GST Rates and Slabs in India
After the GST 2.0 reform, GST in India is charged at four main slabs: 0% (exempt), 5%, 18% and 40%, plus a special 3% rate on gold (and 0.25% on rough diamonds). This structure came into effect on 22 September 2025, replacing the earlier five-slab system and removing the old 12% and 28% rates. The idea stayed the same: essentials are taxed lightly, most goods and services sit at the standard 18%, and luxury or harmful goods sit at the top 40% slab. GST rates are set by the GST Council and can change, so confirm the current rate before billing.
The GST 2.0 change (what's new)
Until September 2025, GST had five slabs: 0%, 5%, 12%, 18% and 28%. The 56th GST Council meeting (3 September 2025) simplified this. From 22 September 2025:
- The 12% and 28% slabs were removed.
- Most 12% items moved to 5%, most 28% items moved to 18%.
- A new 40% slab was created for luxury and "sin" goods (this largely replaced the old 28% + compensation cess).
If you learned the old five slabs, update your memory: it's now 0, 5, 18 and 40.
The current GST slabs
| Slab | Typical items (examples) |
|---|---|
| 0% (exempt) | UHT milk, paneer, Indian breads (roti/paratha), many life-saving drugs, books and school supplies |
| 5% | Butter, ghee, cheese, packaged snacks (namkeen, chips), pasta and noodles, soap, shampoo, toothpaste, medical devices, tractors and farm equipment |
| 18% | Most goods and services: ACs, refrigerators, washing machines, TVs, laptops, mobile phones, cement, small cars, motorcycles up to 350cc, professional and IT services |
| 40% | Luxury and sin goods: tobacco and pan masala, aerated drinks, large cars, motorcycles above 350cc, yachts, casinos and online money gaming |
Item classification can change. Treat this table as a guide and confirm the current rate for a specific item on the official GST portal before invoicing.
Special rates
A few items sit outside the four main slabs:
- Gold and gold jewellery: 3% on the gold value (plus 5% on making charges when sold as jewellery).
- Rough diamonds: a very low special rate of 0.25%.
Worked example
You sell three items to a customer within your state:
| Item | Value | GST slab | GST amount |
|---|---|---|---|
| Soap | ₹100 | 5% | ₹5 |
| Laptop | ₹40,000 | 18% | ₹7,200 |
| Aerated drink (case) | ₹1,000 | 40% | ₹400 |
Because it's an intrastate sale, each GST amount splits into CGST + SGST (half each). For the laptop, that's ₹3,600 CGST + ₹3,600 SGST.
How to find the correct GST rate
- Identify the item's HSN code (for goods) or SAC code (for services).
- Look up that code's current rate on the official GST portal or the CBIC rate finder.
- Use that rate on your invoice.
Because rates changed recently, don't rely on old notes or memory. Check the code.
Pro tips
- Learn the slabs for the items you actually deal in; you don't need to memorise everything.
- Remember most items are now either 5% or 18% after GST 2.0.
- In Tally, set the correct rate on the stock item once, and every invoice uses it automatically.
Common mistakes
- Using the old 12% or 28% slabs. These were removed on 22 September 2025. Check whether your item is now 5% or 18%.
- Assuming one rate for everything. Each product can sit in a different slab.
- Ignoring HSN/SAC codes. These decide the rate and are needed on GST invoices and returns.
Key takeaways
- Current GST slabs are 0%, 5%, 18% and 40%, plus 3% on gold.
- GST 2.0 (from 22 September 2025) removed the 12% and 28% slabs.
- Most goods and services are now 5% or 18%; luxury/sin goods are 40%.
- Confirm the current rate by the item's HSN/SAC code on the official portal.
Practice task
Pick five products you see daily (a soap, a laptop, a restaurant bill, a bottle of cold drink, a bar of gold). Guess each one's current slab, then check the actual rate on the GST portal and see how many you got right under the new GST 2.0 structure.
Learn to apply the right GST rate on every invoice in Tally, in the ADFA program at HCI.
Frequently Asked Questions
What are the GST rate slabs in India in 2026?
After the GST 2.0 reform, the main slabs are 0% (exempt), 5%, 18% and 40%, plus a special 3% on gold. The earlier 12% and 28% slabs were removed on 22 September 2025.
What happened to the 12% and 28% GST slabs?
They were removed under GST 2.0 from 22 September 2025. Most 12% items moved to 5% and most 28% items moved to 18%, while luxury and sin goods moved to a new 40% slab.
Which items are taxed at 40% GST?
Luxury and sin goods such as tobacco, pan masala, aerated drinks, large cars, high-capacity motorcycles, yachts, casinos and online money gaming.
What is the GST rate on gold?
Gold is taxed at 3% on its value, with an additional 5% on making charges when sold as jewellery. Gold sits outside the main 5/18/40 slabs.
How do I find the GST rate for a product?
Identify the product's HSN code (or SAC for services) and look up its current rate on the official GST portal or CBIC rate finder, since rates changed under GST 2.0.