If a price tag looks different from what you remember, it probably is. India rewrote its GST structure in late 2025, and the gst rates 2026 you see on invoices today are simpler than what came before, even if some individual prices went up rather than down. This guide walks through what changed, the new slab structure, which categories of goods got cheaper or costlier, and what it means whether you're doing weekly grocery shopping or running invoicing for a small business.
GST 2.0: What Changed in the September 2025 Reform
The gst rates 2026 structure traces back to a single event: the 56th GST Council meeting on 3 September 2025, which approved what's now called GST 2.0. The new gst rates took effect on 22 September 2025, the first day of Navratri, following CBIC notifications issued on 17 September.
Before the reform, GST ran on four main slabs: 5%, 12%, 18%, and 28%, plus assorted exemptions and cesses on top of the highest slab. The reform collapsed that down to two primary slabs, 5% and 18%, and added a new 40% bracket reserved for sin goods and luxury items. Roughly 99% of items that used to sit in the 12% slab moved down to 5%. About 90% of items in the old 28% slab moved down to 18%. A smaller set, mostly tobacco, pan masala, and high-end vehicles, moved up into the new 40% slab instead.
The government's stated goal was twofold: cut costs on everyday goods and services to boost household spending, and simplify a structure that had become genuinely confusing to apply consistently across product categories. Alongside the rate changes, the reform also promised faster GST refunds and simpler registration for small businesses, though those process changes roll out on a separate timeline from the rate cuts.
It's worth being direct about the scale of this: this isn't a minor tweak to a couple of tax brackets. It's the biggest restructuring of India's GST rates since the tax was introduced in 2017, and it touches nearly every category of goods and services in some way. If you're used to checking a five-year-old rate chart from memory, throw it out. The categories have shifted enough that old assumptions about what's taxed at 12% or 28% no longer hold.
The New Slab Structure: 5%, 18%, 40%
The gst slabs 2026 structure now has four effective tiers, even though it's usually described as "two slabs": a 0% exempt category, then 5%, 18%, and 40%.
0% (Exempt): Reserved for essentials, including many unbranded food staples, select life-saving medicines, and specific health and education-related goods.
5%: The primary slab for everyday goods and mass-consumption items. Packaged food products, personal care items like soap and shampoo, and footwear largely landed here after moving down from the old 12% or 18% brackets.
18%: The default rate for most standard goods and services that don't qualify for a lower slab. This includes most services (restaurants, telecom, banking), electronics, appliances, and items that used to sit at 28%.
40%: A new top slab for sin and luxury goods. Tobacco products, pan masala, carbonated and caffeinated beverages, and luxury vehicles all sit here now, generally without the additional cess that used to apply on top of the old 28% rate.
| Old structure (pre-Sept 2025) | New structure (from 22 Sept 2025) |
|---|---|
| 0% exempt | 0% exempt |
| 5% | 5% |
| 12% | Merged into 5% (most items) |
| 18% | 18% |
| 28% | Merged into 18% (most items) |
| 28% + cess (luxury/sin goods) | 40% |
The practical effect is that you now only need to remember three non-zero numbers instead of four, and the highest one is reserved almost entirely for products most people don't buy on a regular basis. If you're checking a rate for something you buy often, groceries, personal care, basic electronics, it's very likely 5% or 18%.
Items That Got Cheaper vs More Expensive
The gst rate changes list splits fairly cleanly into three groups: things that got cheaper, things that stayed the same, and a smaller set of things that got more expensive.
Cheaper: Life and health insurance premiums moved from 18% to 0%, a meaningful cut given how often those get renewed annually. Household appliances, air conditioners, televisions, washing machines, and refrigerators, moved from 28% to 18%. Cement dropped from 28% to 18%, which matters for anyone mid-construction. Small cars and two-wheelers under 350cc moved from 28% to 18%. Personal care items like soap, shampoo, and toothpaste moved from 18% down to 5%. Packaged food items such as butter, cheese, and namkeen moved from 12% to 5%, and a further set of staples, including UHT milk, paneer, roti, and paratha, moved all the way to 0%.
Roughly unchanged: Fresh fruits and vegetables stay exempt, as they were before. Most services taxed at 18%, restaurants, financial services, education, stay at 18%.
Costlier: Pan masala, gutkha, chewing tobacco, and cigarettes moved from 28% to 40%. Carbonated soft drinks and caffeinated beverages also moved to 40%. Luxury cars and high-end motorcycles moved into the 40% slab as well, in most cases without the old cess stacked on top, which partially offsets the headline rate increase.
| Category | Old rate | New rate | Direction |
|---|---|---|---|
| Life/health insurance premiums | 18% | 0% | Cheaper |
| ACs, TVs, washing machines | 28% | 18% | Cheaper |
| Cement | 28% | 18% | Cheaper |
| Small cars, bikes under 350cc | 28% | 18% | Cheaper |
| Soap, shampoo, toothpaste | 18% | 5% | Cheaper |
| Butter, cheese, packaged snacks | 12% | 5% | Cheaper |
| UHT milk, paneer, roti | 5% | 0% | Cheaper |
| Fresh fruits and vegetables | 0% | 0% | Unchanged |
| Pan masala, tobacco, cigarettes | 28% | 40% | Costlier |
| Carbonated and caffeinated drinks | 28% | 40% | Costlier |
| Luxury cars | 28% + cess | 40% | Mixed |
What This Means for Everyday Purchases
Turning slab changes into actual rupees is where this becomes concrete. Take a bottle of shampoo priced at ₹500 before tax. At the old 18% rate, that's ₹590 at the till. At the new 5% rate, it's ₹525, a saving of ₹65 on a single bottle, which adds up across a year of repeat purchases.
Scale that up to a ₹5,000 packaged food order, say a bulk grocery run including items that used to sit at 12%. Old total: ₹5,600. New total at 5%: ₹5,250. That's ₹350 back in your pocket on one shopping trip.
Now a bigger-ticket item: an air conditioner priced at ₹50,000 before tax. At the old 28% rate, that's ₹64,000 out the door. At the new 18% rate, it's ₹59,000, a saving of ₹5,000 on a single appliance.
Gst on rice is a good example of how the exempt category actually works in practice: loose, unbranded rice sold without a registered trademark stays at 0% GST, same as before. Pre-packaged, branded rice sold under a label attracts 5%. The tax depends on how the product is sold and branded, not on the type of rice itself, and the same branded-versus-loose logic applies to wheat, dal, atta, and other staples. For gst on daily goods more broadly, this branding distinction is worth remembering: two physically identical products can carry different tax rates depending on packaging.
How Businesses Should Update Invoicing
Gst compliance 2026 starts with checking every product or service code you invoice against the new slab structure, because the old rate sitting in your billing software or spreadsheet template may simply be wrong now.
Start with your HSN or SAC codes. GST rates attach to specific HSN (goods) or SAC (service) codes, not to product names, so the fastest way to check whether something changed is to look up its code against the current rate list rather than relying on memory of what it used to be. If you sell across several categories, this is worth doing as a line-by-line audit rather than assuming everything shifted uniformly.
Update your invoicing templates and accounting software before your next billing cycle, not after. Charging an old 12% or 28% rate on an invoice after 22 September 2025 isn't just a customer-facing error, it creates a mismatch against what actually gets filed in your GST return, which can flag discrepancies during reconciliation.
If you sell items that moved into the 0% exempt bracket, check whether that also changes your input tax credit position. Exempt supplies generally can't claim input tax credit the same way taxable supplies can, so a rate cut on your output doesn't automatically mean a straightforward win on your margins; it's worth running the numbers rather than assuming.
Finally, keep an eye on official CBIC notifications rather than secondhand rate lists, including this one, for anything you're about to bill at scale. Slab assignments for specific products can be refined or clarified after the initial rollout, and a wrong rate on a high-volume invoice run is expensive to unwind.
Complete GST Rate Chart (2026)
Even after GST 2.0 simplified the tax structure, different categories of goods continue to fall under different GST rates.
| GST Rate | Common Examples |
|---|---|
| 0% | Fresh fruits and vegetables, milk, eggs, unbranded food grains |
| 0.25% | Rough precious stones |
| 3% | Gold, silver, jewellery and precious metals |
| 5% | Essential household goods, many packaged food items, public transport and items shifted from the old 12% slab |
| 18% | Most services, electronics, restaurants (where applicable), household appliances and the majority of taxable goods |
| 40% | Tobacco products, pan masala and selected luxury or sin goods under GST 2.0 |
Always check the latest GST Council notifications because specific products may receive special treatment or exemptions.
Old vs New GST Slabs
| Earlier GST | GST 2.0 | What Changed |
|---|---|---|
| 5% | 5% | No major change |
| 12% | Mostly 5% | Reduced for most products |
| 18% | 18% | Largely unchanged |
| 28% | Mostly 18% | Reduced for most goods |
| 28% + Compensation Cess | 40% | Simplified into a single higher slab for luxury and sin goods |
GST Reform Timeline
- 1 July 2017: GST introduced across India.
- 2017–2025: Four primary tax slabs (5%, 12%, 18% and 28%) with compensation cess.
- 3 September 2025: GST Council approved GST 2.0.
- 17 September 2025: Official notifications released.
- 22 September 2025: New GST rates came into effect.
- 2026: Businesses and consumers continue using the simplified GST structure.
What are HSN and SAC Codes?
Businesses frequently come across HSN (Harmonized System of Nomenclature) and SAC (Services Accounting Code).
- HSN classifies physical goods.
- SAC classifies services.
- These codes are used while generating GST invoices, filing returns and determining the correct tax rate.
If you own a business, using the correct HSN or SAC code helps avoid GST filing mistakes and notices.
GST on Popular Categories
| Category | Typical GST Rate |
|---|---|
| Gold Jewellery | 3% |
| Mobile Phones & Electronics | Usually 18% |
| Most Professional Services | 18% |
| Essential Food Items | 0% or 5% depending on the product |
| Tobacco & Pan Masala | 40% |
Common Business Mistakes After GST 2.0
- Continuing to use old GST slabs.
- Applying the wrong HSN or SAC code.
- Using outdated accounting software.
- Forgetting to update invoices after GST changes.
- Assuming every product from the old 12% or 28% slab changed automatically.
Related Calculators
After understanding GST, these calculators can also help:
- GST Calculator
- Income Tax Calculator
- Salary Calculator
- HRA Calculator
- Percentage Calculator
Frequently Asked Questions
What are the current GST slabs in India after the GST 2.0 reform?
The current structure has four effective tiers: 0% (exempt) for essentials, 5% for everyday and mass-consumption goods, 18% as the default rate for most goods and services, and 40% for luxury and sin goods like tobacco and high-end vehicles. This took effect on 22 September 2025.
Which everyday items became cheaper under the new GST rates?
Life and health insurance premiums, household appliances like ACs and washing machines, cement, small cars and two-wheelers, personal care items like soap and shampoo, and many packaged food products all moved to lower slabs. Some staples like UHT milk and paneer moved all the way to 0%.
When did the new GST rates come into effect?
The new rates took effect on 22 September 2025, the first day of Navratri, following approval at the 56th GST Council meeting on 3 September 2025 and CBIC notifications issued on 17 September 2025.
Is there still a 12% or 28% GST slab in 2026?
No. Both slabs were removed in the GST 2.0 reform. Items that used to sit at 12% mostly moved to 5%, and items that used to sit at 28% mostly moved to 18%, with a smaller set of luxury and sin goods moving up into a new 40% slab instead.
Check Any Rate Yourself
Rate lists are useful for a category-level overview, but the exact percentage that applies to something you're buying or billing depends on its specific HSN or SAC code, and it's worth confirming before you rely on a number from any guide, including this one. CalcMint's GST calculator lets you plug in a price and rate to see the tax and total instantly, and the GST calculator guide walks through the add, reverse, and CGST/SGST/IGST split calculations in detail if you need to work through an invoice by hand.