GST Rates 2026: The New Slab Structure

GST rates 2026: the slab structure

From 22 September 2025, most goods and services fall into one of two main GST slabs, 5% or 18%. A separate 40% rate applies to sin and luxury goods. Exempt supplies continue to carry no GST. The table below summarises the structure in force as of October 2026.

Source: GST Council PIB release and PIB explainer, checked October 2026.

What changed with GST 2.0 on 22 September 2025?

The 56th GST Council meeting on 3 September 2025 approved a simpler structure. Items previously at 12% or 28% were moved into the remaining slabs, leaving 5% and 18% as the two main rates and 40% for a narrow set of sin and luxury goods. The change took effect on 22 September 2025.

For most businesses the visible effect was a rate change on some products and services they buy or sell. A trader who used to bill an item at 12% now bills it at either 5% or 18%, depending on where the Council placed that item. A buyer who used to pay 28% on a product may now pay 18%, or 40% if the item falls in the sin and luxury category.

The aim, as the Council presented it, was a simpler structure with fewer classification disputes. In practice, fewer slabs mean fewer arguments about whether an item sits in one rate band or the next, although the 5% and 18% boundary still needs care for products that could fit more than one HSN description.

We do not list item-wise rates on this page. The official rate notifications and the Council's own release are the only safe reference for a specific HSN or SAC code, and secondary rate lists often contain mistakes.

What happened to tobacco and pan masala?

Tobacco and pan masala were not moved to the new structure straight away. They continue at their old GST rate plus compensation cess until the loans taken to pay compensation cess to states are cleared. Any change to their treatment will come through a fresh notification, so there is nothing to change in your billing until then.

For wholesalers and retailers in this trade, this means invoices still show the old rate and the cess separately for now. Watch for a notification announcing the switch date, and update billing software on that date, not before.

Is GST charged on life and health insurance?

Individual life insurance and individual health insurance policies are exempt from GST under GST 2.0. Premiums on such policies no longer carry GST. This was one of the most widely noticed changes for salaried households.

The exemption is described for individual policies. If your business buys group insurance for staff, check the treatment of that specific policy with your insurer or CA rather than assuming the exemption applies. Individuals reviewing tax-saving options can see our income tax return filing page for the income tax side of insurance premiums.

How to find the correct GST rate for your product

Find your product's HSN code (or SAC code for services), then check that code in the current CBIC rate notifications or the GST Council release. Your supplier's invoice is a useful cross-check but not proof, because suppliers also make mistakes.

1. Identify the code: use the HSN or SAC code that describes your product or service, at the level of detail your turnover requires.
2. Check the official source: look up the code in the rate notifications on the CBIC website, not a third-party list.
3. Note the effective date: make sure the rate you find applies from 22 September 2025 onwards.
4. Record your reasoning: keep a note of the notification and entry number you relied on, in case of a query later.
5. Ask when unsure: classification disputes are common; a short written opinion from a CA costs less than a demand notice.

How do the new GST rates affect your business?

The new rates affect your invoices, your input tax credit, your pricing and sometimes your cash flow. Businesses that sell at 5% but buy inputs at 18% may now build up unused credit, which can lead to a refund claim under the inverted duty rules.

• Invoices: update tax rates in billing software for every changed item and confirm the change date was set correctly.
• Price lists and MRP: revise shelf prices and quotes so customers see the right tax.
• Contracts: long-term contracts priced as "plus GST" adjust automatically; fixed all-inclusive prices may need renegotiation.
• Input tax credit: watch whether credit is piling up month after month. If it is, read our GST refund page.
• Returns: reports in GSTR-1 must show the right rate for each invoice, because GSTR-3B liability is now locked to GSTR-1.

Delhi traders in wholesale markets and manufacturing clusters, such as the units around Wazirpur, felt the change most because they deal with many product lines at once.

Common mistakes after the GST rate change

The common mistakes are continuing to bill at a removed 12% or 28% rate, applying the new rate to invoices for supplies made before 22 September 2025 without checking the time of supply, and relying on unofficial rate lists for classification.

1. Old rates left in software: a single item master not updated keeps producing invoices at 12% or 28%.
2. Ignoring time of supply: advances, deliveries and invoices that straddle 22 September 2025 need a check of which rate applied.
3. Copying a competitor's rate: similar products can sit under different HSN codes with different rates.
4. Assuming tobacco moved: it did not, yet; old rate plus cess continues.
5. Not telling buyers: large B2B buyers reconcile against GSTR-2B and will query any rate they do not expect.

A monthly review by your accountant catches these early. Our GST return filing service and the GST due dates calendar help keep invoices and returns aligned. Khubchandani & Co. and Moneymji, both in our directory of CA firms in Delhi, handle GST compliance for small businesses.

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