September 22, 2025, New Delhi: New GST rates under GST 2.0 came into effect today, making daily use items cheaper ahead of Chhath Puja and Diwali festivals, with Prime Minister Modi calling it a “double blast of happiness” for common people.
The revised rates are expected to reduce prices of essential items just before the festival season, potentially benefiting the ruling BJP in the upcoming Bihar Assembly elections. Items like Durga Maa idols for Navratri and traditional Chhath puja materials including soup and daura are likely to become more affordable.
“GST 2.0 will not only reduce the burden on common people’s pockets but will make sacred festivals like Chhath and Diwali even more special. This is another step towards Atmanirbhar Bharat,” said PM Modi while announcing the implementation.
The timing of these GST reforms before major festivals and Bihar elections is being viewed as strategically significant. Lower prices during the festive season are expected to boost market activity and provide relief to consumers across the country.
Key Changes Under GST 2.0:
- Reduced rates on daily use items effective September 22, 2025
- Life insurance policies receive GST exemption
- Health insurance policies exempted from GST
- Medicines continue at concessional 5% rate
- Passenger transport services maintain existing rate structure
Important Clarifications for Businesses:
- GST registration limits remain unchanged
- E-way bills issued before rate changes remain valid for full duration
- New rates apply to supplies made on or after September 22, regardless of when stock was purchased
- Businesses must apply revised rates on all supplies from implementation date
Insurance Sector Benefits: All personal life insurance policies including term plans, endowment policies, and ULIPs are now GST-exempt. Similarly, private health insurance policies including family floater and senior citizen plans receive complete GST exemption.
Transport and Medicine Rates: Road passenger transport continues at 5% without ITC, though operators can opt for 18% with ITC. Economy class air travel remains at 5% while other categories stay at 18%. Medicines maintain the 5% concessional rate to ensure affordability while allowing ITC flow through the supply chain.
The GST Council’s recommendations aim to simplify tax rates, remove anomalies, and make the system easier for both businesses and consumers. The implementation comes at a crucial time when festivals boost consumer spending across India.
For businesses, the revised rates apply based on supply date rather than purchase date, ensuring immediate implementation of the new tax structure for all transactions from today onwards.