GST 2.0 Takes Effect: Shah Hails ‘Trust-Based Tax System’ for Growth and Relief

On September 22, 2025, the transformative "GST 2.0" came into effect, heralding what Union Home Minister Amit Shah calls a "trust-based tax system" in an exclusive interview with NDTV’s Rahul Kanwal. Shah emphasized that this overhaul, the most significant since the Goods and Services Tax (GST) was introduced in 2017, aims to foster mutual trust between the government and India’s 1.3 billion citizens. By slashing tax rates and simplifying the structure, the government seeks to boost production, consumption, and economic growth while ensuring the tax system serves to "run the country," not merely increase revenue.

The new GST framework replaces the previous four-tier structure (5%, 12%, 18%, and 28%) with a streamlined two-tier system of 5% and 18%, with ultra-luxury items taxed at 40% and tobacco products retaining a 28% rate plus cess. This change makes a wide range of essentials—daily food items, life and health insurance, automobiles, electronics, appliances, stationery, beauty services, lifestyle services, and machinery—more affordable. Shah highlighted that products like cement, electricity, cars, trucks, tractors, and agricultural goods will see price reductions, directly benefiting consumers and spurring demand.

Shah underscored the government’s commitment to public welfare, noting that GST collections have grown from ₹80,000 crore to ₹2 lakh crore, with potential to reach ₹2.5 lakh crore. However, he stressed that the focus of GST 2.0 is to provide relief rather than maximize revenue. “People will start receiving benefits today onwards,” Shah said, adding that the reforms reflect Prime Minister Narendra Modi’s vision of a tax system that prioritizes citizens’ trust and economic progress over government income.

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Addressing criticisms from the Opposition, Shah took a swipe at those who labeled GST a “waste tax” or claimed credit for its inception. He pointed out that the Congress-led government failed to implement GST due to states’ concerns over revenue losses. Shah credited Modi and former Finance Minister Arun Jaitley for securing a constitutional guarantee to compensate states for five years, a promise fulfilled by November 2024. This assurance, he said, paved the way for GST’s successful adoption and its current evolution into GST 2.0.

Prime Minister Modi, speaking on the eve of the rollout, described GST 2.0 as a “big step towards Atmanirbhar Bharat” on the first day of Navratri. He highlighted that the reforms would benefit the poor, middle class, youngsters, women, and traders by increasing savings and easing purchases. Modi also reflected on the 2017 GST implementation, which untangled India from a complex web of taxes through extensive stakeholder consultations and state cooperation. The new reforms, he said, will enhance ease of doing business, attract investment, and ensure equitable development across states.

The GST 2.0 changes are poised to reshape India’s economic landscape. By reducing tax burdens on essentials and fostering a trust-based system, the government aims to empower consumers and businesses alike. As Shah noted, this “new era of mutual trust” signals a shift toward a tax regime that prioritizes national progress and public welfare, setting the stage for a more vibrant and inclusive economy.

Also Read: PM Modi’s GST 2.0 Revolution: Tax Cuts to Transform India’s Economy