What Are the Current GST Rates in India?
As of September 22, 2025, India's GST structure has been simplified to 0%, 5%, 18%, and 40%, replacing the earlier multi-slab system of 0%, 5%, 12%, 18%, and 28%.
The four current GST slabs are:
0% — Essential items (exempted)
5% — Merit rate (everyday essentials)
18% — Standard rate (most goods & services)
40% — Luxury & sin goods (new high rate)
This reform, called GST 2.0, is the biggest tax change since GST was introduced in 2017. It makes invoicing simpler and essentials cheaper.
If you're creating invoices, the GST rate you charge depends entirely on what you're selling. Get it wrong, and tax authorities will notice. Get it right, and your compliance is solid.
GST Rate Changes: Old vs. New (2025-2026)
The previous multi-slab structure (5%, 12%, 18%, 28%) has been simplified into 5%, 18%, and 40%, making essential goods more affordable and simplifying compliance.
Major rate reductions:
Toothpaste, soap: 18% → 5% (cheaper by 13%)
Edible oils: 12%/18% → 5% (much cheaper)
Roti, paneer: 5% → 0% (now free of GST)
Life insurance: 18% → 0% (completely exempt)
Small cars, ACs, TVs: 28% → 18% (major relief)
Major rate increases:
Luxury cars: 28% + cess → 40% (more expensive)
Aerated drinks, pan masala: 28% + cess → 40% (sin tax)
GST 0% — Nil-Rated & Exempt Items
Foods with Zero GST
Fresh milk (liquid, pasteurized)
Roti, paratha, chapati (Indian breads — reduced from 5%)
Pre-packaged paneer and UHT milk (reduced from 5%)
Fresh, unbranded eggs
Unbranded food grains (rice, wheat, pulses, lentils)
Healthcare & Medicine (0% GST)
33 life-saving drugs and cancer medicines
Individual health and life insurance (previously 18%)
Prescribed medical equipment
Education & Books (0% GST)
Notebooks, books, educational materials
Maps and educational stationery
Certain education services
Example: Buy ₹500 worth of fresh roti. Zero GST. You pay ₹500 flat.
GST 5% — Merit Rate (Everyday Essentials)
Which Foods Have 5% GST?
Packaged snacks (namkeen, bhujia, biscuits, chips)
Instant noodles, pasta, chocolates
Sugar, salt, spices
Edible oils (cooking oil, ghee, butter, cheese)
Cereals and cornflakes
Household & Personal Care (5% GST)
Services at 5% GST
Example: Buy toothpaste for ₹100.
This 5% rate is called the "Merit Rate" because it applies to items the government wants people to afford.
GST 18% — Standard Rate (Most Common)
18% is now the most common GST rate in India for goods and services that aren't essentials or luxury items.
Electronics & Appliances (18% GST)
Smartphones and mobile phones
Laptops, tablets, cameras
Air conditioners (reduced from 28%)
Refrigerators, washing machines, microwaves (reduced from 28%)
TVs (reduced from 28%)
Electric motorcycles and scooters
Cars & Vehicles (18% GST)
Food & Beverages (18% GST)
Branded packaged foods
Fruit juices and energy drinks
Non-alcoholic packaged drinks
Not aerated drinks (those are 40% now)
Services at 18% GST
Telecom services
Professional services (consulting, design, coding)
Rental and leasing services
Hotel rooms above ₹7,500 per night
Construction Materials (18% GST)
Cement
Steel and iron
Bricks and tiles
Construction equipment
Example: Buy a laptop for ₹50,000.
Base price: ₹50,000
GST (18%) = ₹9,000
Total = ₹59,000
GST 40% — Luxury & Sin Goods (New High Rate)
Sin goods such as pan masala, aerated and caffeinated beverages, and luxury vehicles face a steep GST rate of 40%.
This is the highest GST rate, introduced to discourage harmful consumption and maintain revenue.
Vehicles at 40% GST
Luxury cars (BMW, Mercedes, Audi, etc.)
High-performance motorcycles (above 350cc)
Personal-use aircraft
Yachts and premium transportation
Harmful & "Sin" Goods (40% GST)
Aerated soft drinks (Coke, Sprite, Fanta, etc.)
Caffeinated beverages (energy drinks)
Note: Tobacco & pan masala will move to 40% eventually, but currently stay at 28% + cess until compensation loan is settled
Gambling & Entertainment (40% GST)
Example: Buy a luxury car for ₹30 lakh.
Base price: ₹30 lakh
GST (40%) = ₹12 lakh
Total = ₹42 lakh
Special GST Rates: Gold & Precious Stones
3% GST applies to precious metals like gold, and 0.25% GST applies to rough diamonds and unworked precious stones.
Gold & Jewelry (3% GST)
Gold purchases (unchanged in 2025 reform)
Finished jewelry and imitation jewelry
Silver and other precious metals
Diamonds & Precious Stones (0.25% GST)
Rough diamonds
Unworked precious stones
Gemstones in raw form
These special rates protect India's jewelry and gemstone export sectors.
Complete GST Rate List by Category
| Category |
Items |
GST Rate |
| Essential Foods |
Milk, eggs, roti, grains |
0% |
| Basic Medicines |
Life-saving drugs |
0% |
| Insurance |
Health & life policies |
0% |
| Education |
Books, notebooks |
0% |
| Daily Essentials |
Toothpaste, soap, oil, packaged food |
5% |
| Footwear |
Shoes under ₹2,500 |
5% |
| Electronics |
Mobile, laptop, AC, fridge, TV |
18% |
| Vehicles |
Cars, bikes (under 350cc) |
18% |
| Services |
Professional, telecom, rental |
18% |
| Luxury Cars |
BMW, Mercedes, Audi |
40% |
| Sin Goods |
Aerated drinks, tobacco (soon) |
40% |
| Jewelry |
Gold, finished jewelry |
3% |
| Diamonds |
Rough diamonds |
0.25% |
How Does GST Split Between CGST, SGST, and IGST?
The 18% rate is the total GST, but it's split depending on whether the transaction is within the same state or across states.
Intra-State Transaction (Same State)
Total GST = CGST + SGST (50% + 50%)
Example: You (Maharashtra) invoice a client in Maharashtra, 18% rate:
Amount: ₹1,000
CGST (9%): ₹90
SGST (9%): ₹90
Total GST: ₹180
Invoice total: ₹1,180
Inter-State Transaction (Different States)
Total GST = IGST (100%)
Example: You (Maharashtra) invoice a client in Delhi, 18% rate:
Amount: ₹1,000
IGST (18%): ₹180
Total GST: ₹180
Invoice total: ₹1,180
The total GST collected is the same; it's just split differently depending on state boundaries.
How to Find the Right GST Rate for Your Product or Service
Not every item is obvious. Here's the step-by-step:
Step 1: Know Your HSN/SAC Code
Every good or service has a classification code. The GST rate depends on this code.
Example: Mobile phones = HSN 85171219 (18% GST)
Step 2: Check Official Sources
CBIC (Central Board of Indirect Taxes & Customs) website
GST Council notifications
Your Chartered Accountant (CA)
Step 3: When in Doubt, Use 18%
If you're genuinely unsure, 18% is the default/standard rate for most goods and services. But always verify with your CA before invoicing.
Step 4: Apply the Rate When Invoicing
When you create an invoice, you must show the correct GST rate. Using the wrong rate triggers compliance notices and penalties.
Tip: Use a tool that auto-applies GST rates based on product categories. You can create a free GST invoice at freeinvoicebill.com with updated rates built in. It calculates GST automatically — no guessing, no mistakes.
GST Rate Changes Summary: What's New in 2026?
| What Changed |
Old Rate |
New Rate |
Your Impact |
| Small cars, ACs |
28% |
18% |
✅ 10% cheaper |
| Toothpaste, soap |
18% |
5% |
✅ 13% cheaper |
| Edible oils |
12-18% |
5% |
✅ Much cheaper |
| Roti, paneer |
5% |
0% |
✅ Free |
| Life insurance |
18% |
0% |
✅ Free |
| Luxury cars |
28% + cess |
40% |
❌ More expensive |
| Aerated drinks |
28% + cess |
40% |
❌ More expensive |
FAQ: Common GST Rate Questions
Q: What is the highest GST rate in India?
A: 40% — applied to luxury cars, aerated drinks, and gambling services. This is the new high rate introduced in GST 2.0.
Q: Is there a 12% GST rate anymore?
A: No. The 12% slab was eliminated in the September 2025 reform. Items that were 12% moved to either 5% or 18%.
Q: What's the lowest GST rate?
A: 0.25% — for rough diamonds and unworked precious stones. But for practical purposes, 0% (exempt items) is the lowest.
Q: How much GST on mobile phones?
A: 18% GST on all mobile phones (smartphone, feature phone, etc.). HSN code: 85171219.
Q: How much GST on clothes/apparel?
A: Most clothing: 5% GST. Specialty items and high-end apparel may vary. Check HSN code for your specific product.
Q: How much GST on cement?
A: 18% GST on cement (construction material).
Q: How much GST on hotel rooms?
A:
Rooms < ₹7,500 per night: 5% GST
Rooms > ₹7,500 per night: 18% GST
5-star luxury hotels often charge 18%
Q: How much GST on restaurant food?
A: 5-18% depending on restaurant type and tariff. Most restaurants charge 5% for regular dine-in, 18% for premium/fine dining.
Q: Do all products charge GST?
A: No. Some items are exempt (0% GST) like fresh milk, eggs, education, healthcare. Alcohol and petroleum products are outside GST (still taxed separately).
Q: Can GST rates change in 2026?
A: Yes. The GST Council meets periodically and can revise rates. Stay updated on official notifications.
Q: What if I invoice with the wrong GST rate?
A: Tax authorities will issue a notice, demand payment + penalty, and possibly audit your business. Always verify rates before invoicing.
How to Create Compliant GST Invoices with Correct Rates
Getting GST rates right matters for three reasons:
Legal compliance — Wrong rates trigger penalties
Accurate tax filings — Your GSTR returns depend on correct rates
Customer trust — Transparent, correct invoices build credibility
When creating invoices, ensure:
✅ Correct product/service description
✅ Correct HSN/SAC code
✅ Correct GST rate (0%, 5%, 18%, or 40%)
✅ Correct split (CGST+SGST for intra-state, IGST for inter-state)
✅ Accurate tax calculation (no rounding errors)
You can create a free GST invoice at freeinvoicebill.com — it has all 2026 GST rates pre-built. Select your product category, and it auto-applies the correct rate. Download as PDF and send to clients. No login required.
Key Takeaways
India now has 4 main GST rates: 0%, 5%, 18%, 40%
The new system (GST 2.0) simplified the old 5-slab structure
Most everyday items are now 5% (essentials) or 18% (standard)
Luxury and sin goods are 40% (to discourage harmful consumption)
Always verify rates using HSN/SAC codes — don't guess
When invoicing, use tools that auto-apply correct rates to avoid errors
The 0% rate applies to truly essential items like fresh milk, bread, and medicine
Stay updated on GST Council announcements — rates can change. And always double-check your invoices before sending them to clients.
