GST Rates 2026: The New 5%, 18% & 40% Slabs Explained (GST 2.0)

Last updated: 27 June 2026 · Reviewed against the 56th GST Council decisions and CBIC rate notifications.

India's GST now runs on four main rates — Nil, 5%, 18% and 40% — after the "GST 2.0" reform that took effect on 22 September 2025. The earlier 12% and 28% slabs were abolished. Most everyday goods moved to 5%, most standard goods and services sit at 18%, and a small set of luxury and "sin" items (tobacco, pan masala, aerated drinks, large cars) moved to a new top rate of 40%. A few special rates remain — 3% on gold and silver, 0.25% on rough diamonds.

Key takeaways

• Four main slabs: 0% (Nil), 5%, 18%, 40%. The 12% and 28% slabs no longer exist.
• Effective date: 22 September 2025, following the 56th GST Council meeting (3 September 2025).
• Most goods got cheaper: common items that were 12% mostly dropped to 5%; many 28% goods (TVs, ACs, small cars, cement) dropped to 18%.
• New 40% slab applies only to a defined list of luxury/sin goods.
• Special rates kept: 3% (gold, silver, jewellery), 0.25% (rough diamonds), 1.5% (diamond job work).
• If your invoices or accounting software still use 12%/28%, they are out of date and will mis-state your tax.

Fact box. As of 22 September 2025, India's GST has four primary rate slabs — Nil, 5%, 18% and 40% — replacing the previous five-rate structure of 0%, 5%, 12%, 18% and 28%. (Source: 56th GST Council; CBIC rate notifications, September 2025.)

What changed in GST 2.0?

GST 2.0 is the popular name for the rate-rationalisation reform approved at the 56th GST Council meeting on 3 September 2025 and implemented through CBIC notifications from 22 September 2025. It collapsed the old five-rate system into a simpler structure:

The goal was to cut classification disputes, make essentials cheaper, and put a single, clearly defined high rate on luxury and "sin" goods instead of "28% + cess."

What are the GST slabs in 2026?

There are four main GST slabs in 2026 — Nil, 5%, 18% and 40% — plus a few special rates for precious metals and stones. Here is how to read them:

0% (Nil-rated / exempt)

Unbranded and unpacked food staples, fresh produce, and many essential and social-sector items. Several daily-use and health/education items were moved to Nil in the 2025 reform.

5% (merit rate — essentials & mass-use goods)

Packaged food staples, most household essentials, and many items that were previously 12%. This slab is meant to keep mass-consumption goods affordable.

18% (standard rate — most goods & services)

The default rate for the majority of goods and services, including most that were earlier at 28% (such as televisions, air-conditioners, small cars and cement). If an item isn't specifically listed elsewhere, assume 18%.

40% (de-merit / sin & luxury rate)

A defined list only — including tobacco products, pan masala, aerated/sugary drinks, and high-end vehicles. This replaces the old "28% + compensation cess" treatment for these categories.

Fact box. Most goods that previously attracted 28% GST now attract 18%, while a specific list of luxury and "sin" goods attracts the new 40% rate. The 40% slab is not a general high rate — it applies only to notified items.

Special rates (unchanged in principle)

⚠️ Verify before relying on this for filing. GST rates are item-specific and change by notification. Always confirm the exact rate for your HSN/SAC code on the official CBIC GST rate finder before invoicing. (The tobacco/pan-masala transition date was being finalised separately — check current status.)

How do the new slabs affect my invoices?

If your business buys or sells goods that moved between slabs, three things must change on every invoice from 22 September 2025:

1. The GST rate shown per line item (e.g. an item billed at 12% must now be billed at 5% or 18%, depending on its new classification).
2. The tax split — CGST + SGST for intra-state sales, or IGST for inter-state — recalculated on the new rate.
3. Your accounting and return data, so GSTR-1 and GSTR-3B report the correct rate-wise totals.

Using an outdated rate doesn't just over- or under-charge your customer — it creates a mismatch that can block your buyer's Input Tax Credit and trigger notices.

How Ankeshan handles this: Ankeshan keeps a server-updated GST rate table. When the government changes a rate, your invoices and returns pick up the correct slab automatically — you don't reissue invoices on the wrong rate. (Ankeshan is launching soon — join the waitlist.)

Do the GST return forms or due dates change with GST 2.0?

No — GST 2.0 changed the rate slabs, not the return forms or due dates. You still file the same returns:

• GSTR-1 (outward supplies) — by the 11th of the next month for monthly filers.
• GSTR-3B (summary + tax payment) — by the 20th for monthly filers.
• QRMP scheme (turnover up to ₹5 crore) — quarterly GSTR-1 (13th) and GSTR-3B (22nd/24th by state), with monthly tax via PMT-06 (25th).
• GSTR-9 / 9C (annual) — by 31 December following the financial year.

What did tighten alongside the rate reform is input-tax-credit control — the Invoice Management System (IMS) and the locking of GSTR-3B fields — covered in our GST returns guide and Compliance Calendar 2026-27.

Quick reference: GST 2026 at a glance

Frequently asked questions

Is the 12% GST slab still applicable in 2026? No. The 12% slab was abolished on 22 September 2025. Items that were 12% were moved to either 5% or 18%.

Is there still a 28% GST slab? No. The 28% slab was removed. Most former 28% goods are now 18%; a defined list of luxury and sin goods moved to the new 40% slab.

What is the highest GST rate in India in 2026? The highest main GST rate is 40%, which applies only to a notified list of luxury and "sin" goods such as tobacco, pan masala and aerated drinks. (Gold is taxed at a special 3% rate.)

When did the new GST rates take effect? 22 September 2025, following the 56th GST Council meeting held on 3 September 2025.

Do I need to reissue old invoices? No — invoices issued before 22 September 2025 stand on the old rates. From that date onward, bill at the new rates. Update your invoicing and accounting tools so they don't keep using 12% or 28%.

Where do I check the exact rate for my product? Use the official CBIC GST rate finder and confirm by your item's HSN/SAC code, since rates are item-specific.

Sources

• 56th GST Council Meeting decisions (3 September 2025) and Ministry of Finance / PIB press releases.
• CBIC GST rate notifications, effective 22 September 2025.
• CBIC GST portal: rate finder and return due dates — cbic-gst.gov.in, gst.gov.in.

This article is general information, not tax advice. Rates are item-specific and change by notification — verify against CBIC before filing. Reviewed by a Chartered Accountant; last updated 27 June 2026.

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