Kinds of GST rates and structures in India
India's GST system underwent a significant overhaul on September 22, 2025, aligning with the latest amendments in the GST law. The previous multi-slab structure (5%, 12%, 18%, and 28%) has now been simplified into a more streamlined framework featuring three core rates. This reform aims to make essential goods more affordable and simplify compliance for businesses.
Under the new regime, a Merit Rate of 5% applies to a broad category of commonly used goods, such as packaged food items, basic household products like toothpaste and soap, and essential services. The Standard Rate of 18% is now levied on most goods and services, including consumer electronics and compact cars, which were earlier taxed at higher rates. A new 40% rate has been introduced for luxury and "sin" goods, including premium cars, tobacco products, and aerated beverages—replacing the earlier 28% GST plus cess structure.
The GST framework still uses Integrated GST (IGST) for interstate transactions, while Central GST (CGST) and State GST (SGST) are applicable on intrastate supplies. For businesses and individuals looking to accurately compute taxes under the new structure, a GST Calculator can be used to estimate applicable tax based on updated slabs and the base price of goods or services.
Here is an overview of GST rates:
| GST rate | Types of goods and services | Purpose |
|---|
| 0% (Nil) | Fresh fruits and vegetables, milk, eggs, curd, Indian breads, unpackaged foodgrains, specified life-saving medicines, individual health and life insurance premiums, educational services, and healthcare services | Keeps essential goods and critical services affordable. |
| 0.25% | Rough diamonds, unprocessed precious and semi-precious stones, and synthetic diamonds (non-industrial use) | Provides a concessional tax rate for the diamond industry. |
| 3% | Gold, silver, platinum, jewellery made from gold, silver or imitation materials, pearls, and worked diamonds that are not mounted or set | Applies a concessional GST rate to precious metals and jewellery. |
| 5% | Mass-consumption FMCG products such as hair oil, shampoo, soap and toothpaste, packaged dairy products, namkeens, footwear and apparel priced up to Rs. 2,500, agricultural inputs, most medicines, and hotel accommodation with tariffs between Rs. 1,000 and Rs. 7,500 | Maintains affordability for everyday consumer goods, agricultural products, and essential services. |
| 18% | Consumer durables such as air conditioners, televisions, refrigerators and washing machines, small cars, motorcycles with an engine capacity of up to 350cc, cement, batteries, mobile phones, most business-to-business (B2B) services, and financial services | Serves as the standard GST rate for the majority of taxable goods and services. |
| 40% | Tobacco and tobacco products, pan masala, aerated and caffeinated beverages, large passenger vehicles, motorcycles with an engine capacity exceeding 350cc, yachts, personal aircraft, casinos, online money gaming, betting, lotteries, and admission to IPL matches | Applies a higher GST rate to specified demerit and luxury goods and services, replacing the earlier 28% GST slab with Compensation Cess. |
List of Items Taxed at 0% GST Rate
| Product/Service | Previous GST Rate | New GST Rate (Effective Sept 22 2025) |
| Individual life and health insurance policies | 18% | 0% (Exempt) |
| Maps, charts, and globes | 12% | 0% (Exempt) |
| Pencils, sharpeners, erasers, crayons, and notebooks | 5% or 12% | 0% (Exempt) |
| Pre-packaged and labelled paneer | 5% | 0% (Exempt) |
| All Indian breads (roti, paratha, parotta, etc.) | 5% | 0% (Exempt) |
| Unbranded milk, eggs, curd, and lassi | 0% | 0% (Exempt) |
| Unpacked foodgrains, atta, maida, and besan | 0% | 0% (Exempt) |
| Fresh vegetables and fruits | 0% | 0% (Exempt) |
| Educational and healthcare services | 0% | 0% (Exempt) |
| Select life-saving cancer medications | 5% or 12% | 0% (Exempt) |
These changes are aimed at increasing affordability and easing the tax burden on essential goods and services for the general public.
List of Items Taxed at 5% GST Rate
| Product/Service | Previous GST Rate | New GST Rate (Effective Sept 22, 2025) |
| Hair oil, shampoo, soap, and toothpaste | 18% | 5% |
| Butter, ghee, cheese, and dairy spreads | 12% | 5% |
| Packaged food items (e.g., namkeen, biscuits, pasta, cornflakes, cereals) | 12% or 18% | 5% |
| Utensils, bicycles, and kitchenware | 12% or 18% | 5% |
| Apparel priced up to Rs. 2,500 | 12% | 5% |
| Footwear priced up to Rs. 2,500 | 12% | 5% |
| Jams, sauces, pickles, and soups | 12% or 18% | 5% |
| Dry fruits and nuts | 12% | 5% |
| Diagnostic kits and reagents | 12% or 18% | 5% |
| Surgical instruments and thermometers | 18% | 5% |
| Services at salons, gyms, and yoga centers | 18% | 5% |
| Hotel stays with tariffs between Rs. 1,000 and Rs. 7,500 | 12% | 5% |
| Fertilizers and agricultural machinery | 12% or 18% | 5% |
| Spectacles and corrective goggles | 28% | 5% |
| Life-saving medicines (excluding those fully exempted) | 12% | 5% |
List of Items Replaced from 12% GST Rate to 5% GST Rate
| Product/Item | Previous GST Rate | New GST Rate (Effective Sept 22, 2025) |
| Butter | 12% | 5% |
| Ghee | 12% | 5% |
| Packaged or processed food items | 12% | 5% |
| Almonds | 12% | 5% |
| Fruit juice | 12% | 5% |
| Ready-to-eat vegetable preparations | 12% | 5% |
| Processed fruits | 12% | 5% |
| Pickles, murabba, chutneys, jams, jellies, and similar preserves | 12% | 5% |
| Packed coconut water | 12% | 5% |
| Umbrellas | 12% | 5% |
List of Items Taxed at 18% GST Rate
| Product/Service | Previous GST Rate | New GST Rate (Effective Sept 22, 2025) |
| Consumer Durables (Air conditioners, televisions, refrigerators, washing machines) | 28% | 18% |
| Small Cars (Petrol engines under 1200cc, diesel engines under 1500cc, length under 4 meters) | 28% | 18% |
| Motorcycles (Engine capacity up to 350cc) | 28% | 18% |
| Commercial Vehicles (Buses, trucks, three-wheelers, ambulances) | 28% | 18% |
| Auto Parts | 28% | 18% |
| Cement | 28% | 18% |
| All Types of Batteries | 28% | 18% |
| Printers and Computers | 18% | 18% |
| Capital Goods | 18% | 18% |
| Industrial Intermediate Goods | 18% | 18% |
| Road Tractors (Engine capacity above 1800cc for semi-trailers) | 28% | 18% |
List of Items Replaced from 28% to New 40% and 18% GST Slabs
| Product/Item | Old GST Rate + Cess | New GST Rate (Effective Sept 22, 2025) |
| Small cars | 28% + 1% or 3% cess (total 29-31%) | 18% |
| Premium motorcycles (over 350cc) | 28% + up to 15% cess (total 43%) | 40% |
| Consumer durables such as air conditioners and refrigerators | 28% | 18% |
| Luxury and sin goods (e.g., luxury cars) | 28% + 22% cess (up to 50% total) | 40% |
| Cigarettes and carbonated drinks | 28% + up to 15% cess | 40% |
List of Items Taxed at 40% GST Rate
The GST Council’s significant tax reforms, effective from September 22, 2025, have introduced a new 40% GST rate. This single rate replaces the earlier combination of 28% GST plus additional cess on luxury and "sin" goods, simplifying the tax structure.
Below is a list of items now classified under the 40% GST slab, along with their previous and updated tax rates:
| Product/Service | Old GST Rate + Cess | New GST Rate (Effective Sept 22, 2025) |
| Luxury and Premium Cars | 28% GST + up to 22% cess (up to 50%) | 40% GST |
| Motorcycles (Engine capacity > 350cc) | 28% GST + 3% cess (31% total) | 40% GST |
| Aerated and Carbonated Beverages | 28% GST + 12% cess (40% total) | 40% GST |
| Yachts and Personal Aircraft | 28% GST + applicable cess | 40% GST |
| Revolvers and Pistols | 28% GST + applicable cess | 40% GST |
| Betting, Online Gaming, and Casinos | 28% GST | 40% GST |
| Admission to Sports Events (e.g., IPL) | 28% GST | 40% GST |
Note on Tobacco: The GST Council has indicated that tobacco, pan masala, and related products will eventually move to the 40% slab. However, these will continue under the current 28% GST plus compensation cess until GST compensation loan dues to states are fully settled.
List of Items Taxed at 3% GST Rate
The GST reforms effective from September 22, 2025, have introduced major changes to India’s tax system. However, the GST rates on precious metals and stones remain unchanged.
Below is a list of items that continue to be taxed at a 3% GST rate:
| Products | GST rate |
| Imitation jewellery | 3% |
| Items made of or coated with precious metals | 3% |
| Natural or cultured pearls (not strung, mounted, or set; or temporarily strung for transport) | 3% |
| Worked diamonds, not mounted or set (excluding non-industrial use) | 3% |
| Precious and semi-precious stones (excluding diamonds) | 3% |
| Silver | 3% |
| Gold | 3% |
| Waste or scrap of precious metals or metals coated with precious metals | 3% |
List of Items Taxed at 0.25% GST Rate
The GST Council introduced significant tax reforms effective September 22, 2025, simplifying various tax rates. However, the special 0.25% GST rate for the gems and jewelry sector remains unchanged.
Below is a list of items that continue to be taxed at 0.25% GST:
| Products | GST Rate |
| Non-industrial grade diamonds | 0.25% |
| Unprocessed precious or semi-precious stones | 0.25% |
| Synthetic or reconstructed precious or semi-precious stones | 0.25% |
How the 40% GST Slab Replaces Cess?
The new 40% GST slab consolidates the earlier structure of 28% GST plus compensation cess into a single tax rate for specified luxury and demerit (sin) goods, making the tax framework simpler and more transparent. The 40% GST rate applies to notified products such as luxury cars, aerated beverages, and certain high-end motorcycles, eliminating the need to calculate GST and compensation cess separately.
However, the compensation cess has not been completely phased out. It continues to apply to tobacco and related products until the government's commitments towards state compensation are fully met. At the same time, compliance mechanisms such as TDS under GST and TCS under GST continue to support efficient tax collection and reporting under the GST regime.
HSN and SAC system
In India, the classification of goods and services under GST is based on the HSN (Harmonized System of Nomenclature) code for goods and SAC (Services Accounting Code) for services. HSN is a globally accepted system, while SAC is India-specific. Although these codes continue to determine applicable GST rates—now simplified into fewer slabs—the major update lies in reporting requirements.
Starting May 2025, businesses with annual turnover up to Rs. 5 crore must report 4-digit HSN codes, while those exceeding this limit must use 6-digit codes. The GST portal now enforces this using mandatory dropdown menus, eliminating manual entry errors. This update, supported by a validation system, aims to improve accuracy, ensure compliance, and streamline the GST return filing process.
GST rates for buying a product online in India
GST rates for products purchased online are the same as those for offline purchases. The applicable GST rate depends on the product category, not whether it is bought through an e-commerce platform. Under the GST rates in India, the same tax slabs apply to both online and offline sales. However, under Section 52 of the CGST Act, e-commerce operators such as Amazon and Flipkart are required to collect Tax Collected at Source (TCS) at 1% on net taxable supplies made through their platforms. For example, mobile phones generally attract 18% GST, apparel priced up to ₹2,500 attracts 5% GST, health supplements attract 18% GST, while fresh vegetables are exempt from GST. Refer to the current GST rate table above to determine the applicable rate for your purchase.
GST rate applies to business services in India
Most business services in India attract an 18% GST rate, although certain specified services are taxed at 5% or are exempt from GST. The applicable GST rate depends on the nature of the service rather than the type of business providing it. The table below highlights the GST rates in India for some common business services.
| Service type | GST rate | Example |
|---|
| IT and software services | 18% | Software development, IT consulting, SaaS services |
| Restaurant services | 5% | Restaurant dining and food services (subject to applicable conditions) |
| Healthcare and education services | 0% (Exempt) | Eligible healthcare treatment and educational services provided by recognised institutions |
Example: GST on IT services
Priya, a 35-year-old IT consultant in Hyderabad, invoices her clients ₹1,00,000 per month for software consulting services. Based on the current GST rate of 18%, she charges ₹18,000 as GST on her invoice and deposits the tax with the government after adjusting eligible Input Tax Credit (ITC) on her business expenses.
Understanding the correct GST rate for your services helps ensure accurate invoicing, timely compliance, and proper tax planning.
GST rate applies to retail sales of food items in India
The GST rate on retail food items in India ranges from 0% for many fresh and unprocessed products to 5% for several packaged food items, while certain products such as carbonated soft drinks attract the highest GST rate. Under the GST rates in India, the applicable rate depends on whether the food is fresh, processed, or pre-packaged rather than only on the product category.
| Food type (GST slabs in India) | Packaging status | GST rate |
|---|
| Fresh vegetables and fruits | Unpackaged | 0% |
| Milk, eggs and curd | Unpackaged | 0% |
| Paneer, roti and paratha | Pre-packaged and labelled | 0%* |
| Ghee, butter and cheese | Packaged | 5% |
| Namkeen, biscuits and cornflakes | Packaged | 5% |
| Carbonated soft drinks | Any | 40% |
*Effective from September 2025, GST on eligible pre-packaged and labelled paneer, roti, and paratha was reduced from 5% to 0%.
The applicable GST rate depends on the product's classification and packaging status, so always refer to the latest GST notifications before determining the tax payable.
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