On this page · 6 sections
- What are the new GST rates in 2026?
- Which retail goods changed rate?
- What must retailers update now?
- How to update GST rates on your items
- GST rates by product
- Frequently asked questions
Rates checked: 15 October 2026.
GST 2.0 replaced India's four tax slabs with just two main rates — 5% and 18% — from 22 September 2025. The 12% and 28% slabs are gone: almost all items in the 12% slab moved to 5%, and most 28% items moved to 18% (see the PIB release on the 56th GST Council meeting (3 September 2025)). A 40% rate applies to a short list of sin and luxury goods. For retailers, this means every HSN-linked tax rate in your billing software, price labels, and printed MRP needs a one-time review — before your next GST return exposes a mismatch.
Here is exactly what changed, which shelves it touches, and the update checklist to run in your shop this week.
What are the new GST rates in 2026?
In 2026 most goods in India are taxed at 5% or 18% GST, with nil for essentials and 40% for tobacco, pan masala, sugary aerated drinks and cars other than small cars. Gold and silver stay at a special 3%. The structure was decided at the 56th GST Council meeting on 3 September 2025 and took effect on 22 September 2025; tobacco and pan masala moved on 1 February 2026:
| Slab | Applies to |
|---|
| 0% (Nil) | Unbranded staples, fresh produce, most everyday food grains |
| 5% (Merit) | Packaged food, toothpaste, soap, hair oil, tableware, and most items earlier at 12% |
| 18% (Standard) | Most goods and services — consumer electronics, TVs, ACs, cement, small cars, and most items earlier at 28% |
| 40% (De-merit) | Sin and luxury goods only — tobacco, pan masala, sugary aerated drinks, cars other than small cars, motorcycles above 350cc, yachts |
| 3% / 0.25% (special) | Gold and silver, including jewellery (3%); rough diamonds and rough precious stones (0.25%) |
The old 12% and 28% slabs no longer exist. If your billing software still lists them, any invoice raised on those rates is now wrong.
Which retail goods changed rate?
The reprice touched almost every shelf. The high-traffic movers for retail shops:
Moved to nil
- Exercise books and notebooks, pencils, sharpeners, erasers, maps and charts (from 12% or 5%)
- UHT milk and pre-packaged paneer (from 5%)
Moved down to 5%
- Packaged namkeen, sauces, pasta, chocolates, and many packaged foods (from 12% or 18%)
- Toothpaste, soap, shampoo, hair oil, toothbrushes (from 18% or 12%)
- Kitchenware, tableware, and most household plastics (from 12%)
Moved down to 18%
- TVs above 32 inches, air conditioners, dishwashers (from 28%)
- Cement (from 28% — a major input for hardware and building-material shops)
- Small cars and motorcycles up to 350cc (from 28%)
- Most consumer electronics and appliances (from 28%)
Moved up to 40%
Sugary aerated drinks and cars other than small cars moved to 40% on 22 September 2025. Tobacco, cigarettes and pan masala stayed at the old 28% plus compensation cess until 31 January 2026, and moved to 40% GST from 1 February 2026, when compensation cess on them was set to nil. Bidis moved to 18% on the same date.
- Tobacco products, cigarettes, pan masala, gutkha
- Aerated and sugary drinks
- Cars other than small cars, motorcycles above 350cc, yachts and other de-merit goods
If you stock kirana, FMCG, electronics, or hardware, most of your catalogue got cheaper on tax — good news you can pass to customers, but only if your system reflects it correctly.
What must retailers update now?
Run this checklist once. It takes an afternoon and prevents months of return mismatches.
- Update tax rates against HSN codes in your billing software. Every product mapped to a 12% or 28% HSN must be reassigned to its new slab. Pull an item list by HSN first so you know exactly which products to change.
- Reprint or relabel MRP-sensitive stock. Where the tax cut lowers the selling price, revise shelf labels so the billed amount matches what the customer sees.
- Clear old stock rules. For inventory bought before 22 September at the old rate, the rate at the time of supply (sale date) applies — so sales from 22 September onward use the new rate regardless of purchase date.
- Check your input tax credit (ITC). ITC on old-rate purchases stays claimable; the change is on your outward supply rate, not the credit you already hold.
- Verify your GST return maps to the new slabs. Your GSTR-1 and GSTR-3B should reflect 5%/18%/40% buckets. See our GST reporting guide for retailers for the filing walk-through.
- Confirm e-invoicing rates if you cross the turnover threshold. If e-invoicing applies to you, check that each B2B invoice carries the new rate before the IRN is generated. Our e-invoicing guide covers who must e-invoice.
How to update GST rates on your items
Work HSN by HSN, not shelf by shelf. List the HSN codes that changed for your category, filter your items by those codes, update the rate, then print a test bill for one item from each code before the counter opens.
In RichPOS the HSN code and GST rate are stored on each item, every bill carries the CGST + SGST or IGST split, and GST reports by HSN export in one click so you can check the new slabs on last month's sales. Check a price quickly with the free GST calculator, or see GST billing software for retail. If you are still comparing options, our RichPOS vs Vyapar comparison and the billing software checklist break down what to look for.
GST rates by product
Sources: PIB release on the 56th GST Council meeting (3 September 2025) and its Annexure (notebooks HSN 4820, UHT milk, tobacco deferral); Notification 9/2025-Central Tax (Rate), 17 September 2025, effective 22 September 2025 (including gold and silver 3%, rough diamonds 0.25%); Notification 19/2025-Central Tax (Rate) and Notification 3/2025-Compensation Cess (Rate), both 31 December 2025, effective 1 February 2026 (tobacco, pan masala, bidis). Rates checked 15 October 2026; confirm the rate for a specific item with your CA.
Related guides: GST on Grocery Items in India 2026: Kirana Rate List; GST on Cosmetics in India 2026: 5% or 18%? HSN & Rates; GST on Stationery in India 2026: Notebooks, Pens, Paper; GST on Cement and Hardware Items in India 2026: Rate List.
FAQ
Frequently asked questions
When did the new GST rates take effect?
The revised GST rates took effect on 22 September 2025, following the 56th GST Council meeting held on 3 September 2025. Tobacco, cigarettes, pan masala and bidis moved to their new rates on 1 February 2026.
What are the GST slabs in 2026?
There are two main slabs — 5% and 18% — plus a nil (0%) category and a 40% de-merit rate for sin and luxury goods. The earlier 12% and 28% slabs were removed.
Do I charge GST at the old rate on stock I bought before September 2025?
No. GST is charged at the rate in force on the date of sale. Any sale made on or after 22 September 2025 uses the new rate, regardless of when you purchased the stock.
Does the rate change affect my input tax credit?
Input tax credit you already accrued on old-rate purchases remains claimable. The rate change applies to your outward supplies (sales), not to credit already recorded.
What is the fastest way to update GST rates in my shop?
Work by HSN code: list the codes that changed for your category, filter your items by those codes, update the rate on each, then verify a few test invoices before going live.
Need a quick figure? Use the free GST calculator to add or remove GST.
ASWritten by Ashok SachdevFounder, RichPOS Software, Ahmedabad. We build RichPOS for Indian shops and write these guides from what shop owners ask us every day. Facts on tax rates and prices are dated; confirm GST matters with your CA. Questions? WhatsApp us.
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