GST Rate Slabs in India 2026 — GST 2.0: 0%, 5%, 18%, 40% Explained
Since GST 2.0 took effect on September 22, 2025, India's GST framework places every product and service into one of four rate categories instead of the old six. Knowing which slab applies to your transaction is the single most important step in any GST calculation.
- India now has four GST rate slabs under GST 2.0: 0%, 5%, 18%, and 40% — plus special rates of 0.25% and 1.5% for diamonds.
- The 12% and 28% slabs were abolished effective September 22, 2025 — most goods that sat there moved to 5% or 18%.
- The 18% slab is the default rate and covers most goods and services where no special rate is prescribed.
- 0% GST applies to essentials like fresh produce, milk, eggs, books, and education and healthcare services.
- The new 40% slab covers luxury and sin goods such as tobacco, pan masala, and high-end cars — replacing the old 28% + cess structure.
- Every product's rate is determined by its HSN code, and every service by its SAC code — not by the product's common name.
This guide breaks down every GST 2.0 rate slab with real-world product examples, so you can identify the correct rate quickly. It also explains how HSN and SAC codes connect products and services to their applicable rates.
What Are the GST Rate Slabs in India Under GST 2.0?
The GST Council's 56th meeting replaced India's old 5%/12%/18%/28% structure with a simplified system effective September 22, 2025: 0%, 5%, 18%, and a new 40% slab for luxury and sin goods. A small number of goods still attract special rates of 0.25% (rough diamonds) and 1.5% (cut and polished diamonds). The majority of everyday goods and most services now fall under the 5% or 18% slabs.
0% GST — Zero-Rated and Exempt Goods
The 0% slab covers essential items that the government wants to keep affordable. There is an important distinction between zero-rated and exempt goods — one that matters significantly for input tax credit claims.
Zero-rated supplies (like exports and supplies to SEZs) allow businesses to claim ITC on inputs even though output tax is zero. Exempt supplies do not attract GST and also do not qualify for ITC on inputs.
Fresh fruits and vegetables, milk and dairy (unprocessed), eggs, meat and fish (unprocessed), cereals and pulses (unbranded), salt, water (non-bottled), fresh bread, books and newspapers, educational services, healthcare services.
5% GST Slab — Merit Goods and Basic Necessities
The 5% slab covers goods and services that are widely used but not considered bare essentials. Since GST 2.0, it also absorbed most items that previously sat in the abolished 12% slab — so a wider range of processed and packaged goods now qualify for 5% instead of 12%.
Food: Packaged and branded food items, edible oils, sugar, tea, coffee, frozen vegetables, fish (processed), ghee, butter, cheese, frozen meat products, fruit juices, namkeen and snacks.
Medicines: Life-saving drugs, basic medicines, vaccines.
Services: Railways (AC class), economy class air travel, small restaurants (without AC).
Other: Coal, fertilisers, agro machinery, renewable energy devices.
18% GST Slab — The Most Common Rate
The 18% slab is the most widely applicable rate in India. The majority of manufactured goods, most professional services, and most consumer products fall here. It is the default rate for services where no specific rate is prescribed — and since GST 2.0, it also absorbed most items that previously sat in the abolished 28% slab.
Electronics: Computers, laptops, televisions, refrigerators, washing machines, air conditioners.
Services: IT services, financial services, telecom, insurance, consulting, marketing, restaurants (with AC).
Building materials: Cement, steel, paint, tiles, plywood.
Textiles: Apparel above ₹1,000, readymade garments, mobile phones.
Other: FMCG products (shampoo, toothpaste, soap), packaged drinking water above 20 litres, cameras.
40% GST Slab — Luxury and Sin Goods (New Under GST 2.0)
The 40% slab is new as of GST 2.0, replacing the old 28% + Cess structure with a single flat rate for luxury items and goods the government specifically wishes to discourage. There is no separate Cess layered on top — 40% is the full effective rate.
Vehicles: High-end passenger cars and SUVs above the luxury threshold.
Tobacco: Cigarettes, cigars, pan masala, gutka.
Luxury goods: Premium cosmetics (above a certain price), aircrafts for personal use.
Aerated drinks: Carbonated beverages and other sin-good categories.
How to Find the GST Rate for Any Product — HSN and SAC Codes
Every product in India has an HSN (Harmonised System of Nomenclature) code — an internationally recognised classification number. The GST rate for any product is determined by its HSN code, not its common name.
Similarly, every service has a SAC (Services Accounting Code). Businesses with turnover above ₹5 crore must include the full 8-digit HSN code on all invoices. Businesses below this threshold may use 4-digit codes.
How do you quickly look up an HSN code?
The official GST portal at gst.gov.in provides a comprehensive HSN code search tool. The CBIC website maintains the master GST rate schedule. Most GST accounting software packages include built-in HSN lookup functionality.
For the calculation method at each of these slabs, see our step-by-step guide on how to calculate GST in India. If you are unsure whether to use CGST/SGST or IGST, read our article on CGST vs SGST vs IGST differences. For the full history of how the GST Council restructured these slabs — including which products moved and why — see our GST 2.0 reforms explainer.
GST Portal — HSN/SAC code and rate search
CBIC — GST rate schedule notifications
GST Rate Slabs — Frequently Asked Questions
How many GST rate slabs are there in India?
Since GST 2.0 (effective September 22, 2025), India has four standard GST rate slabs — 0%, 5%, 18%, and 40% — plus two special rates of 0.25% and 1.5% that apply only to diamonds. The old 12% and 28% slabs were abolished.
Which GST slab applies to most goods and services?
The 18% slab is the most widely applicable rate and is the default for services and goods where no specific rate has been prescribed. It also absorbed most items that used to sit in the abolished 28% slab.
How do I find the GST rate for a specific product?
Look up the product's HSN code (for goods) or SAC code (for services) on the GST portal or CBIC rate schedule — the rate is tied to this code, not the product's common name.
Is the 40% GST slab the highest tax a product can attract?
Yes — 40% is now the highest GST slab under GST 2.0, replacing the old 28% + Cess structure. It applies as a single flat rate to luxury and sin goods like premium cars, cigarettes, and pan masala, with no separate Cess layered on top.
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