GST Tax Rates in India

GST Tax Rates in India 2026 – Goods, Services, HSN, SAC and Reverse Charge

GST tax rates in India determine the Goods and Services Tax applicable to taxable supplies of goods and services. Following the GST reforms implemented in September 2025, the rate structure generally comprises two principal slabs of 5% and 18%, a special 40% rate for specified supplies, exemptions and certain concessional rates for designated products.

For businesses, identifying the correct GST rate involves more than selecting a tax percentage. The applicable rate depends on the nature of the supply, HSN or SAC classification, product or service description, relevant exemption notifications, place of supply, recipient category and applicable conditions.

Updated for October 2026: Notification No. 09/2025–Central Tax (Rate), dated 17 September 2025, introduced revised goods rate schedules effective generally from 22 September 2025. Further changes affecting specified tobacco and pan masala products took effect from 1 February 2026. The 57th GST Council meeting on 8 October 2026 also issued recommendations, which must be distinguished from legally notified changes.

This guide explains the current GST rate structure, important goods and services categories, reverse charge mechanism, HSN/SAC classification, input tax credit implications and the procedures businesses should follow when GST rates change.

EzyBiz India Consulting LLP assists Indian companies and foreign-owned businesses with GST classification, rate interpretation, input tax credit, reverse charge, return filing, reconciliations and departmental proceedings.

Need professional advice on the applicable GST rate? Call +91 98992 17778, email anil@ezybizindia.in or contact our GST team on WhatsApp.

Explore our GST and Indirect Tax Advisory Services, GST Return Filing Services and GST Assessment and Litigation Services.

GST Tax Rates in India – Overview for 2026

What Is the GST Rate Structure?

GST is levied on taxable supplies according to the rate prescribed for the relevant goods or services. The revised framework implemented in September 2025 generally uses 5% and 18% as the principal rates, along with a special 40% rate for specified supplies.

Nil-rated, exempt and specially rated supplies continue to exist. Therefore, every product or service should be classified under the applicable legal schedule before determining its tax rate.

What Changed in September 2025?

The 56th GST Council recommended a significant restructuring of GST rates. The Government implemented major changes through notifications issued on 17 September 2025, generally effective from 22 September 2025.

The reforms reduced rates on a number of goods and services while moving certain specified categories into the special 40% rate framework.

Are All Goods and Services Taxed at 5% or 18%?

No. The two principal rates do not eliminate exemptions, zero-rated supplies or special concessional rates.

Specified precious metals, stones, luxury products and other categories may attract different rates, while certain supplies remain exempt or outside the scope of GST.

GST Rate Chart 2026 – Principal Tax Slabs

5% GST Rate – Merit Rate

The 5% rate broadly applies to specified essential goods, selected food products, medicines, agricultural inputs and certain other categories, subject to the exact HSN description and notification.

Some services also attract 5%, with conditions relating to input tax credit in particular cases.

18% GST Rate – Standard Rate

The 18% rate is the principal standard rate for many industrial products, consumer goods and services.

Businesses should not automatically apply 18% merely because a supply is commercial; specific exemption and rate entries must first be reviewed.

40% GST Rate and Other Special Rates

The special 40% rate applies to prescribed categories, including specified luxury goods, high-sugar or aerated beverages, certain vehicles and other notified supplies.

Separate concessional rates such as 3%, 0.25% and other notified rates continue for selected goods. The exact classification and effective date remain essential.

GST Rate	General Coverage	Important Qualification
Nil / Exempt	Specified exempt goods and services	Depends on exemption entry and conditions
5%	Specified essential goods and services	HSN/SAC and ITC conditions apply
18%	Many standard goods and services	Subject to specific rate notifications
40%	Specified luxury and special categories	Applies only to notified supplies
Special rates	Specified metals, stones and other products	Product-specific notified schedules apply

For exact rates, consult CBIC’s Tax Information Portal and the relevant rate notifications rather than treating this broad overview as a complete HSN-wise tariff schedule.

GST Rates on Goods in India

GST on Food and Agricultural Products

Rates on food products depend on the precise nature of the goods, processing, packaging, labelling and relevant exemption conditions.

Fresh and unprocessed food products may receive different treatment from prepared, preserved or pre-packaged products. Businesses should verify the actual HSN description.

GST on Consumer and Household Goods

The revised structure includes rate changes for several categories of household appliances, personal-care products and consumer goods.

The treatment of an individual product must be established through the current notification rather than historical lists showing old 12% or 28% rates.

GST on Industrial Goods and Machinery

Many machinery, equipment, electrical and industrial products fall under the standard rate, but specific items may attract concessional or other prescribed rates.

Manufacturers and traders should review the classification of complete machines, components, parts, accessories and composite products independently where necessary.

For manufacturing-specific issues, read our Impact of GST on Manufacturing Sector guide.

GST Rates on Services in India

GST on Professional and Consultancy Services

Many professional, management, consultancy, accounting, technical and business support services ordinarily attract 18% GST where taxable.

Specific service descriptions, exemptions, place-of-supply provisions and reverse charge notifications must be considered before determining the treatment.

GST on Transportation and Logistics Services

Goods transport agency services, passenger transportation and other logistics services can attract different rates depending on the service category and applicable options.

Some rates carry conditions concerning input tax credit. Reverse charge may also apply to specified GTA transactions depending on the relevant notification and circumstances.

GST on Hospitality, Restaurants and Accommodation

Restaurant and accommodation services are governed by specific rate entries and conditions that have changed over time.

The rate may depend on the nature of the premises, accommodation value, service category and ITC conditions. Historic distinctions based solely on air-conditioning or hotel star ratings should not be relied upon.

For the current service-rate schedule, consult the GST Council and CBIC notifications.

GST Reverse Charge Mechanism – Rates and Applicability

What Is Reverse Charge under GST?

Under the reverse charge mechanism, the recipient rather than the supplier is required to pay GST on specified supplies.

Reverse charge is governed by Sections 9(3) and 9(4) of the CGST Act, corresponding IGST provisions and applicable notifications.

Important Services Covered by Reverse Charge

Specified categories may include services supplied by advocates to qualifying business entities, sponsorship services, director services, certain goods transport agency supplies and specified services received from outside India.

The detailed conditions, persons liable, applicable exemptions and available forward-charge options must be checked for each category.

GST Rate and ITC under Reverse Charge

The GST rate applicable under reverse charge is determined by the relevant supply classification and notification. Reverse charge does not automatically mean that every transaction attracts 18% GST.

Tax payable under reverse charge must generally be discharged in cash. Eligible input tax credit may subsequently be claimed subject to statutory requirements.

Service Category	RCM Consideration
Legal services by advocates	Specified business recipients may be liable
Director services	Specified services to company or body corporate may attract RCM
Sponsorship services	Recipient/category conditions and latest notifications apply
Goods transport agency	Forward charge options, recipient category and RCM rules must be checked
Import of services	Relevant place-of-supply, exemption and RCM provisions apply

The table identifies areas requiring examination; it is not a declaration that reverse charge applies to every transaction within the listed service categories.

GST Rates for IT, Software and Digital Services

Software Development and IT Consultancy

Domestic taxable software development, IT consulting and technical support services commonly attract the standard GST rate, subject to classification and transaction facts.

Businesses should distinguish customised services from supplies of goods, licences and other digital arrangements where the legal treatment differs.

Software Licensing and Digital Products

Software licences, subscriptions, cloud services and digital products require examination of the actual contract, nature of supply and relevant SAC or HSN classification.

The applicable GST treatment can depend on whether the arrangement is a supply of goods or services and the location of the supplier and recipient.

Export of IT Services and Zero Rating

Qualifying exports of services are zero-rated under the applicable IGST provisions, subject to the statutory definition and conditions.

Zero rating does not mean every service invoice issued to a foreign customer automatically qualifies. Place of supply, recipient location, payment and intermediary-related questions may need analysis.

For related issues, see GST Refund Problems Faced by Exporters.

GST Rates for Manufacturing and Trading Businesses

HSN Classification of Manufactured Goods

Manufacturers should classify products using the relevant HSN descriptions, chapter notes, applicable interpretative rules and current GST notifications.

Incorrect classification can result in short payment, excess charging of tax or disputed input tax credit.

GST Rate on Raw Materials and Finished Goods

Raw materials and finished goods may attract different GST rates because of their distinct classification.

Manufacturers should examine whether any resulting accumulation of ITC qualifies for refund under the inverted duty structure provisions.

GST on Scrap, By-Products and Stock Transfers

Scrap and by-products may have their own HSN classifications and GST rates.

Stock transfers between distinct registered persons can also attract GST under Schedule I, subject to the relevant valuation and supply rules.

Read our Accounts and Records under GST for related record-keeping requirements.

How to Identify the Correct HSN or SAC Code

Difference between HSN and SAC

HSN is used to classify goods, while SAC is used to classify services.

The classification should reflect the true nature of the supply and the applicable tariff or service description rather than the taxpayer’s preferred rate.

Step-by-Step GST Rate Classification

Begin with the product specification or service agreement. Identify possible HSN or SAC headings, examine descriptions and exclusions, and review the corresponding rate and exemption notifications.

Where uncertainty remains, evaluate relevant CBIC clarifications, judicial precedents and advance rulings in their proper jurisdictional and factual context.

Common HSN and SAC Classification Mistakes

Common errors include using outdated tax-rate lists, applying a rate intended for another product, ignoring exclusions and treating a bundled supply as several unrelated items without legal analysis.

Businesses should document their classification rationale and periodically review it when rates or business activities change.

How to Calculate CGST, SGST and IGST

GST Calculation on Intra-State Supplies

For a taxable intra-State supply, the applicable GST ordinarily consists of CGST and SGST or UTGST in the prescribed proportions.

For example, an ordinary supply taxable at 18% would generally involve 9% CGST and 9% SGST.

IGST on Inter-State Supplies

IGST generally applies to qualifying inter-State taxable supplies and relevant imports, subject to the governing provisions.

An ordinary taxable supply of ₹1,00,000 at 18% IGST results in IGST of ₹18,000 and a gross invoice amount of ₹1,18,000.

GST Calculation Example

Particulars	Intra-State Supply	Inter-State Supply
Taxable value	₹1,00,000	₹1,00,000
Applicable GST rate	18%	18%
CGST	₹9,000	–
SGST	₹9,000	–
IGST	–	₹18,000
Total invoice value	₹1,18,000	₹1,18,000

The illustration assumes an ordinary taxable supply with no exemption, cess, discount adjustment or other special valuation provision.

GST Rate Changes and Time-of-Supply Rules

When Does a Revised GST Rate Apply?

When a notified GST rate changes, the applicable tax rate may depend on the date of supply, invoice and payment under Section 14 of the CGST Act.

The rate should not be determined solely from the date on which the invoice was entered into the accounting software.

Old Stock and Revised GST Rates

Businesses holding inventory purchased before a rate change may need to apply the revised rate when making a subsequent taxable supply, depending on the statutory rules and effective date.

The original purchase invoice’s tax rate does not automatically govern every later sale.

Changes to ERP and Invoice Masters

After a rate notification, businesses should update HSN/SAC masters, invoice systems, price lists, purchase orders and tax-calculation controls.

Retain evidence of the effective date and review transactions around the transition to prevent incorrect invoicing.

GST Exemptions, Nil-Rated and Zero-Rated Supplies

Difference between Nil and Exempt Supplies

A nil-rated supply is subject to a nil rate, while an exempt supply may be exempted through the applicable statutory framework.

The definitions and input tax credit consequences should be considered rather than treating the terms as interchangeable in all circumstances.

Zero-Rated Supplies and Exports

Qualifying exports and supplies to SEZ units or developers are zero-rated under the applicable IGST Act provisions, subject to prescribed conditions.

Refund mechanisms may be available for eligible zero-rated supplies, but the appropriate procedure depends on the supply and applicable legal framework.

Input Tax Credit Impact of Exempt Supplies

Exempt supplies may affect the availability or reversal of input tax credit under Section 17 and the relevant rules.

A business making both taxable and exempt supplies should maintain appropriate records and credit apportionment workings.

For refund eligibility, see our GST Refund Services in India.

GST Rates for Imports and Exports

IGST on Imported Goods

Imports of goods generally involve Customs duties and IGST in accordance with Customs and IGST legislation, subject to relevant exemptions and valuation provisions.

Importers should verify the applicable tariff classification and tax rates using the relevant Customs and GST notifications.

Import of Services and Reverse Charge

Imported services may attract GST through reverse charge where the applicable place-of-supply, import-of-services and charging conditions are satisfied.

Cross-border contracts should be reviewed for related-party transactions, recipient identity and relevant exemptions.

Exports and GST Refund Procedures

Exports that satisfy the zero-rating conditions may qualify for the legally applicable refund mechanism.

Exporters should maintain appropriate invoice, banking, return and Customs records to substantiate their claims.

Refer to the ICEGATE Customs Portal for relevant Customs information and our GST Refund Documentation Guide.

GST Council Reforms and Important Notifications in 2026

September 2025 Rate Notifications

Notification No. 09/2025–Central Tax (Rate) replaced the earlier principal goods rate notification with revised goods schedules.

Notification No. 10/2025–Central Tax (Rate) addressed exemptions for goods, while separate service-rate and other category-specific notifications must also be considered.

February 2026 Changes for Specified Products

Separate notified changes effective from 1 February 2026 addressed specified tobacco and pan masala products, including rates and retail-sale-price-based valuation requirements.

Businesses dealing in such products should review the specific notifications rather than relying on the general September 2025 transition date.

57th GST Council Meeting – October 2026

The GST Council’s meeting on 8 October 2026 recommended measures relating to registration, compliance, refunds, adjudication and selected clarifications.

Recommendations do not automatically change the applicable tax rate. Businesses should verify whether an implementing notification has taken effect.

For official updates, consult the GST Council Press Releases and Government FAQs on the 2025 Rate Changes.

GST Classification Errors, Notices and Litigation

Consequences of Applying an Incorrect GST Rate

An incorrect rate may cause short payment, excess tax collection, inaccurate returns or disputes regarding input tax credit.

The consequences depend on the tax period, the facts, the amount involved and applicable GST provisions.

GST Demand and Show Cause Notices

GST authorities may question the classification or valuation used by a taxpayer during scrutiny, audit or adjudication.

A response should explain the supply, tariff classification, applicable notification and supporting legal reasoning.

Advance Ruling and Appeal Options

Where an eligible classification question arises, the taxpayer may consider the GST advance ruling mechanism under the applicable statutory framework.

Adverse demand orders may be challenged through available appellate remedies, subject to limitation and other legal requirements.

Explore our GST Notice Reply Services and GST Appeal Against Demand Order.

GST Rate Advisory Services by EzyBiz India

GST HSN and SAC Classification Advisory

EzyBiz India Consulting LLP assists businesses with identifying appropriate GST classification and examining relevant rate notifications, exemptions and statutory conditions.

Our professional review may cover goods, services, bundled transactions, related-party supplies and selected industry-specific issues.

Reverse Charge and ITC Advisory

Our Chartered Accountant-led team assists with reverse charge evaluation, input tax credit eligibility, accounting treatment and relevant GST return reporting.

We also support businesses requiring recurring GST Return Reconciliation.

GST Rates and Compliance for Foreign Companies

We assist foreign-owned Indian subsidiaries, importers, exporters, manufacturers, traders and service providers with GST classification and compliance issues.

Our support may be integrated with India Market Entry Consulting and Accounting and Bookkeeping Services.

Frequently Asked Questions on GST Tax Rates

What Are the Main GST Rates in India in 2026?

The main rates are generally 5% and 18%, with a special 40% rate for certain supplies. Exemptions and separate concessional rates also exist.

Is 12% GST still applicable to all products previously taxed at 12%?

No. Many rates changed in September 2025. Businesses must check the latest notified classification and rate for each product or service.

Is 28% GST still a general rate slab?

The September 2025 reforms replaced the earlier broad multi-slab structure. However, certain specially treated product categories and transitional periods require separate examination.

What is the GST rate on consultancy services?

Many taxable consultancy services ordinarily attract 18%, subject to the service classification, exemption and transaction circumstances.

Does Reverse Charge Always Apply at 18%?

No. Reverse charge determines who pays tax; the rate depends on the relevant supply classification and applicable notification.

How do I find the correct HSN or SAC rate?

Examine the nature of the goods or services, classification rules and current GST rate notification, including exclusions and conditions.

Can an incorrect GST rate result in a tax notice?

Yes. Incorrect classification or application of a tax rate may lead to scrutiny, audit observations, demand proceedings or other statutory action.

Can EzyBiz India Help Determine the Applicable GST Rate?

Yes. We provide professional assistance with GST rates, HSN/SAC classification, reverse charge, ITC and related GST compliance or litigation issues.

Mobile: +91 98992 17778
Email: anil@ezybizindia.in
WhatsApp: Speak with Our GST Experts

Related Services and Supporting GST Guides

• GST and Indirect Tax Advisory Services – Main Pillar
• GST Registration Services in India
• GST Return Filing Services
• GST Return Filing Process
• GST Return Due Dates and Late Fees
• GST Return Reconciliation Guide
• Impact of GST on Manufacturing Sector
• Accounts and Records under GST
• E-Way Bill under GST
• GST Refund Services in India
• GST Refund Difficulties Faced by Exporters
• GST Audit Services
• GST Notice Reply Services
• GST Assessment and Litigation Services
• GST Appeal Against Demand Order
• Accounting and Bookkeeping Services
• India Market Entry Consulting Services

Official GST and Regulatory References

• GST Portal – Government of India
• CBIC Tax Information Portal – Rate Notifications and Legislation
• Notification No. 09/2025–Central Tax (Rate) – Goods Rates
• Notification No. 10/2025–Central Tax (Rate) – Exempt Goods
• GST Council – Official Press Releases
• PIB – September 2025 GST Rates FAQs
• PIB – Recommendations of the 56th GST Council
• PIB – Recommendations of the 57th GST Council, October 2026
• ICEGATE – Indian Customs Electronic Gateway
• India Code – Indian Legislation

Contact EzyBiz India Consulting LLP

Mobile: +91 98992 17778

Email: anil@ezybizindia.in

WhatsApp: Contact Our GST Advisory Team

Reviewed By: CA Anil Agrawal, Founder, EzyBiz India Consulting LLP.

Last Updated: October 2026.

Disclaimer: This article provides general information about GST tax rates, exemptions, reverse charge, classification and related compliance in India. It does not constitute a definitive item-wise rate determination or transaction-specific tax or legal advice. GST rates, HSN and SAC classification, exemptions, credit conditions and reverse charge obligations depend on the description of the supply, the relevant notification, effective dates and other statutory provisions. The September 2025 rate reforms and February 2026 changes must be read with their implementing notifications and subsequent amendments. GST Council recommendations do not automatically change legally operative tax rates. Businesses should verify the latest government notifications and obtain professional advice before changing tax rates, issuing invoices or claiming input tax credit.