GST Rate Slabs Explained
GST's current rate slabs (Nil, 5%, 18%, 40%) after the GST 2.0 rate rationalisation, with representative examples of what typically falls in each.
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Nil (Exempt)
No GST charged. Expanded under GST 2.0 to cover more everyday essentials alongside individual insurance.
Typical examples: Fresh produce, milk, unbranded cereals, books, education and healthcare services (within specified conditions), specified life-saving drugs, and individual health and life insurance premiums.
5%
The merit rate, covering essential and mass-consumption goods. GST 2.0 folded most items that used to sit at 12% into this slab.
Typical examples: Packaged food items, most processed foods, small cars and two-wheelers (specified categories), economy air travel, small restaurants (without input tax credit in most cases).
18%
The standard slab most goods and services fall into by default. GST 2.0 moved many items that used to sit at 28%, including most consumer electronics and cement, down into this slab.
Typical examples: Most consumer goods and electronics, cement, financial and professional services, telecom and IT services, business-class air travel.
40%
A demerit slab introduced by GST 2.0 (effective September 2025) for tobacco, sin, and luxury goods, replacing the old 28%-plus-compensation-cess treatment for most of these items.
Typical examples: Pan masala, tobacco, gutkha, and bidi products, aerated and caffeinated drinks, luxury cars, motorcycles above 350cc, yachts, casinos, and online money gaming, betting, and lottery services.
Important
This shows the broad rate structure introduced by the GST 2.0 rate rationalisation (effective September 2025), not an exhaustive HSN or SAC code lookup. Gold, silver, and a few other items continue to be taxed separately at their own long-standing rate outside this structure. The exact rate for a specific product or service depends on its precise classification, and the GST Council revises individual item rates periodically. For a specific transaction, confirm the current rate against the official notified rate schedule or with a tax advisor rather than relying on the category examples above. Related: GST Returns, and if you're not yet registered, who needs GST registration.