What is GST 2.0?
GST 2.0 is the commonly used term for the next generation of GST reforms in India, expected to roll out in 2025-2026. It is not a single amendment but a package of interconnected reforms covering:
- Rate Rationalisation: Merging or adjusting the existing 5%, 12%, 18%, and 28% slabs
- Slab Reduction: Moving towards 3-4 rates from the current 5-rate structure
- Inverted Duty Correction: Fixing industries where inputs are taxed higher than outputs
- Technology Enhancements: Full rollout of IMS, GSTR-1A, and AI-powered compliance tools
- Cess Rationalisation: Streamlining the compensation cess and surcharges
GST 2.0 Status
As of June 2026, several GST 2.0 measures have been partially implemented. The comprehensive rate rationalisation is expected to be implemented in phases. The GoM report has been submitted to the GST Council for final approval.
Current GST Rate Structure vs Proposed GST 2.0 Rates
| Category | Current Rates | Proposed GST 2.0 Rates |
|---|---|---|
| Essential goods (food, etc.) | Nil / 5% | Nil / 5% (unchanged) |
| Merit goods (processed food, etc.) | 12% | Merged into ~15% bracket |
| Standard goods & services | 18% | ~15% (reduced for most) |
| Luxury / demerit goods | 28% | 28% (retained, with cess) |
| Gold & precious metals | 3% | 3% (unchanged) |
Sectors Most Impacted by GST 2.0 Rate Changes
1. FMCG & Food Processing
Many processed food items at 12% could move to the new 15% bracket, while essential food items remain at 5% or Nil. Businesses should prepare for possible rate increases on some products and decreases on others.
2. Healthcare & Pharmaceuticals
GST 2.0 proposes significant changes for healthcare — with many diagnostic services, generic medicines, and medical equipment likely to see rate reductions. Term life insurance premiums already moved to Nil in June 2025.
3. Real Estate
Construction-related goods and services may see adjustments. The inverted duty structure in cement (28%) vs construction services (5%) has long been a concern for developers.
4. Textiles & Garments
The inverted duty issue in textiles (where yarn attracts higher GST than fabrics) is expected to be corrected under GST 2.0, giving relief to the garment manufacturing sector.
5. EV & Green Technology
Electric vehicles remain at 5% GST, and GST 2.0 is expected to further incentivise green technology with concessional rates on solar panels, batteries, and green energy equipment.
How to Prepare Your Business for GST 2.0
HSN Code Audit
Review all product/service HSN/SAC codes and map them to new rate categories
Pricing Review
Assess impact of rate changes on product pricing and margins
Software Update
Ensure your billing/ERP software can handle new rates automatically
Customer Communication
Prepare to communicate price changes to customers in advance
Anti-Profiteering Check
If rates reduce, ensure benefits are passed to consumers as required
ITC Reconciliation
Reconcile all ITC before the transition date to avoid any carry-forward issues
Milaan ERP is GST 2.0 Ready
Milaan ERP's GST rate engine updates automatically with every GST Council decision. When GST 2.0 rates are officially notified, your billing software will reflect the new rates immediately — no manual configuration needed. Stay ahead of the reform.
FAQs on GST 2.0
GST 2.0-Ready Billing Software for Your Business
Milaan ERP automatically applies GST 2.0 rate updates the moment they are notified — keeping your business compliant with zero manual effort.