GST Rates in India 2025-26: What Changed and What Stayed

If you have bought anything since October 2025 and noticed the price quietly shift, here is why. On 22 September 2025 India rolled out what most people are calling GST 2.0, the biggest rework of the tax since it launched back in 2017. The old four-slab maze got flattened, two whole slabs disappeared, and a fresh rate appeared at the top for luxury and sin goods. Whether you run a small shop, file your own returns, or just want to know why your washing machine got a little cheaper, this is the plain-English version of what actually changed.

The new GST slab structure

The headline change is simple. India went from four main slabs to a cleaner set, and dropped the awkward 12% and 28% rates that used to confuse everyone. Here is the before and after at a glance.

So the working set is now 0%, 5%, 18% and 40%, with a couple of special rates for things like gold and rough diamonds, as notified by the Central Board of Indirect Taxes and Customs. Fewer slabs means fewer arguments about which bucket a product falls into, which was always one of the messier parts of the old system.

What is now 0% GST

The nil-rated list got more generous, and it mostly covers everyday food and essential services. You pay no GST on these.

• Daily foods: paneer, roti, paratha, khakra, papad and unbranded namkeen.
• Medicines: a list of lifesaving drugs was moved to nil, easing the cost of long-term treatment.
• Services: education and individual health and life insurance premiums.
• Other: several basic agricultural and household staples that families buy every week.

The insurance change is the quietly big one. Taking GST off individual health and life insurance premiums makes cover a little cheaper for households, which is the kind of change you only notice when your renewal bill arrives lower than last year.

What is now 5% GST

The 5% slab is where a lot of daily-use products landed after the 12% slab was scrapped. Expect to see this rate on things you reach for constantly.

• Soaps, shampoos and toothpaste.
• Cheese, butter and soya milk.
• Many packaged foods and fruit juices.
• Agricultural equipment.
• A broad range of everyday healthcare and personal-care items.

For most households this is the slab that decides the monthly grocery and toiletry bill, so moving common items down into it is the part of GST 2.0 people felt first at the checkout.

What is now 18% GST

The 18% slab is the new home for a huge chunk of consumer goods, including many appliances that used to sit at 28%. That shift is why a lot of big-ticket items got cheaper overnight.

• Air conditioners, refrigerators and washing machines.
• Televisions and monitors.
• Small cars that are not in the luxury bracket.
• Motorbikes under 350cc.
• Kitchen appliances and a wide range of electronics.
• Clothing priced above ₹2,500 a piece.

If you have been putting off a fridge or an air conditioner, this is the change that helped. Pulling these out of the old 28% slab and into 18% is a real saving on a single large purchase.

The new 40% rate for luxury and sin goods

Here is the part that went the other way. To pay for the cuts elsewhere, the government created a top 40% slab for products it wants to tax heavily. This is where the old 28% plus cess items moved to.

• Tobacco products and pan masala.
• Aerated drinks with high sugar content.
• High-end luxury vehicles.

Here is how it works: essentials get cheaper, and things the state actively discourages get more expensive. If you want to see exactly what a 40% rate does to a price, run it through our free GST calculator and watch the tax portion jump.

Special GST rates that still apply

A few items sit outside the main slabs on their own special rates, and these were left untouched by GST 2.0.

• 0.25% on rough precious diamonds.
• 3% on gold, silver and other precious metals.

This is the reason jewellery prices barely moved for most buyers. The metal stays at 3%, with 5% on the making charges, so your jeweller's invoice still splits the two the way it always has.

How to calculate GST on any amount

The maths behind GST is friendlier than it looks. There are really just two directions: adding GST to a base price, or pulling GST out of a price that already includes it.

• Add GST: Total = Amount times (1 + rate/100).
• Remove GST: Base = Amount divided by (1 + rate/100).
• Intra-state sale: the GST splits in half, so CGST = GST/2 and SGST = GST/2.
• Inter-state sale: the full GST shows as a single IGST line.

A quick worked example. Say you buy a washing machine for ₹30,000 before tax, at the 18% rate. The GST works out to ₹5,400, so the total is ₹35,400. Because it is a sale inside your own state, that ₹5,400 splits into ₹2,700 CGST and ₹2,700 SGST. If the seller were in another state, the same ₹5,400 would appear as one IGST line instead. Rather than do this by hand every time, our GST calculator handles both the add and remove directions and shows the CGST, SGST and IGST split for you.

What this means for small businesses

If you run a business, the slab changes are only half the story. The mechanics around them mostly stayed put, and they still matter day to day.

• Input tax credit still applies. You can offset the GST you pay on inputs against the GST you collect, so you are only paying tax on the value you add.
• Registration thresholds are unchanged. Most goods suppliers must register once turnover crosses ₹40 lakh, with a lower threshold for services and special-category states.
• Filing stays monthly or quarterly depending on your turnover and scheme, so check which return cycle you fall into.
• E-invoicing continues to apply above the notified turnover limit, and that is where a clean invoice format earns its keep.

For raising those invoices, our invoice generator builds a proper GST invoice with line items, the CGST and SGST or IGST split, and space for HSN or SAC codes, entirely in your browser with nothing uploaded. Pair it with the salary and tax calculator when you are working out income tax on the business profit at the end of the year.

GST 2.0 is a real simplification, and for once a tax change that left most everyday prices lower rather than higher. The four-slab clutter is gone, essentials got cheaper, and only luxury and sin goods climbed. If you ever need to settle the exact tax on a bill, the GST calculator does it in a second, and it never sends your numbers anywhere.

Tax rates can change with government notifications. Verify any rate against the official GST portal or a qualified chartered accountant before relying on it for a transaction.