GST 2.0: What Changed and How to Prepare Your TallyPrime

India's GST system underwent its biggest transformation since 2017 with the rollout of GST 2.0 on September 22, 2025. The 56th GST Council meeting simplified the tax structure from four slabs (5%, 12%, 18%, 28%) to three slabs (5%, 18%, 40%), affecting over 200 items and impacting businesses across sectors. This guide explains what changed, which items are affected, and how to configure TallyPrime to stay compliant with the new rates.

Understanding GST 2.0: The Three-Slab Structure

Overview of the 56th GST Council meeting (September 3, 2025) recommendations
Breakdown of the three new slabs: 5% (Merit Rate), 18% (Standard Rate), 40% (Demerit Rate)
90% of items from 28% slab moved to 18%; 99% from 12% slab moved to 5%
Rationale behind the simplification: reducing classification disputes and compliance burden

Items Affected: What's Cheaper and What's More Expensive

Lower taxes (moved to 5% or 18%): packaged food, soaps, juices, medicines, life and health insurance, white goods (fridges, ACs, washing machines), small vehicles, bicycles, auto parts
Higher taxes (40% slab): luxury and sin goods - bikes above 350 CC, high-end SUVs, yachts, private jets, sugary and aerated beverages
Impact on common consumption items for businesses
200+ items affected by GST rate cuts from September 22, 2025

Revenue Impact and Economic Implications

SBI Research report: estimated annual revenue decrease of Rs 85,000 crore
FY26 impact estimated at Rs 45,000 crore revenue loss
Trade-off: affordability for citizens vs. government revenue
Expected boost to consumer spending and business competitiveness

How to Update GST Rates in TallyPrime

Step 1: Navigate to Gateway of Tally > Alter > Stock Item > Select item
Step 2: Update GST Rate/HSN details for affected items
Step 3: Verify rate changes in GST rate master (Alt+G > GST Rate)
Bulk update option: Use TallyPrime's import feature for multiple items
Creating separate stock groups for different GST slabs for easier tracking

Reconciling Old and New Rates for Accurate Reporting

Handling inventory purchased at old rates but sold at new rates
Adjusting opening stock valuations if required
Ensuring GSTR-1 and GSTR-3B reflect correct rate changes
Using TallyPrime's GST Annual Computation to verify year-end accuracy

Timeline and Compliance Checklist

September 22, 2025: GST 2.0 effective date
Immediate action items: Update rate master, verify invoices, train accounts team
Ongoing monitoring: Track further rate notifications from GST Council
Leverage TallyPrime automation for error detection and compliance

Mark IT Solutions offers TallyPrime implementation and GST 2.0 migration support. Our certified Tally consultants can help you update your rate master, reconcile opening stock, and ensure seamless compliance. Contact us for a GST 2.0 readiness assessment.

Frequently Asked Questions

What is GST 2.0 and when did it come into effect?

GST 2.0 is India's major tax reform that simplified the GST structure from four slabs (5%, 12%, 18%, 28%) to three slabs (5%, 18%, 40%). It was implemented on September 22, 2025, following the 56th GST Council meeting.

How do I update TallyPrime for GST 2.0 compliance?

Update to TallyPrime Release 5.0 or later, which includes GST 2.0 support. Then configure your stock items with the new GST rates (5%, 18%, or 40%) under Gateway of Tally > Alter > Stock Item.

Which items moved to the new 40% GST slab?

The 40% slab applies to luxury and sin goods including premium automobiles, yachts, private aircraft, high-end electronics, tobacco products, and aerated beverages. Check the official GST portal for the complete list.

Do I need to file revised GST returns for the transition period?

Businesses with transactions spanning the September 22, 2025 transition date may need to file adjustment entries. TallyPrime's GST reports will show you any rate mismatches that need reconciliation.

What is the GST rate for essential items under GST 2.0?

Essential items like food grains, medicines, and basic necessities remain at 5% or are exempt. The middle 18% slab covers most standard goods and services used by businesses.