GST Rates in India — Complete Rate List for All Goods and Services 2025

GST Rates in India — Complete Rate List for All Goods and Services 2025

India's Goods and Services Tax uses five principal rate slabs — 0%, 5%, 12%, 18%, and 28% — with a compensation cess layered on top for demerit and luxury goods. As of FY 2026-27, the broad architecture is unchanged, though the GST Council continues to move specific line items between slabs through CBIC notifications issued under the CGST Act, 2017. Essentials are nil-rated or taxed at 5%; most professional and digital services sit at 18%; luxury goods, automobiles, and tobacco attract 28% plus cess. Knowing exactly which slab applies to what you buy or sell is not an administrative nicety — it determines your output tax liability, your Input Tax Credit (ITC) eligibility, and your exposure to departmental audits.

The Five Core GST Slabs — What Each One Actually Covers

Nil (0%) — Protected Essentials

The nil slab keeps basic necessities affordable for the lowest-income households. Items taxed at zero include:

• Unpackaged or unbranded staples: loose grains, rice, wheat, pulses, jaggery, salt
• Fresh produce: vegetables, fruits, fresh meat, fish, eggs
• Dairy basics: fresh milk, curd, buttermilk — provided they are unpackaged and unbranded
• Services: healthcare by clinical establishments, educational services by institutions recognised under any law (schools, colleges, universities), and most government services

Zero output tax sounds ideal until you realise the catch: if your entire supply stream is nil-rated, you cannot claim ITC on your inputs. ITC flows through the tax chain, and nil-rated output severs that flow. This directly hits primary food processors and caterers who supply zero-rated canteens.

5% — Mass Consumption and Necessities

The 5% band covers goods that most households buy regularly but that carry some processing or value addition:

Goods commonly at 5%:

• Pre-packaged and labelled atta, maida, suji, besan, rice, pulses, sugar, edible oils
• Footwear with Maximum Retail Price (MRP) up to Rs. 1,000 per pair — footwear above Rs. 1,000 MRP moves to 12%
• Life-saving drugs: insulin, oral rehydration salts, anti-cancer drugs as notified by CBIC
• Household LPG cylinders (both subsidised and market-rate)
• Solar energy devices and equipment, including solar panels and solar water heaters
• Agarbatti, exercise books, kite

Services commonly at 5%:

• Restaurant services — whether AC or non-AC (except restaurants in hotels with room tariff above Rs. 7,500, which attract 18%) — charged at 5% with no ITC. This is the most misunderstood rate in food service compliance.
• Transport of goods by road through a Goods Transport Agency (GTA) on forward charge
• Transport of passengers by rail in non-AC classes and in ordinary bus services
• Rental of motor vehicles for passenger transport under certain arrangements

12% — Processed Foods and Mid-Range Goods

The 12% band generally hosts processed foods, branded medicines, and specific construction services:

• Butter, ghee, cheese, frozen meat products, packed paneer
• Ayurvedic, Unani, and Siddha medicines (branded)
• Fruit juices, packed coconut water
• Footwear with MRP above Rs. 1,000 per pair
• Umbrellas, playing cards, carom boards
• Business-class air travel
• Hotel accommodation with tariff between Rs. 1,001 and Rs. 7,500 per room per night (as notified — verify current notification for exact thresholds)
• Works contract services for construction of residential complexes (for self-use)
• Construction services under government-notified affordable housing schemes

18% — The Widest Band and the Default for Services

If you cannot find a specific notification placing your supply in another slab, 18% is the de facto default rate for services. Most goods with any degree of industrial processing also land here.

Goods at 18%:

• Computers, laptops, tablets, printers, scanners and most IT peripherals
• Mobile phones and smartphones (rate revised upward from earlier; currently 18%)
• Soaps, shampoos, hair oil, cosmetics, deodorants
• Paints, varnishes, primers, putty
• Capital goods and most industrial machinery not elsewhere specified
• Mineral water, packaged drinking water (above 20 litres)
• Cameras, binoculars, optical instruments

Services at 18%:

• IT services, Software-as-a-Service (SaaS), cloud computing, data hosting
• Advertising and digital marketing services
• Telecom services — mobile, broadband, DTH
• Banking, insurance, and financial brokerage services
• Professional services: Chartered Accountants, lawyers, management consultants, architects, engineers
• Maintenance, repair, and overhaul services
• Renting of commercial immovable property

28% — Luxury, Demerit, and High-Value Goods

The top slab is reserved for items deemed non-essential or carrying an externality cost:

• Passenger cars (four-wheelers): 28% base rate; cess varies by engine size, length, and category
• Motorcycles above 350cc engine capacity
• Air conditioners and air-cooled refrigeration units
• Washing machines and dishwashers above specified capacity thresholds
• Aerated drinks, carbonated beverages, and flavoured water
• Pan masala, gutkha, chewing tobacco, and manufactured tobacco not elsewhere specified
• Cement (HSN 2523): 28% — the single most common misclassification in the construction sector
• Lottery tickets (state government-run)

Special Rates Outside the Five Slabs

A handful of categories carry rates that sit entirely outside the standard five-slab ladder:

These are standalone CBIC notifications. Applying the "luxury = 28%" heuristic to gold jewellery is a serious error. A jeweller charging 18% instead of 3% creates a substantial ITC mismatch for the buyer and a tax-collected-but-not-due liability for the seller.

Nil-Rated vs Exempt vs Zero-Rated — The Difference That Directly Affects Your ITC

This is where good accountants earn their fees and where most in-house teams go wrong:

• Nil-rated supplies are taxable supplies on which the GST rate is 0%. ITC on inputs used exclusively for nil-rated supplies is blocked under Section 17(2) of the CGST Act, 2017.
• Exempt supplies are supplies notified as exempt under Section 11 of the CGST Act. The ITC consequence is identical to nil-rated — blocked — but the treatment in your GSTR-1 and GSTR-3B differs (exempt supplies are reported separately).
• Zero-rated supplies are exports of goods or services and supplies to Special Economic Zone (SEZ) developers and units. The effective rate is 0%, but ITC on inputs is fully allowed and refundable under Section 16 of the IGST Act. An exporter who files a Letter of Undertaking (LUT) in Form RFD-11 on the GST portal can supply without paying IGST and claim a refund of accumulated ITC.

If you make a combination of zero-rated and exempt or nil-rated supplies, you must apportion ITC under Rule 42 and Rule 43 of the CGST Rules, 2017. Misproportioning inflates your ITC claim and creates recovery risk when your GSTR-9 is picked up for scrutiny.

Compensation Cess — A Hard Cash Cost You Cannot Set Off

The GST (Compensation to States) Act, 2017 authorises a cess collected over and above the standard GST rate on specified demerit goods. The proceeds compensate states for revenue loss during the GST transition. The cess has been extended beyond its original five-year sunset period through successive Finance Acts.

Current cess rates (confirm against the latest CBIC notification before filing):

• Aerated drinks and carbonated beverages: 28% GST + 12% compensation cess = effective rate 40% on the transaction value
• Tobacco products: 28% GST + a specific cess per stick or per thousand sticks plus an ad valorem cess. For cigarettes, the specific cess alone can reach Rs. 4,000–Rs. 5,500+ per thousand sticks depending on length bracket — verify the current Finance Act schedule.
• Coal, peat, and lignite: 5% GST + Rs. 400 per metric tonne as cess — a significant cost for power generators, cement plants, and steel mills that run coal-fired kilns
• Large SUVs (length over 4 metres, engine capacity over 1,500cc, ground clearance above 170mm): 28% GST + 22% cess
• Luxury saloon cars (length over 4 metres, engine capacity over 1,500cc, not qualifying as SUV): 28% GST + 20% cess
• Small petrol cars (engine under 1,200cc, length under 4 metres): 28% GST + 1% cess
• Mid-size petrol cars (engine 1,200–1,500cc, length under 4 metres): 28% GST + 3% cess

The cess is not creditable against your regular CGST, SGST, or IGST ledger. You pay it in cash from your Electronic Cash Ledger. Fleet operators and commercial vehicle buyers who forget to model cess into their Total Cost of Ownership consistently underprice their bids or overestimate their operating margins.

Inverted Duty Structure — When Your ITC Keeps Accumulating

An inverted duty structure arises when the GST rate on your inputs is higher than the rate on your output supply. You collect less output tax than you pay on inputs, so ITC accumulates instead of flowing through.

Classic affected sectors in FY 2026-27:

• Fertilisers: Input chemicals (sulphur, ammonia, phosphoric acid) often attract 18%; finished fertiliser output attracts 5%
• Textiles: Certain yarn and fabric inputs at 12%; specific fabric outputs at 5% or nil
• Footwear below Rs. 1,000: Inputs (leather, adhesives, soles) at 12–18%; output at 5%
• Pharmaceutical formulations: Active Pharmaceutical Ingredient (API) inputs at 18%; certain essential medicines at 5% or 12%

Your remedy under Section 54(3) of the CGST Act: You can claim a refund of the unutilised ITC accumulated on account of the inverted duty structure. File Form RFD-01 on the GST portal (gst.gov.in → Refunds → Application for Refund) within two years from the relevant date — generally the date of filing the return for the period in which the claim arises.

Practice discipline: File quarterly, not annually. A Rs. 15 lakh credit blocked for 12 months at a notional borrowing cost of 12% per annum represents Rs. 1,80,000 in forgone working capital. Quarterly refund claims recover cash faster and keep your finance costs down.

Worked Example: The Cost of Misclassifying One Product for One Quarter

Scenario: Rohit runs a footwear manufacturing unit in Agra. In Q2 FY 2026-27 (July–September 2026), his invoicing team charges 5% GST on all footwear, assuming the slab applies uniformly to the category.

The actual position: Footwear with MRP above Rs. 1,000 per pair attracts 12% GST under the current schedule. Rohit's product line is priced at Rs. 1,299 MRP. Every invoice is charging the wrong rate.

The numbers:

Consequences Rohit now faces:

1. Tax demand: Rs. 4,20,000 must be paid from his own pocket. Attempting to re-bill buyers for a closed quarter creates commercial and legal complications.
2. Interest under Section 50 of the CGST Act at 18% per annum: For a 150-day delay before detection, interest = Rs. 4,20,000 × 18% × 150/365 = approximately Rs. 31,000.
3. Penalty under Section 73 (non-fraudulent short payment): Up to 10% of the tax short-paid, subject to a minimum of Rs. 10,000 = up to Rs. 42,000.
4. ITC mismatch for buyers: Rohit's buyers who filed GSTR-3B claiming ITC at the 5% rate will face GSTR-2B mismatches once Rohit's amended return flows through. They will need to reverse the ITC differential and may raise disputes with Rohit.

Total additional cash outflow for one quarter's error: approximately Rs. 4,93,000 on a Rs. 60 lakh invoice book.

How to correct it:

• File an amended GSTR-1 for the affected months. Amendment is permitted up to the return for October of the following financial year (i.e., the GSTR-1 for October 2026, filed in November 2026) or the date of filing the Annual Return (GSTR-9), whichever is earlier.
• Issue credit notes to buyers, adjusting the GST differential and reissuing revised tax invoices where commercially feasible.
• Pay the shortfall plus interest via DRC-03 (voluntary payment challan) on the GST portal before a show cause notice is issued, to contain the penalty exposure.

How to Look Up Any GST Rate in Three Concrete Steps

Never rely on memory alone. GST Council meetings produce rate changes; what was 12% two years ago may be 18% today.

Step 1 — Identify the HSN code (goods) or SAC code (services).

For goods: use the HSN Finder on gst.gov.in under Services → User Services → Search HSN Code. Cross-check with the Indian Trade Classification published by DGFT for export/import items.

For services: the Services Accounting Code (SAC) list is published by CBIC. Most services are classified under Chapter 99. Use the CBIC circular for your service category if the portal SAC search is ambiguous.

Step 2 — Check the current CBIC notification for that HSN or SAC.

Goods rates are notified through: Notification No. 1/2017-Central Tax (Rate) for CGST and Notification No. 1/2017-Integrated Tax (Rate) for IGST, and their subsequent amendment notifications. Services rates flow from Notification No. 11/2017-Central Tax (Rate) and amendments. The CBIC website (cbic.gov.in → GST → Acts and Rules → Notifications) maintains consolidated updated versions — always read the latest amendment, not the original 2017 notification.

Step 3 — Check for concessional, exemption, or end-use-based notifications.

Several categories get rate relief based on who the recipient is or how the goods will be used:

• Supplies to SEZ developers and units: zero-rated regardless of the base HSN rate
• Supplies to specified UN bodies, embassies, and International Organisations: nil GST under specific notification
• Petroleum exploration contractors: certain supplies are exempt under a specific end-use notification
• Defence procurements: certain goods are exempt for Ministry of Defence supply contracts

Claiming an exemption that does not apply to your specific transaction is itself a Section 73/74 violation. Get the notification number right and document the end-use evidence — a purchase order, government certificate, or SEZ approval letter — before invoicing at zero or concessional rates.

Common Mistakes When Applying GST Rates — and How to Fix Each One

Mistake 1: Treating cement as an 18% item. Cement (HSN 2523) attracts 28% GST, not 18%. Construction company procurement teams consistently under-account for input tax on cement, distorting ITC calculations and project cost models. Fix: amend your purchase register, reverse the ITC differential already claimed, and pay the difference.

Mistake 2: Charging 18% on restaurant services. After GST Council rationalisation, most restaurants (including AC restaurants not attached to hotels with room tariff above Rs. 7,500) charge 5% with no ITC. A restaurant charging 18% and claiming ITC on kitchen inputs is doubly wrong — it is over-collecting from customers and incorrectly claiming credits it is not entitled to.

Mistake 3: Treating an exporter's supply as nil-rated. An exporter who classifies their output as nil-rated will block their own ITC refund. Exports must be treated as zero-rated under Section 16 of the IGST Act, with a filed LUT (Form RFD-11) or with IGST paid and subsequently claimed as refund via Form RFD-01.

Mistake 4: Using last year's rate card without checking post-Council amendments. The GST Council meets approximately quarterly. After each meeting, CBIC issues amendment notifications effective from a specified date — sometimes within 30 days of the meeting. Subscribe to GST Council press notes (available on the GST Council website) and the CBIC notification RSS feed. Build a 30-day rate-change review into every new financial year's kickoff.

Mistake 5: Ignoring cess in purchase cost models. Cess cannot be set off against regular GST credit. It is a pure cash cost. Fleet procurement managers buying 20 large SUVs at 28% + 22% cess who model only the 28% component will be short by a material amount at invoice settlement.

Rate Rationalisation: What Is Being Discussed for FY 2026-27

The GST Council has been deliberating a potential merger of the 12% and 18% slabs into a single revenue-neutral band — floated at various points as 15% or 16%. As of the date of this post, no merger notification has been issued. The discussion continues, particularly around reducing the inverted duty disputes that a two-slab range between 12% and 18% creates.

Notable changes from recent Council meetings worth tracking:

• Online gaming, casinos, and horse racing were moved to 28% on the full face value of bets — a significant structural shift affecting that industry's entire pricing model.
• Restaurant services were standardised at 5% (no ITC) across most formats, removing the earlier complexity around AC versus non-AC classification.
• Several textile and apparel items saw upward rate revisions, triggering industry representations and isolated litigation.

If you operate in a sector that has been publicly discussed at a recent Council meeting, verify the post-meeting press note immediately. Rate changes apply from a specific notified date — you must update your pricing and invoicing before that date, not after your next GST audit.

Key Takeaways

• Five main slabs: 0%, 5%, 12%, 18%, and 28%. Gold and silver carry a separate 3% rate; rough diamonds 0.25%; cut and polished diamonds 1.5%. These are not part of the standard ladder.
• Nil-rated ≠ zero-rated. Only zero-rated exports and SEZ supplies allow ITC refund under Section 54. Nil-rated domestic supplies block ITC under Section 17(2) — a distinction that costs businesses real money every year.
• Compensation cess is a cash-only cost — it cannot be offset against CGST, SGST, or IGST credit. Always include it explicitly in landed-cost and total-cost-of-ownership models for vehicles, tobacco products, and coal.
• Inverted duty structure accumulates refundable ITC under Section 54(3). File Form RFD-01 quarterly rather than annually to protect working capital — the interest cost of blocked credit is real even if it is not visible on a P&L line.
• Getting a rate wrong triggers a cascade: unpaid tax + 18% p.a. interest under Section 50 + up to 10% penalty under Section 73 + buyer ITC mismatches. The total exposure on a Rs. 60 lakh misclassification can exceed Rs. 4.9 lakh in a single quarter.
• Always verify using the current HSN or SAC code and the latest CBIC amendment notification — never rely on rate memory, last year's rate cards, or third-party rate summaries that may lag behind a recent Council meeting.
• Cement is 28%, not 18%. Restaurant services are 5% with no ITC, not 18%. These two errors alone account for a disproportionate share of GST demand notices in the construction and food service sectors.