GST 2.0 takes effect: two main slabs, tractors, ghee and medicines get cheaper

New GST rates came into force across India on Monday, September 22. The overhaul, dubbed 'GST 2.0', took effect on the first day of Navratri.

The GST Council approved the simpler structure at its meeting on September 3. There are now two main slabs, 5% and 18%, while a special 40% rate applies to items such as tobacco, pan masala and luxury cars.

In a major relief for farmers, GST on tractors has been cut from 12% to 5%. Irrigation equipment and farm machinery will also be taxed at 5%.

Ghee, dry fruits, namkeen, medicines, toothpaste and bicycles have moved from the 12% slab to 5%. UHT milk, paneer, roti and parathas are now fully exempt.

Premiums on individual health and life insurance policies no longer attract GST. Tax on small cars has also come down from 28% to 18%.