GST Rates in 2026 After GST 2.0 — The Two-Rate Structure (5% and 18%) With the 40% De-Merit Rate, What Moved Down From 12% and 28%, Exempt and Nil-Rated Lists, Services Rates, How to Confirm a Rate for Your HSN/SAC, Transition Rules for Stock and Contracts, and How Rates Changed From 2017 to Now

The 56th GST Council (3 September 2025) collapsed the four-slab structure into two: 5% for essentials and merit goods and services, and 18% for most other supplies. The 12% and 28% rates were abolished — items at 12% mostly moved to 5%, items at 28% mostly to 18% — and a single 40% rate replaced '28% plus compensation cess' on a short de-merit list. Compensation cess ended with it for most goods. The special rates that always sat outside the main slabs continue: 0.25% on rough diamonds, 3% on gold, silver and jewellery, 1%/5% on affordable and other under-construction housing, and the composition rates.

• •12% → 5%: most processed foods, butter and ghee, dry fruits, condensed milk, namkeen, pasta, jams and sauces, medicines not already at nil, medical devices, glucometers, footwear and apparel in the lower price band, bicycles, umbrellas, sewing machines, agricultural equipment, renewable-energy devices, hotel rooms up to ₹7,500, job-work in several sectors.
• •28% → 18%: cement, small and mid cars, two-wheelers up to 350 cc, air conditioners, televisions of all sizes, dishwashers, washing machines, monitors and projectors, auto parts, tyres, paints, marble and granite slabs, sanitary ware, and consumer durables.
• •18% → 5%: beauty parlour, salon, gym and yoga services (without input credit), hotel rooms up to ₹7,500, several packaged foods and medical devices that had been at 18%, and a set of labour-intensive goods (handicrafts, leather goods, marble idols) — the consumer-relief list the Council published with the notifications.
• •18%/12% → nil: individual life and health insurance premiums (including family floater and senior-citizen policies), 33 life-saving drugs and three cancer drugs, UHT milk, paneer and chena, all Indian breads, maps and charts, erasers, exercise books.
• •28% + cess → 40%: the de-merit list; compensation cess on most other goods ended (a transition period applied to tobacco pending loan repayment).
• •Unchanged: 3% bullion and jewellery, 0.25% rough diamonds, the housing rates, the composition scheme, the 18% on most services and manufactured intermediates.

1. 1Time of supply (section 14): where a supply straddles a rate change, the applicable rate depends on when the supply, the invoice and the payment fall — two of the three after the change date means the new rate applies; the portal rejects an old rate on a post-change invoice.
2. 2Stock on hand: goods bought at 12%/28% and sold after 22 September at 5%/18% carry their original input credit — no reversal; the sale price should reflect the lower rate (the anti-profiteering provision continued in a limited form through the National Anti-profiteering framework's successor at the CCI/GSTAT).
3. 3Credit notes: a rate reduction after invoicing but before supply is adjusted by credit note with GST; a price reduction passed to consumers after the change needs no GST adjustment if the supply was already made at the old rate.
4. 4Contracts and tenders: 'inclusive of GST' contracts change the base price; 'plus GST' contracts change the tax — read the clause before revising invoices; government works contracts moved with notified rates.
5. 5E-invoicing and e-way bills: update HSN-wise rate masters in ERP/Tally so IRNs carry the correct rate; a 12% or 28% rate on an e-invoice after the cut-over is invalid.
6. 6Returns: GSTR-1 Table 12 (HSN summary) and GSTR-3B liability must use the rate in force on the date of supply; the annual return's rate-wise reconciliation (GSTR-9C Table 9) will show both rates for FY 2025-26.

• •cbic-gst.gov.in → 'GST Rate Finder' (goods by HSN, services by SAC) shows the current rate with the notification reference; the GST portal's 'Search HSN' gives the code and description.
• •Notifications: goods rates flow from Notification 1/2017-Central Tax (Rate) as amended (the September 2025 notifications rewrote the schedules); services from 11/2017 and exemptions from 12/2017.
• •Classification disputes (is a product a 'namkeen' at 5% or a 'snack' at 18%?) are resolved by the HSN explanatory notes and advance rulings — get an advance ruling for a new product line rather than guessing.
• •State-specific: rates are uniform across India; only the split (CGST + SGST vs IGST) changes with the place of supply.