Gatwick and the UK and create thousands of jobs.
“As we’ve said previously, it is essential that any planning conditions enable us to realise the full benefits of the project and do not impose unnecessary constraints that make it uneconomic to invest in.
“We now need to carefully examine the details of the planning consent. Once we have done that, we will be able to comment further.”
Katy AustinTransport correspondent and
Jamie WhiteheadBBC News
PA MediaTransport Secretary Heidi Alexander has approved plans for a second runway at London Gatwick Airport, as the government looks for economic growth opportunities.
The £2.2bn privately-financed project involves in effect moving the current Northern Runway 12 metres to bring it into regular use, as well as other developments, including extending the size of terminals.
The airport says its plans will bring jobs and boost the local economy. But there has long been opposition from campaigners and groups worried about the impact on the surrounding area.
Gatwick currently handles about 280,000 flights a year. It says the plan would enable that number to rise to around 389,000 by the late 2030s.
A government source has described the plans as a “no-brainer for growth,” adding that “it is possible that planes could be taking off from a new full runway at Gatwick before the next general election.”
London Gatwick, in West Sussex, is currently Europe’s busiest single-runway airport with more than 40 million passengers using it every year.
The plans approved by Ms Alexander would include adding 40,000 more flights before the second runway opens, and 70,000 more – almost 190 a day – once it is fully up and running.
The airport says that passenger numbers could rise to up to 80 million.
Currently, the Northern Runway is currently only used for taxiing or as a back up.
The second runway would be used for short haul flights, with capacity also freed up for more long-haul services from the main runway.
The decision to approve the expansion plan had been expected in February, but at the time, the transport secretary only said she was “minded to grant consent” for the Northern Runway planning application.
It emerged planning inspectors had expressed concerns over the effect the proposals would have on several aspects on the area surrounding the airport, including traffic and noise.
In April, Gatwick Airport agreed to stricter noise controls, an enhanced insulation scheme for nearby residents, and having 54% of air passengers using public transport before the Northern Runway opened.
To achieve this target, the airport said, third parties – including the Department for Transport – would need to “support delivery of the necessary conditions and improvements required to meet this target,” giving the example of reinstating the full Gatwick Express rail service.
Before the Covid-19 pandemic, the Gatwick Express ran a service of four trains per hour non-stop between the airport and London Victoria, this was reduced to two trains per hour from 2022.
Gatwick Airport also proposed a cars-on-the-road limit if the 54% target could not be met before the first use of the Northern Runway to address possible road congestion concerns.
It added that if neither the target nor the cars-on-the road limit could be met, the runway plans would be delayed until the required £350m of road improvements had been completed.
“This would make sure any additional road traffic flows can be accommodated and any congestion avoided,” the airport said.
“This government has taken unprecedented steps to get this done, navigating a needlessly complex planning system, which our reforms will simplify in future,” the government source said.
“Any airport expansion must be delivered in line with our legally binding climate change commitments and meet strict environmental requirements.”
Chris Curtis, who chairs the Labour Party’s growth group, welcomed the approval but said “radical planning reform” was needed to enable future projects to be completed more swiftly.
Shadow transport secretary Richard Holden welcomed the decision as “a vital step towards driving economic growth”.
But he said approval should have been made months ago and accused Labour of creating “uncertainty for businesses and local communities”.
But there is strong opposition to any expansion, particularly from climate campaigners.
Green Party leader Zack Polanski said approval of the expansion plan was a “disaster for the climate crisis”.
Hannah Lawrence, spokesperson for Stay Grounded, said “We need an immediate end to airport expansion and money put into improving sustainable transport such as trains.”
In February, Greenpeace UK policy director Douglas Parr said the extension would not drive economic growth. “The only thing it’s set to boost is air pollution, noise, and climate emissions,” he added.
Alex Chapman, senior economist at left-of-centre think tank New Economics Foundation, also argued the move would not create new jobs, but would just shift them from other parts of the country.
“People are already perfectly able to catch cheap flights on holiday or travel for business,” he added.
Unite the Union general secretary Sharon Graham backed Gatwick having a second runway, but warned it would need “to come with guarantees of well paid, unionised jobs and proper facilities for workers”.
Sally Pavey, chair of Communities Against Gatwick Noise Emissions (CAGNE), said she was worried about “uncontrollable noise, ramifications on the roads, decline in air quality… and climate change”.
“We can’t keep ignoring climate change and it would be wrong to allow a new ‘bucket and spade’ runway, as we put it, at the expense of residents and the economy,” she said.
The group would take legal action through a judicial review if the expansion goes ahead, she added.
Gatwick’s is the latest in a string of airport expansion approvals, most recently Luton’s in June.
The government has also expressed support for a third runway at the country’s biggest airport, Heathrow, but that would be a much more complex, costly and controversial project.
Italy’s inflation eases to 1.6% in August: Istat flash estimate
Portugal Becomes Latest EU Nation to Recognize Palestine
US’ VF Corp sells Dickies brand to Bluestar Alliance for $600 mn
-
Tech1 week agoHow a 2020 Rolex Collection Changed the Face of Watch Design
-
Tech1 week agoOpenAI reaches new agreement with Microsoft to change its corporate structure
-
Fashion1 week agoUK real GDP grows 0.2% QoQ, 1.2% YoY in May-Jul 2025: ONS
-
Tech1 week agoColor-changing strip enables affordable nanoplastic analysis using ordinary microscope
-
Tech1 week agoThe Free Ride for EVs in the Carpool Lane Is Coming to an End
-
Tech1 week agoHow to Switch to Google Fi
-
Tech1 week agoThe Top 11 Protein Powders, According to My Stomach
-
Sports1 week agoNFL to let teams decide on Charlie Kirk tributes after mandating moment of silence in recent game