GST Rates · GST 2.0 · 2026

GST rates in India — the 5%, 18% and 40% slabs.

A single-page reference for India's GST rates after the GST 2.0 reform — the three main slabs, what sits in each, the niche rates that survived, and exactly what changed when the 12% and 28% slabs were abolished on 22 September 2025.

Reviewed May 2026
6 min read
CA Anil Agarwal & the TatvaBooks team

What are the GST rates in India in 2026?

After the GST 2.0 reform (56th GST Council, effective 22 September 2025), India has three main GST slabs — 5%, 18% and 40% — plus a nil (0%) rate for essentials. Two niche rates survive: 3% on gold and 0.25% on rough diamonds. The old 12% and 28% slabs are abolished.

The GST slab table — FY 2026-27

The slab for any item depends on the HSN classification of the goods or the SAC classification of the service. After GST 2.0, the five-slab structure collapsed into two main rates plus a high rate for sin and luxury goods.

Rate	Typical coverage
0% (nil / exempt)	Unbranded food grains, fresh produce, milk, paneer and Indian breads, education, healthcare, individual life and health insurance, exports (zero-rated)
5%	Most daily-use and mass-consumption items — packaged foods, edible oils, life-saving drugs, garments and footwear up to ₹2,500, small cars and two-wheelers up to 350cc, budget hotel rooms (≤ ₹7,500/day), most goods that used to sit at 12%
18%	The standard rate — most services (IT, consulting, telecom, banking), most consumer durables and electronics, cement, footwear above ₹2,500, and the bulk of goods that used to sit at 28%
40%	Sin and luxury goods — pan masala, tobacco, aerated and caffeinated drinks, luxury and large motor vehicles, plus betting, casinos, lotteries, horse racing and online money gaming
3% / 0.25%	Gold and precious metals (3%), rough diamonds (0.25%) — niche rates that survived the reform

Petroleum products, alcohol for human consumption and electricity remain outside GST and continue under the old regime. Exports are zero-rated.

What sits at 5%, 18% and 40%

At 5% — the mass-consumption rate

The 5% slab is now the home for most daily-use items. The bulk of goods that used to sit at 12% moved here. Typical examples:

Packaged and processed foods, edible oils, namkeen, sauces
Life-saving drugs and most medicines
Garments and footwear with sale value up to ₹2,500
Small cars and two-wheelers up to 350cc
Budget hotel rooms at a tariff up to ₹7,500/day
Standalone restaurant meals (without input tax credit)
Bicycles, kitchenware, and many household goods

At 18% — the standard rate

18% is the default rate for services and the landing slab for roughly 90% of items that used to be taxed at 28%. Typical examples:

Most services — IT, consulting, telecom, banking, insurance (general)
Cement (moved down from 28%)
Air conditioners, televisions, refrigerators, washing machines
Mobile phones and most consumer electronics
Footwear priced above ₹2,500 per pair
Small cars within the size and engine limits
Hotel rooms at a tariff above ₹7,500/day (with input tax credit)

At 40% — sin and luxury

The 40% slab is a short list. It replaces the old 28% + heavy compensation cess that applied to these categories:

Pan masala and tobacco products
Aerated, caffeinated and sugar-sweetened drinks
Luxury and large motor vehicles, and SUVs over the size/engine thresholds
Betting, casinos, lotteries and horse racing
Online money gaming (on the full face value of the bet)

The right rate on every bill.

Map each item to its HSN/SAC once and TatvaBooks applies the current 5/18/40 slab for you — no stray 12% or 28% left in a rate master — and the GSTR-1 picks it up clean. Free on the Solo plan.

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What changed under GST 2.0

At its 56th meeting on 3 September 2025, the GST Council collapsed the old five-slab structure into a simpler one — often called GST 2.0 — with effect from 22 September 2025. The headline changes:

The 12% slab is abolished. Roughly 99% of old-12% items moved down to 5%; a small number moved to 18%.
The 28% slab is abolished. Roughly 90% of old-28% items moved down to 18%; only a short list of sin and luxury goods landed at the new 40% rate.
A new 40% rate consolidates the tax on sin and luxury goods, replacing the old 28% + compensation cess on those categories.
Compensation cess scrapped on virtually all goods. It survives only on tobacco and pan masala — and only until the Centre's compensation-cess loan obligations are discharged.
Individual life and health insurance moved to nil (exempt), down from 18%.

A practical consequence for your books: any rate master, item template or recurring invoice still carrying 12% or 28% needs re-mapping. An invoice dated on or after 22 September 2025 at those rates is wrong — and a wrong rate is the deepest hole to climb out of, because it flows straight into your GSTR-1.

The GST Council reviews rates periodically. Always confirm the rate against the latest CBIC notification before invoicing — particularly for borderline items where the 5% vs 18% classification is contested.

Frequently asked questions

Is GST 12% still applicable in 2026?

No. The 12% slab was abolished under GST 2.0 with effect from 22 September 2025. Roughly 99% of items that used to sit at 12% moved down to 5%, and a small number moved up to 18%. There is no 12% GST rate any more — if you still see it on an invoice dated on or after 22 September 2025, the rate is wrong.

Is the 28% GST slab still applicable?

No. The 28% slab was abolished too. Around 90% of items that used to be taxed at 28% moved down to 18% (cement, air conditioners, most consumer durables). A short list of sin and luxury goods — pan masala, tobacco, aerated drinks, luxury and large vehicles, betting and online money gaming — moved up to the new 40% rate instead.

What are the GST slabs in India in 2026?

Three main slabs — 5%, 18% and 40% — plus a nil (0%) rate for essentials. Two niche rates survive: 3% on gold and precious metals and 0.25% on rough diamonds. The earlier 12% and 28% slabs no longer exist. The slab for any item still depends on its HSN (goods) or SAC (services) classification.

What is the GST rate on cement?

18%. Cement was one of the headline items moved down from 28% to 18% under GST 2.0, effective 22 September 2025. This applies to ordinary Portland cement, Portland pozzolana cement and aluminous cement.

What is the GST rate on footwear?

It depends on price. Footwear with a sale value up to ₹2,500 per pair is taxed at 5%. Footwear priced above ₹2,500 per pair is taxed at 18%. The threshold is per pair, on the sale value, not per invoice.

What is the GST rate on hotel rooms?

Hotel rooms with a tariff up to ₹7,500 per day are taxed at 5% (without input tax credit on that supply). Rooms above ₹7,500 per day are taxed at 18% (with input tax credit). The slab is decided by the declared room tariff per day.

What is the GST rate on gold?

3% on the value of the gold, plus 5% GST on the making charges if billed separately. Gold, silver and other precious metals sit at the special 3% rate that survived the GST 2.0 reform; rough diamonds remain at 0.25%.

What is the GST rate on cars?

Small cars (petrol up to 1200cc / diesel up to 1500cc, within the length limit) are at 18% after GST 2.0. Larger and luxury vehicles, plus SUVs that cross the size and engine thresholds, sit in the 40% slab. The earlier 28% + compensation cess structure for cars has been replaced.

What is the GST rate on mobile phones and electronics?

18%. Mobile phones stay at 18%, and most consumer electronics and durables — televisions, air conditioners, refrigerators, washing machines — that earlier sat at 28% have moved down to 18% under GST 2.0.

What is the GST rate on restaurants?

5% without input tax credit for standalone restaurants and most eating-out. Restaurants located inside hotels where any room tariff exceeds ₹7,500 per day are taxed at 18% with input tax credit. Food delivered through e-commerce operators is taxed in the operator's hands.

Is there still a compensation cess on top of GST?

For almost all goods, no. The GST compensation cess has been scrapped as part of GST 2.0. It survives only on tobacco and pan masala for now — and only until the Centre's compensation-cess loan and interest obligations are discharged, after which those items move fully to the 40% GST rate.

How do I know which GST rate applies to my product?

The rate follows the HSN code (for goods) or SAC code (for services). Classify the item to its correct HSN/SAC, then read the rate against that code in the latest CBIC rate notification. For borderline items where the 5% vs 18% line is contested, confirm against the notification before invoicing.

For the full FY 2026-27 GST picture — registration thresholds, ITC rules, e-Invoice, RCM, returns and appeals — see the GST guide. To compute tax on a given value, use the GST calculator.

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The right rate, every time

GST that follows the HSN, not your memory.

TatvaBooks maps each item to its HSN/SAC and the current slab, so the 5/18/40 rate is applied for you — and GSTR-1 picks it up clean, with no stray 12% or 28% left behind.

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