GST Rates in India 2026: List of Goods and Services Tax Slabs
India’s Goods & Services Tax (GST) went through its biggest overhaul since 2017 when the GST 2.0 rate rationalisation took effect on 22 September 2025. The reform, cleared by the 56th GST Council, collapsed a four-slab system into a leaner structure built around two main rates, 5% and 18%, along with a special 40% rate for luxury and sin goods and a wide band of nil-rated essentials. This guide explains the 2026 GST slabs, what moved where, common examples in each slab, and how to find the exact rate for any product or service.
From four slabs to a simpler structure
Before the reform, GST operated on four principal slabs, 5%, 12%, 18% and 28%, plus a compensation cess on select items. The 12% and 28% slabs were the pain points. They created classification disputes, inverted duty structures and confusion for small businesses. GST 2.0 removed the 12% and 28% slabs almost entirely and redistributed those items into either the lower 5% band or the standard 18% band.
The 2026 GST framework now rests on these rates:
- Nil (0%) – essential and unbranded food items, key medicines and social-sector goods.
- 5% – daily necessities, most food products and mass-use items.
- 18% – the standard rate for most goods and services.
- 40% – a special rate on select luxury and sin goods.
A 3% rate continues on gold, silver and jewellery, and 0.25% on rough diamonds, so the system is not literally two rates. But for everyday goods and services, most items now sit at 5% or 18%.
What moved where
The clearest way to understand GST 2.0 is to see how items shifted out of the discontinued 12% and 28% slabs.
| Old slab | Where it went | Examples |
|---|---|---|
| 12% | Mostly to 5% | Butter, ghee, cheese, packaged namkeen, condensed milk, tractors, spectacles, exercise books |
| 28% | Mostly to 18% | Air conditioners, televisions, dishwashers, small cars, cement, motorcycles up to 350cc |
| 28% + cess | To 40% | Luxury cars, big motorcycles, aerated drinks, tobacco products |
The effect for households was a visible reduction in tax on many appliances, food items and personal-care products, while luxury and sin consumption was pushed into the top band.
Nil-rated (0%) essentials
A broad list of essentials carries no GST so that basic consumption stays affordable.
| Category | Examples |
|---|---|
| Food staples | Fresh fruits and vegetables, unbranded flour (atta), rice, pulses, milk, eggs, curd |
| Health | Select life-saving drugs, certain medical items |
| Education | Printed books, slates, and specified educational supplies |
| Other | Fresh meat and fish, certain sanitary and social-sector goods |
Goods at 5%
The 5% slab covers mass-consumption items and daily necessities.
| Category | Examples |
|---|---|
| Food | Packaged paneer and dairy spreads, edible oils, packaged namkeen, sugar, tea, coffee |
| Household | Toothpaste, soap, hair oil, toiletries, kitchen utensils |
| Agriculture | Tractors, irrigation equipment, farm inputs |
| Health & education | Thermometers, glucometers, spectacles, pencils, exercise books |
Goods and services at 18%
18% is the workhorse standard rate. Most services and a large share of manufactured goods sit here.
| Category | Examples |
|---|---|
| Consumer durables | Air conditioners, televisions, refrigerators, dishwashers, washing machines |
| Vehicles | Small cars (petrol up to 1200cc / 4000mm), motorcycles up to 350cc |
| Construction | Cement, tiles, paints, hardware |
| Services | Professional and consulting services, telecom, financial services, works contracts, most restaurant and hospitality services (with conditions) |
Some services keep concessional or specific rates, for example certain transport, hotel tariff bands and job-work services, so services are not uniformly at 18%.
The special 40% rate on luxury and sin goods
The 40% rate is deliberately narrow. It targets goods the Council classifies as luxury or harmful, replacing the old 28% plus compensation cess arrangement for many of these items.
| Category | Examples |
|---|---|
| Tobacco & intoxicants | Cigarettes, cigars, pan masala, chewing tobacco, nicotine products |
| Beverages | Aerated, carbonated and caffeinated drinks, sugary non-alcoholic drinks |
| Luxury vehicles | Large cars above 4 metres with high engine capacity, motorcycles above 350cc, yachts, personal aircraft |
| Entertainment | Casinos, betting, race clubs and specified event admissions |
Note on tobacco: certain tobacco and pan masala products were transitioned in a phased manner. Until the Centre’s compensation-cess obligations were fully settled, some of these continued under the earlier rate plus cess before shifting to the 40% structure. Always check the latest notification for the product in question.
How to find the GST rate for a product or service
Every good and service has a classification code that fixes its rate. Rates are tied to these codes, not to loose product names, so identifying the code correctly is essential.
- Goods use HSN codes (Harmonised System of Nomenclature). An HSN code is 4, 6 or 8 digits and maps a product to its GST rate.
- Services use SAC codes (Services Accounting Code). SAC codes similarly map each service to its rate.
To find a rate, identify the correct HSN or SAC code for your item, then check the rate notified against that code. You can verify codes and rates on the official GST portal’s rate finder and in the CBIC rate notifications. When a product could fall under more than one heading, the specific description usually prevails over the general one, and professional advice helps avoid misclassification and interest or penalties.
Why this matters for your business
Getting the slab right affects invoicing, input tax credit, pricing and returns. Migrating to the GST 2.0 rates means updating your billing software, price lists and HSN/SAC masters, and re-checking contracts signed under the old slabs. If you are starting out or need to align your compliance with the new structure, our team can help you get your GST registration and rate mapping sorted so your invoices stay accurate from day one.
Frequently asked questions
When did the new GST slabs take effect?
The GST 2.0 rate rationalisation took effect on 22 September 2025, following the 56th GST Council decision. It removed the 12% and 28% slabs for most items and centred the system on 5% and 18%, with a special 40% rate and nil-rated essentials.
What are the main GST slabs in 2026?
The principal rates are nil (0%), 5% and 18%, plus a special 40% rate on select luxury and sin goods. Special rates such as 3% on gold and 0.25% on rough diamonds also continue, so the structure is simplified rather than literally two rates.
Which items are taxed at 40%?
The 40% band covers luxury and sin goods, including tobacco and pan masala, aerated and caffeinated drinks, large luxury cars and high-capacity motorcycles, yachts, personal aircraft, and activities like casinos and betting.
How do I find the GST rate for my product?
Identify the product’s HSN code (for goods) or SAC code (for services), then check the rate notified against that code on the official GST portal or CBIC notifications. Correct classification is key, as rates follow the code, not the product name.
Can these GST rates change again?
Yes. GST rates are set by the GST Council and revised from time to time through notifications. The rates and examples here reflect the position after the September 2025 reform; always confirm the current rate for your specific item before invoicing.
