GST 2.0 Explained: The New 5%, 18% and 40% Slabs
Last updated: 1 July 2026
On 22 September 2025, India overhauled GST — dropping two slabs to simplify the system. If you run a business or just want to understand your bills, here's the plain version.
What changed
The old four-slab structure (5%, 12%, 18%, 28%) became three: 5%, 18% and 40%. The 12% and 28% slabs were removed — most 12% items moved to 5%, and most 28% items moved to 18%.
The new slabs
- 0% — essentials like many food staples and some medicines.
- 5% — everyday and mass-use goods.
- 18% — the standard rate for most goods and services.
- 40% — luxury and 'sin' goods (tobacco, aerated drinks, high-end cars).
What it means for you
Many household items got cheaper as they moved to lower slabs. For businesses, invoicing and returns now use a simpler rate structure. Use our GST calculator to split any amount into base price and tax at the new rates.