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: roughly 99% of items taxed at 12% moved to 5%, and about 90% of goods in the 28% bracket dropped to 18%. A new 40% rate now applies only to 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?
Effective 22 September 2025, GST runs on a simplified structure decided at the 56th GST Council meeting on 3 September 2025:
| 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, aerated drinks, high-end cars, yachts |
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 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%)
- Notebooks, exercise books, and stationery basics (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%
- Tobacco products, cigarettes, pan masala, gutkha
- Aerated and sugary drinks
- Luxury cars, motorcycles above 350cc, 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. A good POS lets you bulk-edit by HSN instead of item-by-item.
- 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, the IRP validates the rate — a stale slab gets rejected. Our e-invoicing guide covers the setup.
How to update GST rates without editing every item
The slow way is opening each product and changing its tax field. In a shop with thousands of SKUs, that is days of work and a guaranteed source of errors.
The fast way: use billing software that stores tax against the HSN code, not the individual item. Change the rate once at the HSN level and every product mapped to it updates together. RichPOS handles GST this way — HSN-linked rates, bulk edits, and GST-ready invoices that carry the correct slab automatically. If you are still comparing options, our RichPOS vs Vyapar comparison and the billing software checklist break down what to look for.
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.
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?
Use billing software that links tax rates to HSN codes so you can bulk-update by HSN instead of editing each product. Reassign the affected 12% and 28% items to their new slabs, then verify a few test invoices before going live.
