GST Slab Rates Explained Simply: 0%, 5%, 18% and 40%
Short answer: India’s GST now has four rates: 0%, 5%, 18% and 40%. Since 22 September 2025 the old 12% and 28% slabs no longer exist. Almost all items from the 12% slab moved to 5%, most items from the 28% slab moved to 18%, and a new 40% rate applies to luxury and sin goods such as tobacco, pan masala and aerated drinks.
The four GST rates today
| Rate | What it covers |
|---|---|
| 0% | Exempt items and services |
| 5% | Essentials and everyday goods. Items that moved here include toothpaste, umbrellas, pressure cookers, sewing machines and bicycles |
| 18% | The standard rate for most goods and services. Items that moved here include air conditioners, TVs, refrigerators, washing machines and cement |
| 40% | Luxury and sin goods, such as tobacco, pan masala and aerated drinks |
The examples above are those reported from the GST Council’s announcement of 3 September 2025. For any specific product, check its HSN code (for goods) or SAC code (for services) on the GST portal, because exact classification matters.
What changed on 22 September 2025
The GST Council abolished two slabs. About 99% of the items in the old 12% slab moved to 5%, and about 90% of the items in the old 28% slab moved to 18%. The idea was to simplify GST and lower prices on many everyday and household items.
What it means for a bill
Take a product with a base price of ₹40,000 that moved from 28% to 18%. At 28%, GST is ₹11,200 and you pay ₹51,200. At 18%, GST is ₹7,200 and you pay ₹47,200. That is ₹4,000 less, if the base price stays the same. In practice, sellers also change prices, so the shelf price may not fall by exactly this amount.
How to calculate GST yourself
- Adding GST: GST = base price × rate ÷ 100. Total = base price + GST.
- Removing GST from a final price: base price = total × 100 ÷ (100 + rate). For a total of ₹11,800 at 18%, the base price is ₹10,000.
- CGST and SGST: inside one state, GST splits equally into CGST (centre) and SGST (state). Between two states, the whole amount is IGST.
The GST calculator does all three, for any amount, at any of the four rates.
Why businesses can claim GST back
GST is a tax on value added at each step, so a business does not pay it twice. It can deduct the GST it paid on its purchases (called input tax credit) from the GST it collects from customers. Take a shop that buys goods for ₹10,000 plus 18% GST, which is ₹1,800. It sells them for ₹15,000 plus 18% GST, which is ₹2,700. The shop pays only the difference to the government: ₹2,700 minus ₹1,800 = ₹900. You, as the final customer, cannot claim this credit, so the full GST on your bill is your cost. This is also why you should ask for a proper GST invoice with the seller’s GSTIN when a business expense is involved.
Common mistakes
- Using 12% or 28% on a bill dated after 22 September 2025.
- Applying GST on top of a price that already includes it.
- Assuming every item in a category has the same rate. Rates depend on the exact HSN or SAC code.
Keep reading
- GST on a Restaurant Bill: Is It 5% or 18%? How to Check — GST, 5 min read
- CTC vs In-Hand Salary: Why Your Take-Home Is Less Than Your CTC — Salary and tax, 6 min read
- DA Hike to 63% From July 2026: What Changes for Your Pay and Arrears — Government pay, 5 min read
- Section 80C Explained: What You Can Claim Up to ₹1.5 Lakh — Income tax, 6 min read
Frequently asked questions
What are the GST rates in India now?
The rates are 0%, 5%, 18% and 40%. The 12% and 28% slabs were abolished with effect from 22 September 2025.
What is charged at 40% GST?
Luxury and sin goods, such as tobacco, pan masala and aerated drinks, as announced by the GST Council.
How do I remove GST from a total amount?
Divide the total by (1 + rate ÷ 100). For ₹11,800 at 18%, divide by 1.18 to get a base price of ₹10,000, so GST is ₹1,800.
What is the difference between CGST, SGST and IGST?
For a sale within one state, GST is split equally into CGST and SGST. For a sale between two states, the full GST is charged as IGST.
Sources: PIB — GST reforms 2025: new rate structure · CBIC — GST rates for goods and services · GST Portal