GST Rates Explained: Old vs New Slabs After the 2025 Reform
Last updated: 2 July 2026 · 8 min read
India overhauled its GST rate structure in the 56th GST Council meeting, with new rates taking effect on 22 September 2025. If you still think of GST as a five-slab system (5/12/18/28), this guide brings you up to date: the new structure is simpler, mostly two rates plus a demerit rate.
The new slab structure
From 22 September 2025, GST is organised around three main rates plus a nil category:
| Slab | Role | Examples |
|---|---|---|
| 0% (Nil) | Exempt essentials | Fresh produce, unbranded staples, printed books |
| 5% | Merit rate | Most food items, medicines, apparel |
| 18% | Standard rate | Electronics, small cars, cement, most services |
| 40% | Demerit rate | Aerated drinks, tobacco, pan masala, large/luxury vehicles |
The idea behind the reform was to reduce classification disputes and put more essentials into lower brackets while concentrating high taxation on a narrow set of luxury and sin goods.
How it compares to the old slabs
The previous system had 0%, 5%, 12%, 18% and 28% (plus compensation cess on some goods). The two middle-and-top slabs — 12% and 28% — were removed. This means fewer decisions about which bracket an item falls into, and for many households and businesses, a lower effective rate.
What moved where
As a rule of thumb:
- Most items that were at 12% moved down to 5%.
- Most items that were at 28% moved down to 18% — including many consumer durables such as televisions and air conditioners, and smaller vehicles.
- A narrow set of luxury and sin goods moved to the new 40% demerit rate — for example aerated/sweetened beverages, tobacco products, pan masala, and large or luxury vehicles.
Because the exact classification of a specific product can be nuanced, always confirm the current rate for your HSN code. Our GST rate finder and HSN finder give quick indicative answers.
Special rates
A few categories keep special treatment outside the main slabs. The most common one for retailers is gold, silver and jewellery, taxed at 3% (with a very low rate on rough diamonds). If you sell these, use a custom rate in the GST calculator or the line-item rate in the GST bill generator.
What it means for your invoices
Practically, you should: update the default rates in your billing software, re-check the rate on your fastest-moving items, and make sure any price lists that quoted GST-inclusive prices are recalculated. If you issue invoices spanning the transition date, apply the rate in force on the date of supply. Our generators default to the current slabs, so a fresh invoice will already reflect them.
FAQ
What are the current GST slabs in India?
0%, 5% and 18% as the main slabs, with a 40% demerit rate on luxury and sin goods. Gold and silver are at 3%.
What happened to 12% and 28%?
They were removed. Most 12% items moved to 5%; most 28% items moved to 18%; a narrow luxury/sin set moved to 40%.
When did the new rates start?
22 September 2025, following the 56th GST Council meeting.
Related tools & reading
Try the GST calculator, the GST rate finder, and read how to calculate GST and the GST invoice format.