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).

© Vipin Nair. This guide is for reading online only. Copying, downloading, printing and redistribution are not permitted. For study and general reference; not legal, tax or investment advice.