GST Rates in India 2026-27: New Tax Slabs, Item-Wise List & GST 2.0 Changes

Introduction

Last updated: Reflects the 56th GST Council Meeting decisions and revised rates effective from 22 September 2025

The 56th GST Council meeting rewrote the rate book. From 22 September 2025, India runs on a much simpler structure: 5%, 18%, and 40%, with a 0% slab for essentials. The old 12% and 28% slabs? Gone.

This guide walks you through everything that changed – the rate cuts, the rate hikes, the full item-wise tables for each slab, an HSN chapter quick-reference, and a plain-English summary of the official notifications. Whether you’re an SMB owner updating your billing system, an accountant preparing GSTR-1, or a consumer wondering why prices shifted, this is your one-stop reference.

Quick Snapshot: What Changed in GST 2.0

If you only have 30 seconds, here’s the list:

Aspect	Before 22 Sept 2025	After 22 Sept 2025
Number of main slabs	5 (0%, 5%, 12%, 18%, 28%)	3 (5%, 18%, 40%) plus 0% nil-rated
Health & life insurance (individual)	18%	Nil (Exempt)
Small cars, two-wheelers ≤350cc	28% + cess	18%
ACs, large TVs, dishwashers	28%	18%
Hair oil, shampoo, soap, toothpaste	18%	5%
Butter, ghee, paneer, packaged namkeen	12%	5%
33 life-saving drugs	12%	Nil
Notebooks, pencils, maps, crayons	12%	Nil
Pan masala, large cars, aerated drinks	28% (+ cess)	40%
Coal, lignite, peat	5%	18%

What is a GST Rate, Really?

A GST rate is just the percentage of tax added on top of the value of any taxable supply of goods or services in India. Simple enough – but it shows up on your invoice in three different forms depending on the transaction:

• CGST (Central GST) – half the rate, goes to the Centre on intra-state sales
• SGST (State GST) – the other half, goes to the State on intra-state sales
• IGST (Integrated GST) – the full rate, applied on inter-state sales and imports

Here’s a quick example. You sell goods worth ₹10,000 in an intra-state sale at 18%. Your invoice will show ₹900 CGST + ₹900 SGST = ₹1,800 GST. For an inter-state sale of the same goods, you’d charge ₹1,800 IGST instead.

Why does the rate matter so much for your business? Because it directly decides:

• The selling price your customer ends up paying
• The input tax credit (ITC) you can claim on purchases
• Your GST liability when you file GSTR-1 and GSTR-3B
• Your competitive position vs others selling the same category

Get the rate wrong, and the consequences ripple across every invoice and every return.

The New GST Rate Structure in India

After the 56th Council meeting, the GST world looks a lot cleaner. Think of it as four buckets:

Slab	What It Covers	Examples
0% (Nil-rated)	Essentials, life-saving drugs, individual insurance, education materials	Fresh fruits, vegetables, milk, paneer, bread, exercise books, pencils, sanitary napkins
3%	Gold, silver, platinum, jewellery, imitation jewellery	Gold biscuits, gold/silver ornaments, coins
0.25%	Rough diamonds and unstrung precious/semi-precious stones	Uncut diamonds, raw rubies, sapphires
5%	Mass-market essentials and key inputs	Edible oils, packaged namkeen, butter, ghee, footwear ≤₹2,500, fertilizers, tractors
18%	Standard rate for most goods and services	Mobiles, ACs, cement, IT services, small cars, motorcycles ≤350cc
40%	Sin goods and luxury goods	Aerated drinks, large luxury cars, motorcycles >350cc, yachts, betting, casinos
28% (residual)	Pan masala and tobacco (until cess obligations clear)	Pan masala, cigarettes, bidis

A few special rates continue alongside this:

• Composition Scheme: 1% (traders & manufacturers), 5% (restaurants), 6% (specified service providers) on turnover
• TDS under GST: 2%
• TCS under GST: 0.5% (revised from 1% w.e.f. 9 July 2024)

What the 56th GST Council Actually Decided

This wasn’t a small tweak – it was the most significant rate restructuring since GST began in 2017. The headline decisions:

• The 12% slab was scrapped. Items either moved down to 5% or up to 18%.
• The 28% slab was largely scrapped. Most items moved to 18%; sin and luxury items moved to a new 40% rate.
• Individual health and life insurance were exempted from GST (down from 18%).
• 33 life-saving drugs went from 12% to nil GST.
• School supplies like notebooks, pencils, crayons, maps, globes, and erasers moved to nil.
• A revamped service-rate notification clubbed several services into the 18% rate.
• New provisional refund rules and a refreshed appeals mechanism were introduced via the CGST Third Amendment Rules, 2025.

These changes came through Notifications 09/2025-CTR to 17/2025-CTR dated 17 September 2025, taking effect 22 September 2025. The tobacco and pan masala move to 40% has been deferred until compensation cess obligations are settled.

What Got Cheaper from 22 September 2025

This is the part most consumers and businesses care about. Here’s the full picture, broken down by sector.

Daily-Use & FMCG Essentials

The biggest household-level wins are here.

FMCG Items	Old Rate	New Rate
Hair oil, shampoo, toothpaste, toilet soap, toothbrushes, shaving cream	18%	5%
Butter, ghee, cheese, dairy spreads	12%	5%
Pre-packaged namkeen, bhujia, mixtures	12%	5%
Kitchen utensils	12%	5%
Feeding bottles, baby napkins, clinical diapers	12%	5%
Sewing machines & parts	12%	5%

Agriculture & Farm Inputs

A clear push to make farming inputs more affordable.

Agriculture Items	Old Rate	New Rate
Tractor tyres & parts	18%	5%
Tractors	12%	5%
12 specified bio-pesticides & micro-nutrients	12%	5%
Drip irrigation & sprinkler systems	12%	5%
Agricultural / horticultural / forestry machines	12%	5%

Healthcare & Medical

Easily the most socially impactful set of changes.

Healthcare Items	Old Rate	New Rate
Individual health & life insurance	18%	Nil
Thermometers	18%	5%
Medical-grade oxygen	12%	5%
Diagnostic kits & reagents	12%	5%
Glucometers & test strips	12%	5%
Corrective spectacles	12%	5%
33 specified life-saving drugs	12%	Nil
Agalsidase Beta, Imiglucerase, Eptacog alfa	5%	Nil
Faricimab, Pertuzumab, Ocrelizumab, Brentuximab Vedotin	12%	5%

Automobiles

Small-car buyers and two-wheeler riders win big here.

Automobile Items	Old Rate	New Rate
Petrol, petrol-hybrid, LPG, CNG cars (≤1200 cc, ≤4000 mm)	28% (+ cess)	18%
Diesel & diesel-hybrid cars (≤1500 cc, ≤4000 mm)	28% (+ cess)	18%
Three-wheelers	28%	18%
Motorcycles ≤350 cc	28%	18%
Goods transport vehicles	28%	18%

Education Supplies

Back-to-school just got cheaper.

Education Supplies Items	Old Rate	New Rate
Maps, charts, globes	12%	Nil
Pencils, sharpeners, crayons, pastels	12%	Nil
Exercise books & notebooks	12%	Nil
Erasers	5%	Nil

Electronics & Home Appliances

Festive-season shopping looks far more attractive now.

Electronics Items	Old Rate	New Rate
Air conditioners	28%	18%
Televisions above 32″ (LED & LCD)	28%	18%
Monitors & projectors	28%	18%
Dishwashers	28%	18%

What Got Costlier

The flip side – sin goods, luxury items, and a few inputs went up.

Sin Goods & Luxury Items (Now 40%)

Luxury Items	Old Rate	New Rate
Tobacco & pan masala*	28%	40%
Aerated waters & soft drinks	28%	40%
Caffeinated beverages	28%	40%
Carbonated fruit drinks / fruit-juice drinks	28%	40%
Other non-alcoholic beverages	18%	40%
Large cars & big hybrids (above small-car limits)	28% (+ cess)	40%
Motorcycles >350 cc	28%	40%
Aircraft for personal use	28%	40%
Yachts and pleasure/sports vessels	28%	40%
Smoking pipes, cigar/cigarette holders	28%	40%
Revolvers & pistols	28%	40%
Casinos, race clubs, IPL & sports event tickets	28% (with ITC)	40% (with ITC)
Online money gaming, betting, lottery, gambling	28% (with ITC)	40% (with ITC)

*Tobacco and pan masala move to 40% on a date to be notified later – once the compensation-cess loan obligations have been discharged.

Other Hikes

Other Items	Old Rate	New Rate
Coal, lignite, peat	5%	18%
Apparel & made-ups above ₹2,500 per piece	12%	18%
Quilted/cotton quilts above ₹2,500 per piece	12%	18%
Dissolving-grade chemical wood pulp	12%	18%
Most paper & paperboard (other than exercise-book paper)	12%	18%

Items at 0% GST (Nil-Rated / Exempt)

If you sell any of these, you don’t charge GST – but you also can’t claim ITC on inputs related to them, so plan accordingly.

Exempt Item Type	What’s Included
Fresh produce	Fresh and unprocessed vegetables, fruits, nuts (coconut, almond, cashew in shell), ginger, turmeric, tender coconut water (loose), prasadam
Dairy & eggs	Fresh milk (pasteurised, UHT), curd, lassi, buttermilk (loose), paneer/chena, fresh eggs, loose honey
Grains & staples	Loose rice, wheat, millets, maize, oats, barley, sorghum, atta, besan; loose puffed/beaten rice, pappad, bread, roti, chapati, paratha, khakhra
Water & natural beverages	Plain non-aerated water, neera (date/palm)
Animal products	Live animals, fresh/chilled meat, fresh fish, fish & shrimp seeds, frozen semen, animal bones (untreated), human hair (raw)
Animal feed & plant materials	Aquatic, poultry, cattle feed; husks; dicalcium phosphate (feed grade); medicinal plants; fresh hop cones; coconut shell; lac; shellac
Textiles & fibre	Silkworm cocoons, raw silk, silk waste, khadi fabric (KVIC), wool, raw animal hair, jute fibres, coir fibre/pith (unbranded), cotton waste, Gandhi Topi, khadi yarn
Personal care (traditional)	Kajal, kumkum, bindi, sindur, alta
Handcrafted items	Earthen pots, clay lamps & idols, glass bangles, hand tools (agricultural), pencil sharpeners, brooms (sarkanda), pencils, crayons, chalks, slate pencils, indigenous handmade musical instruments, sal/sisal leaves
Stationery & printed material	Printed/Braille books, newspapers, maps, globes, children’s picture books, printed music, postal items, exercise books, notebooks, pencils, rupee notes, judicial stamps
Healthcare	Drugs in Annexure I list (33 life-saving drugs), blood & components, contraceptives, condoms, hearing aids & parts, sanitary napkins/tampons
Insurance	Individual health insurance, individual life insurance
Religious / cultural	Indian national flag, salt (table, sea-water, sodium chloride), puja samagri (rudraksha, sacred thread, panchamrit, vibhuti, roli, kalava), rakhi (non-precious), deities (stone, marble, wood)
Miscellaneous	Electrical energy, uranium ore concentrate, government-to-government grant goods, spacecraft & satellites, firewood, charcoal, plastic/lac/shellac bangles, erasers, passenger baggage, municipal/clinical waste

Items at 5% GST

The 5% slab is the new workhorse rate – covering everyday essentials and key business inputs.

Goods Classification	What’s Included
Processed foods	Dried herbs, jaribooti, dried fruits, raisins, roasted coffee, processed tea, spices (pepper, cardamom, cinnamon, cloves, saffron, vanilla), preserved fruits & vegetables, jams, jellies, marmalades, sauces, soups, ice cream, sweetmeats, pre-packaged namkeen/bhujia, batters, chutney powder, diabetic foods
Dairy & fats	Condensed milk, sweetened yoghurt, whey, butter, ghee, dairy spreads, cheese (other than paneer), packaged honey, animal fats, wool grease, lanolin
Edible oils	Soyabean, groundnut, olive, palm, sunflower, coconut, mustard/rape, jojoba; hydrogenated and modified oils; margarine; edible blends; vegetable waxes
Pre-packaged meat & fish	Pre-packaged meat & fish products, sausages, preserved meats, caviar, prepared crustaceans & molluscs
Sugar & confectionery	Cane/beet sugar, refined sugar, jaggery, packaged khandsari, rab, mishri, gajak, molasses, sugar syrups, boiled candies, cocoa, chocolate
Cereal products	Pre-packaged millet flour (≥70%), bread/pastry mixes, doughs, seviyyan, pasta, noodles, sabudana, corn flakes, cakes, biscuits, rusks, packaged cereals
Beverages	Mineral water (unsweetened), plant-based milk drinks, soya milk, fruit juices/pulp drinks (non-carbonated), milk-based beverages, ethyl alcohol for OMC blending
Apparel & footwear (≤₹2,500)	Knitted/non-knitted apparel ≤₹2,500/piece, made-up textile sets ≤₹2,500, footwear ≤₹2,500/pair, caps, hats, umbrellas, walking sticks
Textiles	Silk, wool, cotton, plant-fibre, manmade yarns and fabrics; carpets, rugs, embroidery, lace, zari, technical textiles
Metal household items	Metal boxes, utensils, milk cans, nails, sewing needles, kerosene stoves, solar cookers, household items in iron/steel/copper/aluminium/brass, bidriware
Stone & ceramic items	Sand-lime bricks, stone inlay craft, stone statues/vases; ceramic and porcelain pots, jars, tableware, kitchenware
Minerals (raw)	Iron pyrites, sulphur, graphite, quartz, clays, phosphates, gypsum, mica, talc, feldspar, ores, slag, fly ash
Renewable energy & fuel	Bio-gas, coke & semi-coke, PDS kerosene, bunker fuel, LPG (domestic), hydrogen and fuel-cell vehicles, EV chargers, biofuels
Pharma & medical	Insulin, drugs & vaccines, ORS, diagnostic kits, glucometers, thermometers, corrective spectacles, dressings, sutures, stents, dialysis units, X-ray machines, surgical instruments, prosthetic aids, Ayurvedic & Unani medicines
Agricultural equipment	Tractors, tractor tyres & parts, pumps, sprinklers, drip irrigation, harvesting tools, beekeeping & poultry gear, biogas plants, photovoltaic cells, solar/wind energy units
Transport	Aircraft, helicopters, spacecraft, ships, bicycles, tricycles, tractors, trailers, non-motorised vehicles
Furniture	Bamboo, cane, rattan furniture; coir products; quilts ≤₹2,500; lanterns, lamps
Toys & sports	Toy balloons, tricycles, scooters, pedal cars, chess, carrom, ludo, board games, sports goods, fishing tackle
Art & antiques	Paintings, mosaics, original prints, sculptures, stamps, antiques (>100 years)
Personal care	Hair oil, shampoo, toothpaste, toilet soap, shaving cream, toothbrushes, talcum, face powder
Bio inputs	Bio-pesticides (Bacillus, Trichoderma, neem-based), silicon wafers, biodiesel, fertilisers, agarbatti, natural glues
Wood & paper	Particle boards, bamboo flooring, barrels, baskets, wooden idols, cork, pulp, newsprint, cartons, kites, brochures
Tobacco (raw)	Tobacco leaves
Religious items	Rosaries, prayer beads, hawan samagri, biofuel pellets

Items at 18% GST

This is the standard rate – anything that isn’t an essential, sin good, or luxury item generally lands here.

Goods Classification	What’s Included
Premium apparel & footwear (>₹2,500)	Apparel/made-ups >₹2,500/piece, waterproof footwear, footwear with rubber/plastic/leather/textile uppers (>₹2,500/pair), flexible bulk containers
Headgear & accessories	Hat forms, felt hoods, knitted/crocheted/lace caps, headbands, peaks, chinstraps
Hair & wig items	Artificial flowers, prepared wool/animal hair for wigs, wigs, false eyelashes, hair switches
Iron & steel basics	Pig iron, ferro-alloys, semi-finished metal products, ingots, scrap, granules, powders
Rolled metal products	Flat-rolled iron/steel, bars, rods, wires of stainless steel/copper/aluminium
Pipes & fittings	Tubes, pipes, hollow profiles, couplings, elbows, sleeves of base metals
Structural items	Sheet piling, track materials, bridges, towers, frameworks, large tanks, gas cylinders
Wires & cables	Stranded wire, ropes, plaited bands, barbed wire, fencing, expanded metal
Fasteners	Chains, nails, screws, bolts, nuts, rivets, washers, springs, anchors
Hand tools & cutlery	Saws, files, pliers, wrenches, anvils, dies, knives, blades, scissors, razors, hair clippers, manicure sets, spoons, forks
Household appliances	Air conditioners, televisions >32″ (LED/LCD), monitors, projectors, dishwashers, stoves, cookers, barbecues, radiators, sanitary ware (cast iron)
Hardware & fittings	Locks, padlocks, keys, hinges, door closers, safes, filing cabinets, name plates, electrodes
Paints & dyes	Dyes, pigments, paints, varnishes, printing inks, writing inks, pesticides (non-bio), thinners, lubricants, fragrances, biodiesel (non-OMC)
Cosmetics & detergents	Perfumes, deodorants, beauty creams, skincare products, detergents, polishes, dental wax (other than basic toilet soap & oral care now at 5%)
Casein & enzymes	Casein, protein derivatives, glues, enzymes, peptones, culture media, albumins, whey proteins for industrial use
Industrial ceramics	Refractory bricks, nozzles, crucibles, lab ware (siliceous, alumina-based)
Building ceramics	Tiles, chimney pots, conduits, paving blocks, hearth and wall coverings
Sanitary ceramics	Sinks, basins, baths, urinals, bidets
Stone & aggregates	Building stones, decorative stones, mosaic cubes, slates, millstones, abrasives
Insulation & composites	Rock wool, expanded clays, asphalt/bitumen, plaster panels, fibre-cement boards
Cement & concrete	Cement and concrete articles, asbestos-cement goods, friction materials
Electrical machines	Motors, generators, transformers, electromagnets, batteries (primary & storage)
Industrial appliances	Vacuum cleaners, heaters, ignitions, lighting, welding machines, ovens
Audio/visual	Cameras, recorders, microphones, speakers, transmitters, radars, CCTV, alarms
Electronics & semiconductors	Switches, fuses, lamps, semiconductors, integrated circuits, LEDs, wires, insulators, e-waste
Explosives	Propellant powders, detonators, fireworks, pyrotechnics, lighter fuels
Spirits & vinegar	Artificial honey, ethyl alcohol (non-OMC), industrial spirits, vinegar
Petroleum products	Coal, lignite, petroleum oils, tar, gasoline, propane, butane, waxes, bitumen
Chemicals	Most inorganic and organic chemicals (other than gibberellic acid and natural menthol)
Glass	Sheets, rods, tubes, safety glass, mosaics, bottles, jars, lamp bulbs, mirrors, optical glass, lenses, watch glass, decorative & lab glassware
Furniture	Residential, medical, industrial furniture; bedding; lighting fixtures; prefab buildings
Electronic toys	Consoles, gaming machines, fairground equipment, exercise equipment
Stationery	Pens, brushes, mops, markers, stamps, ink pads, office sets
Industrial machinery	Engines, turbines, reactors, boilers, pumps, compressors, refrigeration, conveyors, CNC tools, vending machines, data-processing machines, bearings, gears, gaskets
Leather goods	Travel bags, wallets, purses, holsters, leather clothing, gloves, belts
Furs	Raw, tanned, dressed furs; fur apparel; artificial fur
Mineral ores	Ores of iron, manganese, copper, aluminium, zinc, lead; cement, slags, dross
Plastics	Polymers, resins, plastic pipes, fittings, packaging, kitchenware, woven bags
Rubber	Synthetic rubber, vulcanized rubber, conveyor belts, tyres (other than agricultural), tubes, retreads, gloves, hygienic containers
Watches & clocks	All watches, clocks, time recorders, timers, movements, cases, bands, straps
Musical instruments	String, wind, percussion, electric instruments; music boxes; accessories
Weapons	Firearms (other than 40%-rated handguns), explosives, swords, grenades, missiles
Optical & precision	Binoculars, microscopes, telescopes, lasers, gauges, thermometers, analyzers, lab equipment
Tobacco-related	Cigarette filter rods
Nicotine cessation	Nicotine patches, oral & transdermal cessation products
Rail transport	Locomotives, coaches, wagons, signalling gear, refrigerated containers
Road vehicles	Buses, larger goods carriers, SPVs, vehicle parts, chassis
Aircraft & boats	Aircraft, parachutes, vessels, canoes, boats
Wood & paper	Plywood, fibre boards, joinery, flooring, framing, pulp, paper (most grades), kraft, tissue, coated, carbon, cigarette paper, wallpaper, stationery, printed promotional materials
Services	IT services, telecom, banking, financial services, restaurants (specified categories), professional services, courier and postal services, multimodal & non-Indian-Railways container transport, manufacturing job work (most categories)

Items at 40% GST (Sin Goods & Luxury)

The new 40% slab is small and specific – it’s for items the government wants to discourage or tax for redistribution.

Goods Classification	What’s Included
High-sugar & carbonated drinks	Sweetened/aerated waters, flavoured non-alcoholic drinks, caffeinated beverages, carbonated fruit-juice drinks
Gambling & gaming	Betting, casinos, horse racing, lotteries, online money gaming (actionable claims), admission to IPL and similar sporting events
Handguns	Revolvers and pistols
High-engine vehicles	Motorcycles >350 cc; passenger cars excluding small-car limits; petrol/petrol-hybrid cars >1200 cc or >4000 mm length; diesel/diesel-hybrid cars >1500 cc or >4000 mm length
Aircraft & yachts	Aircraft for personal use, yachts, pleasure vessels

Tobacco products and pan masala will move to 40% on a date to be notified after compensation cess loans are repaid. Until then, they continue at 28% (plus existing cess).

Special Niche Rates: 3%, 0.25%, 1.5%, 28%

Not everything fits the 5-18-40 buckets. A few specialised categories continue at their own rates:

Goods Classification	Item	Rate
Pan Masala (residual)	Pan masala	28%
Tobacco products	Unmanufactured tobacco, tobacco refuse, cigars, cheroots, cigarillos, cigarettes, manufactured tobacco, biris, tobacco-substitute inhalation products	28%
Precious metals	Pearls (natural/cultured, unstrung); silver and silver-plated forms; gold and gold-plated forms; platinum; precious metal scrap; precious-metal-clad base metals	3%
Jewellery	Gold, silver, platinum jewellery and parts; goldsmith/silversmith wares; pearl articles; imitation jewellery; coins	3%
Diamonds & gemstones	Rough or sawn diamonds; precious stones (non-diamond); semi-precious unstrung stones; synthetic/reconstructed stones (unstrung); synthetic diamonds	0.25%
Diamond job work	Job work on diamonds	1.5%
Bricks/Tiles	Fly-ash bricks, building bricks, fossil bricks, earthen/roofing tiles	12% (Notification 14/2025-CTR)

Old vs New GST Rates: Side-by-Side

If you want to see the full impact of GST 2.0 in one place, this is the table to bookmark.

Item / Category	Old GST	New GST	Impact
Hair oil, shampoo, toothpaste	18%	5%	Cheaper
Butter, ghee, paneer, cheese	12%	5%	Cheaper
Pre-packaged namkeen, bhujia	12%	5%	Cheaper
Sewing machines & parts	12%	5%	Cheaper
Tractors	12%	5%	Cheaper
Tractor tyres & parts	18%	5%	Cheaper
Drip irrigation, sprinklers	12%	5%	Cheaper
Bio-pesticides, micronutrients	12%	5%	Cheaper
Individual health & life insurance	18%	Nil	Much cheaper
33 life-saving drugs	12%	Nil	Much cheaper
Thermometer	18%	5%	Cheaper
Glucometer & test strips	12%	5%	Cheaper
Corrective spectacles	12%	5%	Cheaper
Diagnostic kits & reagents	12%	5%	Cheaper
Air conditioners	28%	18%	Cheaper
TVs above 32″ (LED/LCD)	28%	18%	Cheaper
Monitors & projectors	28%	18%	Cheaper
Dishwashers	28%	18%	Cheaper
Small petrol cars (≤1200 cc, ≤4000 mm)	28% (+ cess)	18%	Much cheaper
Small diesel cars (≤1500 cc, ≤4000 mm)	28% (+ cess)	18%	Much cheaper
Three-wheelers	28%	18%	Cheaper
Motorcycles ≤350 cc	28%	18%	Cheaper
Goods transport vehicles	28%	18%	Cheaper
Cement	28%	18%	Cheaper
Notebooks, exercise books	12%	Nil	Much cheaper
Pencils, sharpeners, crayons	12%	Nil	Much cheaper
Maps, charts, globes	12%	Nil	Much cheaper
Erasers	5%	Nil	Cheaper
Apparel ≤₹2,500/piece	5% / 12%	5%	Same / Cheaper
Apparel >₹2,500/piece	12%	18%	Costlier
Footwear ≤₹2,500/pair	Various	5%	Simplified
Footwear >₹2,500/pair	18%	18%	Same
Coal, lignite, peat	5%	18%	Costlier
Aerated/carbonated beverages	28%	40%	Costlier
Caffeinated beverages	28%	40%	Costlier
Other non-alcoholic beverages	18%	40%	Much costlier
Large cars (above small-car limits)	28% (+ cess)	40%	Similar / Costlier
Motorcycles >350 cc	28%	40%	Costlier
Yachts, personal aircraft	28%	40%	Costlier
Revolvers & pistols	28%	40%	Costlier
Casinos, IPL admission, online gaming	28% (+ ITC)	40% (+ ITC)	Costlier
Smoking pipes, cigar holders	28%	40%	Costlier
Pan masala	28%	40%*	Deferred
Tobacco products	28% (+ cess)	40%*	Deferred
Gold, silver, platinum jewellery	3%	3%	No change
Rough diamonds, uncut gemstones	0.25%	0.25%	No change
Mobile phones	18%	18%	No change
Restaurant services (most)	5%	5%	No change
EVs (Electric Vehicles)	5%	5%	No change

*Tobacco and pan masala continue at 28% until compensation cess loans are repaid; the move to 40% will be notified separately.

How These Changes Affect Consumers and Businesses

For Consumers

The good news is widespread. Daily-use FMCG items – soap, shampoo, toothpaste, butter, ghee, packaged namkeen – are noticeably cheaper now. Insurance premiums dropped 18% for individual policies. Big-ticket buys like air conditioners, large TVs, dishwashers, small cars, and motorcycles are 10 percentage points cheaper. Healthcare costs fell across the board: 33 life-saving drugs at nil GST, plus thermometers, glucometers, and diagnostic kits dropping from 12–18% down to 5%. Back-to-school shopping is lighter on the wallet too – notebooks, pencils, crayons, and maps are all at 0% now.

The bad news is narrower but real. Aerated drinks, energy drinks, big cars, premium motorcycles, casinos, and online gaming all moved to 40%.

For Businesses

The transition isn’t optional – every invoice from 22 September 2025 onwards must reflect the new rates. That means catalogues, MRPs, and ERP/billing systems all need updating.

A few practical things to keep in mind:

• HSN code accuracy is everything. Even one wrong digit can put your item in the wrong slab, causing return mismatches.
• Inventory transition needs care. Stock procured at old rates but sold post-22 September has to follow time-of-supply rules cleanly.
• ITC implications matter. When items move to nil-rated (like individual insurance), the supplier loses ITC on related inputs. Businesses with mixed supplies need to reassess proportional ITC reversal under Rules 42/43.
• Cash flow gets a boost on inputs. Cement, electronics, and capital goods moving from 28% to 18% means less capital blocked in inventory tax.
• Watch the first two filing cycles. October and November 2025 returns had the highest mismatch risk. Double-check yours.
• Talk to your customers. Many noticed the price change. A short note explaining the GST rate change goes a long way.

How Small Businesses Can Adapt

Here’s a 7-step checklist to get through the transition cleanly:

1. Update your billing software. Make sure your invoicing tool reflects the new rates and HSN-code mappings. Vyapar updates its rate masters automatically, so this is mostly a setup-once thing.
2. Re-verify HSN codes for every SKU. Don’t skip this. One wrong digit is the difference between 5% and 18%.
3. Reprice your catalogue. Decide whether to pass the GST cut entirely to the customer, hold some margin, or use it for promotions.
4. Train your team. Anyone at a billing counter or on the phone with customers should know which items moved.
5. Review supplier invoices. Ensure incoming bills also reflect the new rates – your ITC depends on it.
6. Reconcile transition stock. For inventory bought at old rates and sold at new rates, document the time-of-supply rule applied.
7. File the first two GST returns carefully. September and October 2025 cycles are most error-prone.

How Vyapar Helps You Stay GST-Compliant

Vyapar App is built for Indian SMBs navigating exactly this kind of change. With GST 2.0 live, here’s what Vyapar does for you out of the box:

• Auto-updated GST rates – Pick an item or HSN, Vyapar applies the right slab automatically (5%, 18%, 40%, or nil).
• Smart HSN suggestions – Built-in HSN code lookup, so you never misclassify.
• GST-compliant invoices – Every bill carries the right CGST + SGST or IGST split, with a clear breakup for the customer.
• One-click GSTR reports – GSTR-1, GSTR-3B, and GSTR-9-ready summaries, generated straight from your transactions.
• E-invoicing & e-way bill – Generate IRN and e-way bills in-app, fully aligned with the new rules.
• Inventory adjustments – Track items bought at old rates and sold at new rates with proper time-of-supply handling.
• Free GST Calculator – A handy tool for quick GST math, even when you’re not on the app.

Whether you sell daily essentials at 5%, standard goods at 18%, or premium items at 40%, every invoice comes out right – without you memorizing the rate book.