New GST Rates 2026: Full Slab List After GST 2.0 (5%, 18%, 40%)

If you are running a small business in India, the latest tax changes are likely making your head spin. As of 22 September 2025, the government rolled out the massive “GST 2.0” reform. They scrapped the old, confusing structure and replaced it with something far simpler but significantly different. If you’re still invoicing clients at 12% or 28%, you are making a compliance error that could cost you heavily in penalties.

This guide breaks down exactly what the new GST rates 2026 are, how they affect your business, and how to apply them correctly today.

Quick Answer: The new GST rates for 2026 under GST 2.0 are primarily 0%, 5%, 18%, and a top luxury/sin slab of 40%. The 12% and 28% slabs have been completely removed. Niche rates of 0.25% and 3% still apply to precious stones and metals. Composition scheme rates remain unchanged at 1.5%, 5%, and 6%.

The Big Shift: Understanding GST 2.0 Slabs

Before September 2025, Indian businesses had to navigate a complex maze of five main slabs: 0%, 5%, 12%, 18%, and 28%. This led to endless disputes about whether an item should be taxed at 12% or 18%.

The GST 2.0 reform aimed to simplify this. The new gst rates 2026 structure is designed to reduce classification disputes and make filing easier for small businesses and e-commerce sellers.

The New GST Rate List 2026

Here is exactly how the new slabs work:

0% (Exempt): Essential goods like unpackaged food grains, fresh vegetables, milk, and basic healthcare services.
5% (Mass Consumption): Packaged food items, basic apparel, footwear below certain thresholds, and transport services.
18% (Standard Rate): This is the new default. Everything that previously fell under the 12% and 18% slabs is now merged here. Most services, electronics, FMCG goods, and software fall into this category.
40% (Luxury and Sin Goods): This replaces the old 28% slab. It applies to high-end cars, aerated drinks, tobacco products, and luxury hotels.

Note: Special rates like 3% on gold/silver and 0.25% on rough diamonds remain untouched.

What Happened to the 12% and 28% Slabs?

One of the most common questions from junior accountants is about the 12% gst removed status.

Yes, the 12% slab is officially gone. Items previously taxed at 12% (like certain processed foods, medical supplies, and mobile phones) were mostly moved into the 18% slab, though a few essential items were dropped to 5%.

Similarly, the 28% slab was abolished. The items in this category were heavily polluting or luxury items. These have now been shifted to the new 40% slab. If you’re referencing the gst slab changes september 2025, this 12-point jump for luxury goods was the most dramatic shift for businesses dealing in high-end merchandise.

How the New Rates Impact Your Business

Let’s look at a practical example of how these changes impact your daily operations.

Suppose you sell mobile phones. Pre-September 2025, mobile phones were taxed at 12%. If you sold a phone for a base price of ₹10,000, you would add ₹1,200 as GST, bringing the invoice total to ₹11,200.

Under the new GST rates 2026, mobile phones fall into the standard 18% slab.

Base Price: ₹10,000
CGST (9%): ₹900
SGST (9%): ₹900
Total Invoice Value: ₹11,800

If you forget to update your billing software, you will under-collect GST by ₹600. When you file your GSTR-3B, the government will still demand the 18% rate, meaning that ₹600 will have to come directly out of your profit margin.

👉 Try it yourself: Ensure your invoices are perfect with our GST Calculator. It fully supports the new 5%, 18%, and 40% slabs to help you price your products instantly and correctly.

Updating Your HSN Codes

Because thousands of items shifted slabs, the HSN code classifications have also seen updates. You cannot rely on an old invoice from 2024 to determine your current tax rate.

If you are unsure whether your product dropped to 5% or jumped to 18%, you must verify it. Using an updated HSN/SAC Code Lookup tool is critical to ensure you don’t face penalties during a tax audit.

Composition Scheme: Unchanged but Vital

While the main slabs saw massive changes, the GST composition scheme rates remain the same. This is a huge relief for micro-businesses.

Manufacturers and Traders: 1.5% of turnover (0.75% CGST + 0.75% SGST)
Restaurants (not serving alcohol): 5% of turnover
Service Providers: 6% of turnover

If the jump to the 18% slab makes your product uncompetitive, and your turnover is under ₹1.5 crore, 2026 might be the perfect year to opt into the composition scheme.

Frequently Asked Questions

Are the 12% and 28% GST slabs completely removed? Yes. As of September 2025, the 12% and 28% slabs were abolished. Items have been reclassified primarily into the 18% standard slab or the 40% luxury slab.

What is the GST rate on mobile phones in 2026? Mobile phones are now taxed at the standard rate of 18%. The old 12% rate no longer applies.

Did the GST rate on gold change in 2026? No, the special GST rate for gold, silver, and precious jewellery remains unchanged at 3%.

How do I know if my product is 5% or 18%? You need to check the updated HSN code for your specific product. The government issued a new classification list in late 2025.

Is there still a 0% GST slab? Yes, essential goods like unpackaged food grains, fresh milk, and basic healthcare services remain fully exempt at 0% GST.

Ensure Your Compliance Today

The transition to GST 2.0 doesn’t have to be a nightmare, but you do need to update your pricing and invoicing immediately. Continuing to use the old 12% or 28% rates will lead to mismatched returns, ITC denials for your buyers, and heavy penalties for you.

Always double-check your calculations before issuing an invoice. Use our updated GST Calculator to compute the exact CGST and SGST split under the new 2026 slabs.

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