GST Rates in India 2025: Complete Rate Chart After GST 2.0

GST 2.0: The New 4-Slab Rate Structure

The 56th GST Council meeting (September 22, 2025) rationalised India's rate structure from six slabs to four primary slabs. The reform's stated goal was to simplify compliance, eliminate cess cascading , and improve ITC (Input Tax Credit) fungibility for businesses.

Current GST Rate Slabs (Effective September 22, 2025)

Note: The 28% rate with compensation cess has been replaced by a flat 40% rate. For tobacco and pan masala, a transitional period was in effect from September 22, 2025, to January 31, 2026, before a new production-capacity-based Health Security Cess regime took effect on February 1, 2026.

Before vs. After: Old vs. New GST Rate Structure 

GST Rate Structure - Pre-Reform vs. Post-Reform

What Gets Cheaper, What Gets Costlier After GST 2.0

The GST 2.0 reform did not uniformly raise or lower taxes - it streamlined how taxes are calculated, which in practice changes costs depending on the product and on whether your business is B2B (ITC-eligible) or B2C.

What Gets Cheaper

1. Automobiles (especially mid-segment)
   Under the old regime, a ₹10 lakh car attracted 28% GST + 17% cess = 45% effective tax. Post-reform, the same car attracts 40% GST. That is a 5-percentage-point reduction for buyers in that segment.
2. Coal
   Imported and domestic coal used to attract 28% + ₹400/tonne cess. The cess is now abolished; coal attracts 18% GST, making it cheaper for power plants and industry.
3. Aerated Beverages
   Effective rate was 28% + 12% cess = 40%. Post-reform: flat 40% - mathematically the same, but with full ITC now available at each stage (cess ITC was ring-fenced), reducing hidden costs for manufacturers.
4. Goods Previously at 12% Now at 18% - B2B Buyers
   For registered businesses buying goods that moved from 12% -> 18%, the higher GST is fully available as ITC. Net cost of purchase remains the same; only cash flow differs (higher outgo claimed back sooner).

What Gets Costlier

1. Goods Previously at 12% - B2C / End Consumers
   End consumers cannot claim ITC. For goods that moved from 12% to 18%, they pay 6 percentage points more. Key categories that became costlier due to the move from 12% to 18% include business-class air travel, intellectual property services, and specific high-end processed foods, as these did not qualify for the 5% merit rate.
2. Tobacco (Short-Term, February 1, 2026)
   The new Health Security Cess + National Security Cess + Central Excise duty on pan masala and tobacco products introduced from February 1, 2026, results in a higher effective burden than the previous cess regime for premium cigarette and smokeless tobacco brands.
3. Goods at 28% with Low Cess -> Now at 40%
   Goods that were at 28% + cess rates below 12% (e.g., certain luxury goods at 28% + 1% cess = 29%) now face 40% - an 11-point increase. Luxury watches, high-end handbags, and similar items fall here.
4. Key principle: If you are a GST-registered business buying inputs, rate changes affect cash flow, not final cost (ITC cancels out the extra GST paid). If you are an end consumer or exempt business, rate changes directly affect your price paid.

Special GST Rates: Gold, Diamonds, and Precious Metals

Precious metals and stones have always carried special concessional GST rates outside the standard slab structure. These rates are unchanged post-GST 2.0.

Special GST Rates - Precious Metals and Stones

Why special rates? Gold and diamonds are India's second-largest import categories by value (India imports approximately 700-800 tonnes of gold annually per the World Gold Council). A standard 18% rate would fuel a massive grey market and smuggling. The 3% rate is calibrated to keep the formal trade competitive.

Making charges clarification: Charges for making gold jewellery attract 5% GST separately (as a service). If a jeweller charges ₹1,00,000 for gold + ₹10,000 making charges, GST is: ₹3,000 (3% on gold) + ₹500 (5% on making) = ₹3,500 total.

Nil-Rated vs. Zero-Rated vs. Exempt: Key Differences 

One of the most common sources of GST confusion is the distinction between goods and services that attract "zero" tax. There are actually three distinct categories, and they have very different implications for Input Tax Credit.

Nil-Rated vs. Zero-Rated vs. Exempt - Comparison

Why This Distinction Matters

A hospital providing exempt health services cannot claim ITC on the equipment it buys. If it pays ₹18 GST on a ₹100 medical device, that ₹18 is a real cost - not recoverable.

An exporter providing zero-rated services can claim a full refund of ITC accumulated on inputs , which is why export-oriented businesses file for GST refunds regularly.

A farmer selling nil-rated fresh vegetables cannot claim back the GST paid on fertilisers, tractors, or seeds - the rate structure effectively subsidises the end consumer but does not benefit the farmer's input cost chain.

Composition Scheme Tax Rates

Small businesses with turnover up to ₹1.5 crore (₹75 lakh for some North-Eastern and special category states) can opt for the Composition Scheme under Section 10 of the CGST Act. Composition dealers pay a flat tax on turnover instead of the standard rate, cannot charge GST on invoices, and cannot claim ITC.

Composition Scheme Rates (Current)

Note: Composition dealers pay tax from their own pocket - they cannot charge GST to customers, and they cannot issue tax invoices. They issue Bills of Supply instead. Their buyers cannot claim ITC on purchases made from composition dealers.

When Composition makes sense: If most of your customers are end consumers (B2C), your input costs are low relative to turnover, and your compliance capacity is limited, Composition typically reduces your tax outflow significantly compared to regular registration.

When it does not: If you sell primarily to registered B2B buyers who need ITC, being a Composition dealer makes you uncompetitive because your buyers cannot claim back any tax on your supply.

Reverse Charge Mechanism (RCM) and GST Rates 

Under the standard GST mechanism, the supplier collects and remits GST. Under the Reverse Charge Mechanism (RCM), the recipient pays the GST directly to the government - the supplier does not charge it.

RCM matters for rate purposes because the recipient must self-assess the applicable rate and pay it. Getting the rate wrong in an RCM scenario results in the recipient bearing both the shortfall and any interest or penalty.

Key RCM Scenarios and Applicable Rates

ITC under RCM: GST paid under RCM is eligible for ITC in the same month it is paid - but only if the payment is made in cash (not from ITC balance). This is a critical cash-flow planning point: businesses with large RCM liability must keep sufficient cash to pay RCM and can only recover it as ITC in subsequent months.

For a full list of RCM-notified goods and services, refer to Notification No. 4/2017-Central Tax (Rate) and Notification No. 13/2017-Central Tax (Rate) as amended.

ITC Eligibility Across Rate Slabs

Not all GST paid on inputs is eligible for Input Tax Credit. The CGST Act, Section 17(5), blocks ITC on specific categories regardless of the GST rate charged. Understanding which inputs qualify for ITC is essential for correctly computing your net tax liability.

ITC Eligibility - Rate Slab Interaction

Pro-Rated ITC (Rule 42 / Rule 43)

If you make both taxable and exempt supplies, you cannot claim full ITC on common inputs . ITC must be apportioned in the ratio of taxable turnover to total turnover. Businesses with a mix of GST-taxable and non-taxable revenue (e.g., hospitals with some taxable supplies, schools with some commercial activities) must calculate this apportionment monthly in GSTR-3B.

GST Rate Change History (2017-2025)

The GST Council has met 56 times since 2017 . The following table captures the most significant structural rate changes - not individual product movements, but changes to the architecture of the rate system itself.

GST Rate Structure Change History

GST Rates by Category: Complete Hub Index 

Goods Categories

Services Categories

India's GST rate structure underwent its most significant overhaul since the tax's 2017 introduction when the 56th GST Council abolished the 12% slab and replaced 28% + cess with a flat 40% on September 22, 2025. Understanding these changes matters because:

• B2C businesses must reprice products previously in the 12% bracket
• B2B businesses need to update their tax codes and ERP configurations to reflect the new slabs
• Composition dealers are unaffected on rates but need to understand the ITC implications of the reform for their B2B buyers
• Importers of automobiles, coal, and aerated beverages will see a simplified duty structure without cess