GST 2.0: New GST Slabs (5%, 18%, 40%) and What Businesses Must Do
GST 2.0 collapsed most of the old four-slab structure into two main rates plus a special 40% rate. Here is what changed, how to confirm the rate for your product, and the compliance steps that follow a rate change.
Official portal: CBIC GST
Indus Tax is a private CA firm, not affiliated with the Government of India. This guide explains the official process; we never ask for your portal password.
What GST 2.0 changed
The 56th GST Council meeting on 3 September 2025 approved a simpler rate structure that took effect on 22 September 2025. Most goods earlier taxed at 12% moved to 5%, and most goods at 28% moved to 18%. A new 40% rate applies to a small set of luxury and sin goods. Special rates, such as 3% on gold, continue.
| Rate | Typical coverage |
|---|---|
| Nil / exempt | Essential and exempt items |
| 5% | Merit rate — most items previously at 12% and many daily-use goods |
| 18% | Standard rate — most goods and services, including most items previously at 28% |
| 40% | Special rate for select luxury and sin goods |
Check the rate for your product
Rates are notified by HSN and SAC code. Do not rely on generic lists — check the notified rate for your exact HSN on the CBIC GST website (cbic-gst.gov.in) or with your CA, and keep a note of the notification you relied on.
Compliance checklist after a rate change
A rate change touches billing, pricing and credits:
- Update HSN-wise rates in your billing, ERP and e-invoicing software
- Apply the right rate by time of supply — invoices, advances and payments around a change date follow Section 14 of the CGST Act
- Revise price lists and labels as required
- If your output rate is now lower than your input rate, check for an inverted duty structure and whether accumulated credit is refundable
- Check that the HSN summary in GSTR-1 matches the rates you charged
Other GST changes worth knowing in 2026
The rate change came alongside several process changes:
- 3-day GST registration for small applicants under Rule 14A, from 1 November 2025
- Hard-locking of auto-filled liability in GSTR-3B from the July 2025 period
- The Invoice Management System (IMS) now also covers imports (bills of entry)
- Returns can no longer be filed three years after their due date
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