Types of GST Rates in India: New Rate List, and Updates

The Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based tax that has been revolutionary in the indirect taxation scenario in India. In July 2017, GST merged various indirect taxes under one uniform taxation framework in India. The GST Council has regularly reviewed and updated rates over the years in a bid to keep pace with the nation’s changing economic requirements. Let’s look at different types of GST rates in India, the new GST rate list, and the summary of recent changes in the council meetings.

What is the GST Rate?

The GST Rate refers to the percentage of tax applied to the value of goods and/or services under the Goods and Services Tax (GST) framework in India.

When a product is sold or a service is provided, the GST rate determines how much tax the buyer pays and how much revenue the government collects from that transaction. This rate is applied to the transaction value, which typically includes:

• The base price of the goods or services
• Any additional charges related to supply (such as packaging, delivery, and installation, if applicable)

The GST rate is a critical component of the GST system, as it ensures that the tax burden is shared fairly between consumers and businesses, while also generating the necessary revenue for both the Central Government and State Governments.

Understanding GST Rates in India

Goods and services in India fall under different GST slabs: 0% for essential items, 5% for basic necessities, 12% for standard goods, 18% for most consumer products, and 28% for luxury and sin goods. Each slab is designed to categorise goods and services according to necessity and luxury.

The GST rates in India are separated into slabs, which apply to certain types of services and products. This division guarantees that necessities are taxed at a lower rate and luxury and sin goods at a higher rate. Here’s a short explanation of GST’s significance and impact on businesses and customers.

Basic Concept of GST Rates

Businesses that are GST-registered must levy tax as per the applicable rate on the items and services they provide. The GST rate is the tax shown as a percentage of the value of the taxable property. For instance, if a product costs INR 20,000 and it has a 12% GST rate, then the GST for that product will be INR 2,400. The current GST rate in India is from 0% to 28%, with certain products and services being subject to additional cess.

Types of GST Rates

The GST rate structure is carefully thought out in order to tax everyday essentials at a lower rate, while high taxes are levied on luxury and sin items. Here are the major GST rate slabs defined in India.

• Nil Rate (0%): Key commodities and services like raw food products, education services, and medical services come under this category and are not subject to GST.
• 5% Rate: Items of mass consumption and social value, such as packaged food products, footwear below a certain amount, and essential items, are taxed at this rate.
• 12% Rate: The slab includes processed foods, certain drugs, and intermediates.
• 18% Rate: Regular goods and services such as the bulk of consumer goods, industrial intermediaries, and services are subjected to this rate.
• 28% Rate: High-end goods, sin products like tobacco and carbonated drinks, luxury consumer durables are the items taxable in this upper tax bracket.

Some products are subject to special tax, such as 3% for precious metals like gold and silver and 0.25% for semi-precious stones. For composition taxpayers, nominal GST of 1.5%, 5%, or 6% may be applicable.

Read more: Types of GST

New GST Rate List

The GST Council had its 54th meeting on 9 September 2024 and recommended a few GST rate amendments to deal with the revenue issue and correct inverted duty arrangements. These changes were later announced by the Central Board of Indirect Taxes and Customs (CBIC). Let’s view the new GST rate list for essential, standard, and luxury goods and services.

GST Rates for Essential Goods (0% GST Rate)

Product	GST Rate
Milk	0%
Kajal	0%
Eggs	0%
Educational Services	0%
Health Services	0%
Unpacked Foodgrains	0%
Unbranded Atta/Maida	0%
Gur (Jaggery)	0%
Unbranded Natural Honey	0%
Fresh Vegetables	0%
Prasad (Offerings to Deities)	0%
Sanitary Napkins	0%

GST Rates for Essential Goods (5% GST Rate)

Product	GST Rate
Packed Paneer	5%
Sugar	5%
Domestic LPG	5%
Edible Oils	5%
Raisins	5%
Cashew Nuts	5%
Tea	5%
Roasted Coffee Beans	5%
Life-saving drugs	5%
Footwear (Price < INR 500)	5%
Apparels (Price < INR 1000)	5%
Skimmed Milk Powder	5%
Mishti/Mithai (Indian Sweets)	5%

GST Rates for Standard Goods (12% GST Rate)

Product	GST Rate
Butter	12%
Ghee	12%
Processed Foods	12%
Almonds	12%
Fruit Juice	12%
Mobiles	12%
Packed Coconut Water	12%
Jam, Jelly	12%
Umbrella	12%
Condensed Milk	12%
Dried Nuts	12%
Mobile Phones	12%

GST Rates for Consumer Goods (18% GST Rate)

 

Product	GST Rate
Hair Oil	18%
Capital Goods	18%
Toothpaste	18%
Soap	18%
Ice-cream	18%
Computers	18%
Printers	18%
Pasta	18%
Toiletries	18%
Corn Flakes	18%
Soups	18%

Note: Mobile Phones typically fall under the 12% GST slab, not 18%.

GST Rates for Luxury and Sin Goods (28% GST Rate)

Product	GST Rate
Small Cars (plus 1% or 3% cess)	28%
High-end Motorcycles (plus 15% cess)	28%
Consumer Durables (e.g., ACs, Fridges)	28%
Cigarettes (plus 15% cess)	28%
Aerated Drinks (plus 15% cess)	28%
Luxury Cars	28%
Caffeinated Beverages	28%
Aircraft for Personal Use	28%
Smoking Pipes	28%
Carbonated Beverages	28%

Note: Many items in the 28% GST slab also attract an additional cess, especially luxury and sin goods.

Special GST Rates for Specific Products

Product	GST Rate
Imitation Jewelry	3%
Diamonds	0.25%
Precious and Semi-Precious Stones	3%
Gold	3%
Natural Pearls	3%
Synthetic or Reconstructed Precious Stones	0.25%

GST Rates for Services (Select Examples)

Service	GST Rate
Educational Services (Govt. & Charitable Trusts)	0%
Health Services	0%
Services by Goods Transport Agency (GTA)	5%
Restaurant Services	5%
Air Travel (Economy Class)	5%
Renting of Motor Vehicles	18%
Construction of Residential Apartments	12%
Business Services for Mining	12%
Telecom Services	18%
Postal and Courier Services	18%
Casino and Race Club Services	28%

Summary of Recent Changes in GST Rates

Goods/Service	Previous GST Rate	New GST Rate
Cancer Drugs	12%	5%
Namkeens & Extruded/Expanded Snacks	18%	12%
Car & Motorcycle Seats	18%	28%
Import of Services by the Branch Office of Foreign Airlines	Taxable	Exempted
Solar Cookers	Variable	12%
Hostels (under specified rent limits)	Taxable	Exempted
Water Supply Services	Taxable	Exempted

Recent GST Rate Changes by Industry in 2025

1. Food and Beverages

• Fortified Rice Kernel (FRK): The GST rate on Fortified Rice Kernel (FRK) has been reduced from 18% to 5%. This change is aimed at promoting nutrition and making fortified foods more affordable.
• Extruded/Expanded Snack Pellets: The GST rate for these snack pellets was reduced to 12% from 18%, bringing them in line with other savory snacks.
• Milk Cans: To ensure uniformity, a standardized GST rate of 12% has been applied to all types of milk cans made of iron, steel, or aluminum.
• Ready-to-Eat Popcorn: The GST rate has been clarified, with rates based on preparation method. It was also noted that caramelized popcorn has been reduced to 5% after initial adjustments.

2. Healthcare and Pharmaceuticals

• Cancer Drugs: The GST on certain life-saving cancer drugs, such as Trastuzumab Deruxtecan and Osimertinib, has been lowered to 5% from 12%. This is a significant move to reduce the cost of cancer treatment.
• Gene Therapy: Gene therapy has been fully exempted from GST to support advanced healthcare innovations.
• Medical Devices: While general medicines remain at 5%, the GST on certain medical devices, such as stents, has been reduced to 12%, making them more affordable for consumers.

3. Automobiles and Transport

• Used Vehicles: The GST rate on the sale of old and used vehicles, including EVs, by registered businesses has been increased from 12% to 18%. This tax applies to the profit margin (the difference between the purchase and selling price) of the dealer.
• Electric Vehicles: The concessional GST rate of 5% on electric vehicles remains in place to support the government’s push for sustainable mobility.
• Helicopter Passenger Transport: The GST on helicopter passenger transport on a seat-sharing basis has been set at 5%, while charter services remain at 18%.
• Railway Services: Several services offered by Indian Railways have been exempted from GST, including platform tickets, retiring rooms, cloakrooms, and battery-operated car services.

4. Manufacturing and Industrial Goods

• Solar Cookers and Sprinklers: A uniform GST rate of 12% has been applied to all types of solar cookers and sprinklers.
• Cartons and Boxes: The GST rate on cartons and boxes (HS 4819) has been slashed from 18% to 12%.
• Railway Goods and Parts: The GST rate for railway goods and parts under Chapter 86 has been increased from 12% to 18%.
• Extra Neutral Alcohol (ENA): ENA used for making human-grade liquor has been exempted from GST.

5. Services

• Hotel Accommodation: A new framework has been introduced for hotel accommodation. The GST rate is now linked to the actual value of supply. The GST on restaurant services in hotels will be either 18% with ITC or 5% without ITC, with the hotel having the option to choose at the beginning of the financial year.
• Hostel Accommodation: Hostel accommodation with a monthly charge of less than ₹20,000 and a stay of up to 90 days is now exempt from GST.
• E-Commerce: The Tax Collected at Source (TCS) for e-commerce suppliers has been reduced from 1% to 0.5%.

It is important for businesses to stay updated on these changes and consult with a tax professional to ensure proper compliance, as the GST Council regularly reviews and revises rates.

Read more: Search GST number

HSN and SAC Codes in GST Rate Classification

Part of GST registration is the implementation of the Harmonized System of Nomenclature (HSN) and Service Accounting Codes (SAC) for goods and services classification. Let’s see how such systems function in the GST regime.

HSN Code System for Goods

The HSN system, developed by the World Customs Organization, identifies traded commodities in a structured manner that assists international trade. HSN codes are composed of six or eight digits and each level provides more precise item identification. For instance, the HSN code of rice “1006” indicates that it is in the cereal category. Here is the format of the HSN code system.

• Starting Two Digits: Mentions the chapter number (general category).
• Next Two Digits: Mentions the heading (subcategory).
• Following Two Digits: Mentions the subheading (more specific classification).

For instance, the HSN code for rice is “1006,” where:

• 10 refers to the chapter on cereals.
• 06 is specific to rice.

HSN codes, when properly used, can result in accurate taxation and organized customs documentation and avoid classification disputes.

SAC Code System for Services

India’s CBEC’s SAC system operates the same way for services and separates them into different service segments like legal services, telecommunications, and transportation. Every SAC code helps to identify the specific service type and GST rate for it.

Read more: GST payment

HSN and SAC Codes Help Determine the Appropriate GST Rate Slab

GST rates in India are determined based on the categories of goods and services as per HSN and SAC codes as these codes directly impact the tax rate levied. The GST Council decides tax rates based on the HSN/SAC code to ensure taxation in India is uniform and fair.

• Essential Goods and Services (Lower Slabs): Essential products and services such as uncooked food, public transportation, and education are given HSN and SAC codes which are equal to the GST rate ranging from 0% or 5%.
• Standard Goods and Services (Mid Slabs): Products such as processed food, electronic goods, industrial items etc. falls in 12% or 18% slabs. For each of these products and services, there are separate HSN/SAC codes associated with their type.
• Luxury and Sin Goods (Highest Slab): Luxury goods, tobacco products and high-end consumer goods usually fall under 28% tax category and the HSN codes uniquely mark them in this tax slab.

Read more: GST Registration Requirements

Ensuring Compliance, Precision, and Process Efficiency

HSN and SAC codes are the backbone of applying the right GST rate slab to ensure proper tax classification and compliance for all products and services. The categorization ensures that taxation remains systematic and just under India’s GST regime.

• Tax Calculation Accuracy: Using the right HSN or SAC code will allow businesses to calculate the right GST rate and eliminate tax mistakes that could incur penalties.
• Simplified Filing and Documentation: HSN and SAC codes help to reduce paperwork for the GST system because these codes specify the tax rate for each item or service. This makes it less ambiguous and also makes GST filing easy.
• Consistency Across India: HSN and SAC codes are standardized so similar goods and services will be taxed similarly across the country to avoid regional differences.

Read more: Financial Accounting

Key Takeaways and GST Rate Revisions from Recent Council Meetings

Rate Rationalization Remains a Priority: The Group of Ministers (GoM) on rate rationalization continues to work on simplifying the GST slab structure. The long-term goal is to reduce the number of slabs from the current four (5%, 12%, 18%, 28%) to a more streamlined two or three-slab structure. There have been discussions about potentially merging the 12% and 18% slabs, which would significantly reduce classification disputes but could also impact consumer prices.

• Focus on Compliance Simplification: A major theme of recent meetings has been to ease the compliance burden, particularly for small and medium-sized businesses (MSMEs). This includes:
• Mandatory Input Service Distributor (ISD) Registration: A significant change that came into effect on April 1, 2025, made ISD registration mandatory for businesses with multiple GST registrations under a single PAN. This is aimed at standardizing and improving the distribution of Input Tax Credit (ITC).
• Multi-Factor Authentication (MFA): To enhance security, MFA has been phased in for all taxpayers, regardless of their turnover, by April 1, 2025.
• E-Invoicing and E-Way Bills: The government has been tightening the timelines for e-invoicing and e-way bill generation to improve reporting discipline and combat tax evasion.
• Amnesty Schemes and Dispute Resolution: The Council has continued to offer amnesty schemes to help taxpayers resolve past non-compliance issues. The rollout of the GST Appellate Tribunal (GSTAT) is also a key focus, to create a dedicated forum for quicker resolution of tax disputes.
• Future of Compensation Cess: The GST compensation cess, which was extended to March 31, 2026, is a topic of ongoing discussion. The Council is deliberating on its future, with proposals including replacing it with a new cess, particularly for “sin goods” and luxury items, to ensure a stable revenue stream for states.

Notable GST Rate Revisions and Clarifications

While a complete rate rationalization is still in progress, several targeted rate changes and clarifications have been announced:

• Fortified Rice Kernels (FRK): The GST rate has been reduced from 18% to 5% to promote nutrition and affordability.
• Electric Vehicles (EVs): The concessional rate of 5% on EVs remains to support the government’s push for green mobility. However, the GST on the sale of used EVs by registered dealers has been increased to 18% on the profit margin.
• Hostel and Hotel Accommodation: GST exemptions have been provided for hostel accommodation with a monthly charge below a certain threshold to support students. New rules for hotels have been introduced, linking the GST rate to the actual value of the room.
• Online Gaming: The 28% GST on the full face value of bets in online gaming, casinos, and horse racing remains in place, a decision that has been a subject of litigation and industry debate.
• Railway Services: Several services offered by Indian Railways, such as platform tickets and retiring rooms, have been exempted from GST.

Also Read: How to search GST Number

Conclusion

GST rates in India are designed to keep necessities affordable while collecting profit from luxuries and non-essential products. The GST Council, with its regular audits, keeps these rates relevant to the economy. The GST rate structure (0%, 5%, 12%, 18%, and 28%) combined with special rates creates a progressive tax regime for economic development and consumer welfare.

Understanding the GST rate list and keeping up to date with its revisions will help businesses and consumers make well-informed choices and benefit from a transparent tax regime which will help streamline India’s economy. The GST regime continues to evolve to keep pace with the demands of India’s dynamic economy while facilitating inclusive growth.

FAQs

1. What are the GST rate slabs in India?
   The GST rates in India are classified into five slabs – 0%, 5%, 12%, 18% and 28%. There are also special rates of 0.25% and 3% on certain products, such as precious stones and gold, respectively. These tax slabs ensure that essential goods are less taxable and luxury and non-essential items are taxed higher.
2. Who decides the GST rates in India, and how often are they revised?
   The GST Council (the group of delegates from central and state governments) sets the GST rates in India. Rates are reviewed and updated periodically by the Council to reflect economic demands and industry trends.
3. What is an HSN code, and how does it relate to GST rates?
   The Harmonized System of Nomenclature (HSN) is a globally accepted code system for goods. With GST, each HSN code is linked to a certain GST rate to maintain consistency in taxes on different types of goods.
4. What is a SAC code and what is its significance for service providers under GST?
   The ​​Service Accounting Code (SAC) is a special code used to categorize services under GST. It works like HSN codes but is for services. The correct SAC codes make sure that the services get correctly categorized and are taxed the correct GST rate, to avoid compliance issues.
5. How does the GST rate on transport of goods by road vary by provider?
   The GST rate on the transport of goods by road is 5% under reverse charge, wherein the recipient is paying, whereas under forward charge wherein the provider is paying, the tax rate is 12%. Non-GTA (Goods Transport Agencies) operators are typically exempted from GST.
6. Are all essential items exempt from GST?
   No, not all basic needs are GST-exempt. Taxes on some necessities are 0%, for instance, fresh fruits, milk, and education services. However, some basic needs, such as packaged foods and household LPG, are subject to the 5% GST slab.
7. Can businesses claim Input Tax Credit (ITC) on all GST payments?
   Companies can receive ITC on purchases and expenses paid for under GST, provided that these are related to taxable sales or services. But ITC cannot be claimed for personal use or exempt goods/services, and certain tax rates, such as for the 5% RCM on GTA, ITC is not granted.
8. What happens if a business uses an incorrect HSN or SAC code?
   If a business uses the wrong HSN or SAC code, incorrect GST rates will be used, which can result in penalty, deferment, or withdrawal of input tax credits and filing issues.
9. Are GST rates uniform across all states in India?
   Yes, GST rates in India are the same for goods and services, according to the GST Council. This single structure eliminates state-by-state variation and builds a unified market.
10. How can businesses find the correct GST rate for a specific product or service?
    The HSN or SAC code of the product or service can help businesses calculate the right GST rate. For instance, CBIC’s HSN and SAC finder or GST portals can help identify rates and ensure accurate categorization and compliance.