Library / Goods and Services Tax: The Professional's Master Guide

Appendix C: GST Rate Chart after GST 2.0

GST 2.0 took effect on 22 September 2025 on the recommendations of the 56th GST Council meeting held on 3 September 2025. The main slabs are now 5% (merit rate) and 18% (standard rate), with 40% for select demerit and luxury goods and services. The 12% and 28% slabs have largely gone. Compensation cess was removed on all goods other than tobacco from 22 September 2025, and on tobacco too from 1 February 2026.

Key point

This chart is a quick guide, not a substitute for the rate notifications. Rates attach to HSN or SAC entries, and many entries carry conditions (packaged or not, branded or not, with or without ITC). Verify the exact HSN entry and its conditions in the current notification before applying a rate.

Selected goods

Goods	Rate from 22 September 2025
UHT milk, paneer, Indian breads (chapati, roti, paratha)	Nil
33 specified life-saving drugs	Nil
Many packaged food items	5%
Hair oil, soap, toothpaste	5%
Bicycles	5%
Tractors and farm machinery	5%
Solar energy devices	5%
Man-made fibre and man-made yarn	5%
Cement	18% (earlier 28%)
Air conditioners, televisions	18% (earlier 28%)
Small cars (petrol up to 1200 cc, diesel up to 1500 cc, length up to 4 m)	18% (no cess)
Motorcycles up to 350 cc	18% (earlier 28%)
Buses and trucks	18% (earlier 28%)
Bigger cars and motorcycles above 350 cc	40% (no cess)
Aerated sugary drinks and caffeinated beverages	40%
Tobacco products and pan masala (from 1 February 2026)	40% (cess ended)
Bidis	18%

From 1 February 2026, specified tobacco products are valued on retail sale price, and a central excise duty on tobacco and a cess on pan masala manufacturing capacity also apply.

Special rates

A few rates sit outside the main slabs because of the high value or special nature of the goods.

Supply	Rate
Rough precious and semi-precious stones	0.25%
Merchant exports (supply to a registered merchant exporter, subject to conditions)	0.1%
Cut and polished diamonds	1.5%
Gold, silver and jewellery	3%
Affordable residential apartments	1% without ITC
Other residential apartments	5% without ITC

Selected services

Several services now choose between a lower rate without ITC and 18% with ITC. Work out the effect on customers who can or cannot claim credit before choosing.

Service	Rate and ITC position
Hotel accommodation, value up to Rs. 7,500 per unit per day	5% without ITC
Hotel accommodation, value above Rs. 7,500 per unit per day	18% with ITC
Restaurant service (standalone)	5% without ITC
Restaurant in specified premises (hotel with any room tariff above Rs. 7,500)	18% with ITC
Beauty and wellness (salons, gyms, yoga centres)	5% without ITC (earlier 18%)
Individual life and individual health insurance (and reinsurance)	Exempt
GTA, multimodal transport, renting of goods carriage with operator	5% without ITC or 18% with ITC (option)
Passenger transport by motor vehicle	5% without ITC or 18% with ITC
Air travel other than economy class	18%
Job work for specified items (pharma, leather, printing, bricks, umbrellas)	5%
Job work: residual entry	18%
Cinema tickets up to Rs. 100	5%
Casinos, race clubs, betting, gambling, lottery, online money gaming	40%
Admission to IPL-type sporting events	40%
Leasing or renting of goods without operator	Same rate as the goods
Local delivery through an ECO where the supplier is unregistered	18%, paid by the ECO under section 9(5)
Most works contract services, including to Government	18% (check the specific entry)

Practice note

Where a supplier moved from 18% with ITC to 5% without ITC (for example a salon), ITC on stock and capital goods relating to the now lower-rate supply needs review from 22 September 2025. Document the working and the reversal, if any, in the September 2025 file.

Reverse charge summary

Reverse charge applies to notified supplies under section 9(3) of the CGST Act (and section 5(3) of the IGST Act), and to supplies from unregistered persons notified under section 9(4). The list below covers the entries met most often. Each entry has conditions about who the supplier and recipient are.

Supply	Recipient who pays
GTA service where the GTA has not opted for forward charge at 18%	Specified recipients such as factories, companies, firms, societies and registered persons
Legal services by an advocate or firm of advocates	Business entity with turnover above the threshold
Services of an arbitral tribunal	Business entity
Sponsorship services	Body corporate or partnership firm
Services of a director (other than salary)	The company or body corporate
Services of an insurance agent	Insurance company
Services of a recovery agent	Bank, financial institution or NBFC
Transfer of copyright by an author or music composer (subject to option)	Publisher or producer
Security services by a person other than a body corporate	Registered person (with exclusions)
Services by Government or local authority (with exclusions)	Business entity
Renting of residential dwelling	Registered recipient
Renting of commercial property by an unregistered person (from 10 October 2024)	Registered recipient (check current exclusions)
Import of services	Recipient in India (section 5(3) of IGST Act)
Specified goods such as raw cotton, tobacco leaves, cashew nuts (unshelled), silk yarn	Registered recipient

The recipient pays reverse charge tax in cash; it cannot be set off from the credit ledger. ITC is then available to the recipient, subject to the usual conditions. A self-invoice is needed where the supplier is unregistered (rule 47A).