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The Goods and Services Tax (GST) is one of the most significant financial segments for every sector in society. The Goods and Services Tax affects not only large-scale businesses and small-scale businesses but also every consumer in the market. Before 2017, businesses and consumers used to pay multiple indirect taxes on every transaction, such as value-added tax (VAT), service tax, excise tax, entertainment tax, sales tax, and luxury tax. But post-2017, the GST bill was passed in both houses of the parliament, leading to a single indirect tax, thereby replacing all other individual indirect taxes.
It is not only advantageous but also necessary for firms, particularly those in the fintech industry, to have a thorough understanding of GST rates. This article functions as a comprehensive road map that clarifies the subtleties of GST rates in India, breaks them down into their categories, and keeps you informed about the most recent decisions made by the GST council.
As of September 22nd, 2025, the GST council has made an effort to simplify the tax slabs for better tax collections. Currently, there are only 5%, 18%, and 40% tax slabs, which aim to fuel the country’s economic growth.
Our goal is to provide clarity and insight as we navigate the intricacies of this tax system, ensuring companies stay informed and compliant. Let’s set off on this analytical exploration of new GST rates.
Quick Facts on Latest GST Rates 2026
- As of the recent GST council meeting in 2025, the updated GST slab system mainly includes 0%, 5%, 18%, and 40% tax rates, thereby eliminating or merging the 12% and 28% slabs to simplify the overall GST framework and improve compliance.
- The 2025 revision of GST is now referred to as GST 2.0, aiming to simplify GST classification, which further helps to reduce compliance complexity.
- After the recent GST 2.0 rollout, many goods became cheaper, including soaps, toothpaste, personal care items, consumer electronics, and packaged foods.
- A new 40% GST has been implemented on products that fall under the luxury and sin categories. Examples: Pan masala, cigarettes, tobacco, and high-end luxury items.
- Essential goods like unpacked food items, fresh fruits, vegetables, milk, bread, salt, and education/health services are exempt from GST and, hence, have 0% tax.
What are the Old + New GST rates in India?
The Goods and Services Tax (GST) is a unified indirect tax that was implemented as a comprehensive, multi-stage, destination-based tax to combine several state and federal levies into a single, cohesive system. This section explores the particular rates established by this system and looks at how they affect consumers and businesses.
Reduction in GST Rates 2026
| Category | Old GST | New GST |
| Hair Oil, Toothpaste, Shampoo, Soap bar (Daily essential goods) | 18% | 5% |
| Milk, Butter, Ghee & Cheese, and other dairy products | 12% | 5% |
| Utensils | 12% | 5% |
| Namkeens, Mixtures, and Bhujia (Packed food items) | 12% | 5% |
| Sanitary Napkins, Babies napkins, feeding bottles, and other medical diapers | 12% | 5% |
| Printed Materials | 12% | 5% |
| Thermometer | 18% | 5% |
| Medical-Grade Oxygen, Diagnostic Kits & Reagents, Glucometer & Test Strips, and Corrective Spectacles | 12% | 5% |
| Automobiles | 28% | 18% |
| Maps, Charts & Globes, Pencils, Sharpeners, Crayons & Pastels, Exercise Books & Notebooks | 12% | Nil |
| Electronic Appliances (Air Conditioners, Television (above 32″) (inc. LED & LCD TVs), Monitors & Projectors, Dishwashers) | 28% | 18% |
Hike in GST Rates 2026
| Category | Item | Old GST | New GST |
| Sin goods | Aerated drinks | 28% | 40% |
| Carbonated Beverages | 28% | 40% | |
| Caffeinated beverages | 28% | 40% | |
| Tobacco/pan masala | 28% | 40% | |
| Personal-use aircraft | 28% | 40% | |
| Smoking pipes and cigarette/cigar holders | 28% | 40% | |
| Textiles | Apparel/Made‑ups and quilted/cotton quilts and quilted products more than Rs. 2,500 per piece | 12% | 18% |
| Paper Industry | Dissolving‑grade chemical wood pulp, paperboards, other than exercise‑book paper | 12% | 18% |
| Mining | Coal, lignite, peat | 5% | 18% |
List of Items Taxed at 40% GST Rate
| Category | Item |
| Sugar-High Food & fizzy or carbonated Beverages | Aerated waters that have been sweetened or sugared; flavoured non-alcoholic beverages; other unidentified non-alcoholic beverages; caffeinated beverages; carbonated fruit drinks; and fruit juice beverages. |
| Betting, Casinos & Gaming | Activities including betting, casinos, gambling, horse racing, lotteries, and online gaming (actionable claims). |
| High-Performance Vehicles | Motorcycles with engine capacity over 350cc; hybrid spark-ignition vehicles with engines over 1200cc or lengths over 4000mm; hybrid diesel vehicles with engines over 1500cc or lengths over 4000mm; yachts; pleasure vessels. |
| Firearms – Handguns | Revolvers, rifles and pistols. |
List of GST Exemptions as per Industries
The following is the list of industries that are exempt from GST.
| Industry | Description |
| Agriculture | If any cultivation, harvesting, warehouse operations, or renting or leasing of agricultural machinery is done, all these services are exempt from GST. |
| Government services | Transportation of passengers or goods, services offered by foreign diplomats in India, and postal services. |
| Educational services | Transportation of faculty or students, mid-day meal scheme, examination services, services offered by IIMs, etc. |
| Medical services | Services offered by ambulances, charities, veterinary doctors, medical professionals, etc., do not include hair transplants or cosmetic or plastic surgery. |
| Additional services | Services offered by GSTN to the central or state government or to union territories, and admission fees payable to theatres, circuses, sports events, etc., that charge a fee up to INR 250. |
Impact of New GST Rates on Businesses & Consumers
For Consumers:
- Lower prices on daily essentials
- Slight increase in luxury product costs
For Businesses:
- Simplified tax structure
- Easier compliance and classification
- Better pricing strategies
Frequently Asked Questions on New GST Rate
What are the new GST rates in India for 2026?
The new GST rates in India include 0%, 5%, 18%, and 40% slabs. Essential goods fall under 0% or 5%, while luxury and sin goods attract 40% GST.
What is the highest GST rate in India?
The highest GST rate is 40%, applied to luxury and sin goods.
Has GST on electronics changed in 2026?
Yes, many electronic items have been reduced from 28% to 18%, making them more affordable.
How are GST rates decided in India?
The GST Council of India is the constitutional body that determines the tax rates, exemptions and threshold limits. These decisions are made jointly by the union finance minister and the state minister, thereby ensuring a balance of power.
Who must pay the GST rate?
Businesses having a registered GST number that offer items to clients with a turnover of more than ₹20 lakh or ₹40 lakh are required to pay GST. The final burden rests with the consumer, e-commerce operators, entities subject to reverse charge, and non-resident taxable persons, who bear the majority of the cost.
How can I verify a business’s GST details?
Cashfree Payments provides an efficient GST number verification tool for this purpose.
In case you missed it:
- What is GST, Full Form, Meaning & Key Features
- What is CGST?
- How to Access GST Portal
- How to Apply for GST Number, Process & Documents
- GST Rules & Regulations in India 2026
- How to Generate E-Way Bill Online
- MSME Registration in India
- What is GSTR-1?
- GST State Code List – All States & UT Codes
