GST 2.0 simplifies IGST and Cess, keeps luxury goods under heavy tax

India’s indirect tax system is on the verge of a major shift with the introduction of GST 2.0 from September 22, 2025. At the centre of this overhaul are two pillars—Integrated GST (IGST) and Cess—that decide how imported goods, inter-state supplies, and luxury products are taxed. IGST has long been used as a balancing tool to treat imports and domestic goods equally, while Cess worked as an extra duty on luxury and demerit products.

Under the upcoming system, these two will be folded into a more straightforward slab arrangement. The intent is to simplify compliance while keeping the overall tax pressure on premium products largely the same.
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