New GST rates in 2026: the 5%, 18% and 40% slabs, and what they mean for your shop

Customers ask why the TV is cheaper than last year, your supplier’s bill shows 5% where it used to show 12%, and your billing app still has the old rates. GST changed more in September 2025 than at any time since it began in 2017, and many shops are still pricing some items the old way.

This guide lists the new GST slabs, what got cheaper and what costs more, using only items the GST Council and the rate notifications name, and shows how a small shop re-prices its stock. The GST calculator beside the guide follows along: as you read each part, it switches to that part’s example.

The new GST slabs

The GST Council’s 56th meeting on 3 September 2025 replaced the four main slabs (5, 12, 18 and 28%) with a simpler set. People call it GST 2.0. Since 22 September 2025:

Slab	What it covers
Nil	Essentials such as fresh milk, UHT milk, packaged paneer, roti and paratha, exercise books
5%	The “merit rate”: most everyday food, soap, toothpaste, medicines, bicycles
18%	The “standard rate”: most other goods and most services
40%	A “de-merit rate” for a few goods, such as sugary aerated drinks and large cars
3%	Gold, silver and jewellery (unchanged)

The rate lists themselves are Notification 9/2025 for taxed goods and Notification 10/2025 for goods with no GST. The only 2026 change to the goods list we found was a code correction for some drinks from 1 May 2026, with no change to the slabs.

When did the new GST rates apply?

• 22 September 2025: all services and almost all goods.
• 1 February 2026: pan masala, gutkha, cigarettes, bidi and other tobacco. The Council kept them on the old rate and compensation cess until the cess loans were repaid; news reports of the Finance Ministry’s notifications give 1 February 2026 as the switch date.

What got cheaper under the new GST rates

These are the everyday changes the Council’s own release lists:

Items	Old rate	New rate
Hair oil, soap bars, shampoo, toothpaste, toothbrushes, bicycles, kitchenware and tableware	12% or 18%	5%
Butter, ghee, namkeen, sauces, pasta, instant noodles, chocolates, coffee	12% or 18%	5%
UHT milk, packaged paneer, roti, paratha, parotta	5%	Nil
Exercise books, pencils, sharpeners, maps	12%	Nil
Most medicines	12%	5%
ACs, dishwashers, TVs above 32 inches	28%	18%
Cement	28%	18%
Small cars, motorcycles up to 350 cc	28%	18%
Individual life and health insurance	18%	Nil
Salons, gyms, yoga centres	18%	5%
Hotel rooms up to ₹7,500 a night	12%	5%

Clothes and footwear up to ₹2,500 a piece now stay at 5% (the limit used to be ₹1,000). For anything not in this table, don’t guess: look up your item’s own rate entry with our guide on how to find the HSN code.

What costs more now

A few goods moved up to the new 40% rate: sugary and caffeinated aerated drinks, motorcycles above 350 cc, larger cars, and from 1 February 2026 cigarettes and pan masala. Clothes above ₹2,500 a piece moved from 12% to 18%.

What the new rates mean for a small shop’s prices

Take Muthu, who runs a household goods and electronics shop in Madurai. He has to re-price two kinds of stock.

A TV priced before GST. His 43-inch TV costs ₹30,000 before tax. At the old 28% the customer paid ₹38,400. At 18% it is ₹35,400: ₹2,700 each as CGST and SGST, and ₹3,000 less for the customer.

A shampoo priced with GST included. His customers know the bottle as ₹180, which included 18%. To re-price, he first takes the old GST out, not 13% off:

1. ₹180 including 18% is ₹152.54 before GST.
2. Add the new 5%: ₹152.54 + 5% = ₹160.17.

So the fair new price is about ₹160, roughly 11% less. Subtracting “18 minus 5” from ₹180 would give ₹156.60, which is wrong.

Re-pricing is always two steps: take the old GST out, then put the new GST in.

How to re-price with the GST calculator

1. Pick Remove GST, type the old shelf price and the old rate. Note the price before GST.
2. Pick Add GST, type that price and the new rate. That is your new shelf price.
3. Or pick the item in Find the rate for an item: the calculator uses the new rate and tells you what the old rate was.
4. For a mixed bill with items at 5% and 18%, use Invoice mode. Our guide to making a GST bill shows how a bill with two rates must be laid out.

Update the GST rate of every item in your billing software, not only the new stock. An old rate left on one product puts the wrong tax on every bill it appears in.

For stock you bought before 22 September 2025 at the old rate, how your input tax credit works out depends on your own purchases and returns. Check with your tax adviser rather than guessing.

Questions

What are the new GST slabs in 2026?

Nil, 5% and 18% are the main slabs, with 40% for a few luxury and harmful goods and 3% on gold and silver. They have applied since 22 September 2025, and the 12% and 28% slabs are gone for most goods.

When are the new GST rates applicable?

From 22 September 2025 for all services and almost all goods. Pan masala, cigarettes and other tobacco moved to the new rates later, on 1 February 2026.

Is there any change in GST rates in 2026?

The slabs did not change in 2026. A notification from 1 May 2026 corrected the codes of a few drink entries. Check your item’s own entry if you are unsure.

What is the new GST rate on mobile phones?

Mobile phones are at 18%, the same rate as before the change. Laptops and computers are also at 18%.

What is the new GST rate on TVs and ACs?

18% since 22 September 2025, down from 28%. All TVs are now at 18%, whatever the screen size.

How do I change prices that already include GST?

Divide the old price by 1 plus the old rate to get the price before GST, then add the new rate. A ₹180 item that included 18% is ₹152.54 before GST, and ₹160.17 with the new 5%.

What is the new GST rate on clothes?

Clothes up to ₹2,500 a piece are at 5%, and above ₹2,500 a piece at 18%. Before September 2025, the 5% limit was ₹1,000.