The 12% and 28% GST slabs are gone. India now has three main rates: 5%, 18%, and 40%. Here is the complete updated list of GST rates effective from September 22, 2025.
On September 3, 2025, the 56th GST Council approved the biggest overhaul of India's indirect tax system since GST was introduced in 2017. Dubbed GST 2.0, the reform simplified the rate structure by abolishing the 12% and 28% slabs and introducing a new 40% luxury rate. The changes took effect on September 22, 2025.
Before GST 2.0, India had four main tax slabs: 5%, 12%, 18%, and 28% — plus a cess on certain items. This created confusion for businesses trying to classify products and frequent disputes about which slab applied. The new structure aims to fix this with just three primary rates.
This guide covers every change in detail — which items moved between slabs, the new 40% luxury category, what went to 0% (tax-free), and how this affects your GST invoicing and filing. We update this page as new notifications are issued. If you create GST invoices, bookmark this page and use our free GST calculator to verify rates for any product.
Before and after comparison of GST slabs
| Feature | Before GST 2.0 | After GST 2.0 |
|---|---|---|
| 0% (Exempt) | Essential food, healthcare | Expanded — now includes insurance, more food items |
| 5% (Merit Rate) | Essential goods | Expanded — includes items from old 12% slab |
| 12% (Standard) | Many consumer goods | ABOLISHED — items moved to 5% or 18% |
| 18% (Standard) | Services, consumer durables | Now the main rate — includes items from old 12% and 28% |
| 28% (Luxury + Sin) | Luxury goods, aerated drinks | ABOLISHED — items moved to 18% or 40% |
| 40% (New Luxury) | Did not exist | NEW — luxury and sin goods only |
| Cess | On top of 28% for some items | Continues on tobacco, pan masala at 40% base |
GST 2.0 expanded the list of exempt items significantly. These products and services now attract zero GST:
Food items moved to 0%: Roti, paratha, paneer, khakhra, UHT milk, certain packaged dal and rice, plain curd, and buttermilk. Previously some of these were at 5% when packaged and branded.
Insurance: Life insurance and health insurance premiums are now exempt from GST. This is one of the most impactful changes for consumers — previously both attracted 18% GST. Term insurance and family health plans are now tax-free.
Other exempt items: Exercise books and notebooks below Rs 50, hearing aids, certain agricultural implements, and sanitary napkins (already exempt, confirmed to remain so).
If you sell any of these items, update your product catalog in your billing software to reflect 0% GST. In myBillPlease, you can bulk-update GST rates for multiple products at once.
Many items moved from 12% down to 5% under GST 2.0
18% is now the standard rate for most goods and services. It absorbed items from both the old 12% and 28% slabs:
Items that moved UP from 12% to 18%: Processed food (frozen items, ready meals), furniture, office equipment, building materials (cement, tiles), and certain industrial inputs. The 12% slab no longer exists — everything in it moved to either 5% or 18%.
Items that moved DOWN from 28% to 18%: This is the bigger win for consumers. TVs above 32 inches, air conditioners, refrigerators, washing machines, dishwashers, and other white goods all dropped from 28% to 18%. This means a Rs 40,000 AC that previously cost Rs 51,200 with GST now costs Rs 47,200 — a saving of Rs 4,000.
Services at 18%: Most professional services remain at 18% — IT consulting, marketing, legal, accounting, design, and other B2B services. Telecom services, financial services, and hotel rooms between Rs 1,000 and Rs 7,500 per night are also at 18%.
Use the HSN code directory to find the exact rate for any product. Each HSN chapter page lists all codes with their applicable GST rates.
The most controversial change in GST 2.0 is the new 40% slab. It replaces the old 28% rate for luxury and sin goods, effectively increasing tax on these categories by 12 percentage points. Items in this slab include:
Tobacco products: Cigarettes, cigars, chewing tobacco, pan masala, and gutka. These already had cess on top of 28% — now the base rate itself is 40%.
Aerated and sugary beverages: Carbonated drinks, energy drinks, and sweetened beverages moved from 28% + cess to 40%. The government's rationale is public health — discouraging consumption of sugary drinks.
Luxury vehicles: High-end SUVs above Rs 20 lakh, sports bikes above 350cc, and luxury cars. Mid-range vehicles moved to 18%.
Other luxury items: Yachts, private jets, high-end watches above Rs 1 lakh, and premium cosmetics.
For businesses selling these items, the invoice amount changes significantly. Make sure your billing software reflects the new 40% rate. In myBillPlease, update the GST rate in your product catalog — it takes 2 clicks per product, or use CSV bulk update for large catalogs.
Industry-specific impact of the new rates
Good news — many FMCG products moved from 12% to 5%. Update product GST rates in your billing software. GSTR-1 and GSTR-3B will reflect new rates automatically for invoices created after Sep 22.
White goods (AC, fridge, washing machine) dropped from 28% to 18%. Update HSN codes and rates. Old stock sold after Sep 22 must use new rates regardless of when purchased.
Non-AC restaurants in non-star hotels remain at 5%. AC restaurants and star hotels remain at 18%. No change in restaurant GST rates under 2.0 — only the removed 12% slab affects catering services (now 18%).
Professional services remain at 18%. No rate change, but the simplified slab structure means fewer classification disputes. SAC codes unchanged.
Multiple product categories changed rates. Update your entire catalog. If you use myBillPlease with Shopify, update product GST rates in myBillPlease — Shopify invoices will use the new rates automatically.
Biggest impact — life and health insurance premiums moved from 18% to 0%. This reduces the cost of insurance for every Indian and was the most demanded change in GST 2.0.
If you create GST invoices, here is your action checklist after GST 2.0:
1. Update product GST rates. Go through your product catalog and update the GST percentage for items that changed slabs. In myBillPlease, open Products, click on each item, and change the GST rate. For large catalogs, export as CSV, update rates in Excel, and re-import.
2. Verify HSN codes. Some items may have new HSN classifications under the new slab structure. Use the HSN code directory to verify. Wrong HSN codes can trigger a penalty of Rs 50 per invoice (max Rs 25,000 per year) under Section 125 of the CGST Act.
3. Check your GSTR reports. After creating invoices with new rates, generate a test GSTR-1 report to verify the tax breakdowns are correct. The report should show the new rates for post-Sep 22 invoices and old rates for pre-Sep 22 invoices.
4. Inform your customers. If you sell B2B, your customers need to know about rate changes that affect their input tax credit. Send a notification about changed rates on your invoices.
5. Talk to your CA. Discuss how the transition affects your input tax credit balance, especially if you had accumulated credit at old rates. Your CA can advise on transitional provisions.
July 1, 2017: GST launched with 4 slabs — 5%, 12%, 18%, 28% plus cess. India's biggest tax reform replaces 17 central and state taxes.
2017-2024: Multiple rate revisions through GST Council meetings. Items frequently moved between slabs. The 12% and 28% slabs became increasingly problematic due to classification disputes.
September 3, 2025: The 56th GST Council, chaired by PM Modi, approves GST 2.0 reform. The 12% slab is abolished, 28% is abolished, and a new 40% luxury slab is introduced. This is the most significant restructuring since GST launch.
September 22, 2025: New rates take effect. All invoices from this date must use the new rates. Billing software providers rush to update their systems.
October-December 2025: Transition period. Businesses adjust catalogs and filing processes. Some classification ambiguities resolved through CBIC clarifications.
January 2026 onwards: New rate structure fully operational. Businesses report smoother compliance with fewer slab-related disputes. Government revenue from the 40% slab on luxury goods exceeds projections.
For the latest GST rate notifications and changes, check the official CBIC GST rates page. We update this article as new changes are announced.
myBillPlease makes it easy to update product rates after GST 2.0. Bulk update via CSV, auto-calculate new taxes, and generate compliant GSTR reports.
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