The Goods and Services Tax (GST) is a unified tax, vital for all segments and sectors of the Indian economy. GST not only affect large and small-scale businesses but also consumers. Businesses and consumers used to pay multiple indirect taxes before 2017, such as service tax, value-added tax (VAT), sales tax, excise tax, entertainment tax, and luxury tax. However, when the GST bill was passed in 2017, it replaced all other individual indirect taxes with a single indirect tax.
India’s GST regime has undergone a landmark transformation with effect from September 22, 2025, with GST 2.0. The new GST rates brought next-generation reforms, simplifying tax slabs to 0%, 5%, 18%, and 40%. These reforms are not only beneficial but also necessary for firms. This article will provide clarity and insight into the new GST, clarifying the subtleties of GST rates in India and breaking them down into their categories.
Latest GST Rates 2026 Facts
As per the GST Council meeting in 2025, the new GST slabs broadly include 0%, 5%, 18%, and 40% rates, eliminating or merging the earlier 12% and 28% slabs to simplify GST classification and the framework.
The revised 2025 GST is referred to as GST 2.0, and after its rollout, many goods became cheaper, including personal care items, soaps, toothpaste, consumer electronics, and packaged foods.
40% GST is levied on products in the luxury and sin categories, including cigarettes, tobacco, pan masala, luxury vehicles, aerated and caffeinated beverages, and high-end luxury items.
Essential items are exempt from GST and have 0% tax. This list includes unpacked food items, vegetables, fresh fruits, dairy products, salt, bread, 33 lifesaving drugs, and education and individual health/life insurance.
Daily essentials, healthcare equipment, and agricultural goods are moved to the 5% GST slab.
Electronics like motorcycles, small cars, and appliances now attract 18% GST.
Changes in GST Rates 2026
1. Below is the new GST rates list of commodities with reduced GST rates:
Electronic Appliances such as AC, LED & LCD TV above 32″, Monitors, Projectors & Dishwashers
28%
18%
Automobiles
28%
18%
Thermometer
18%
5%
Daily Essential Goods like Toothpaste, Hair Oil, Shampoo & Soap Bar
18%
5%
Dairy Products like Milk, Butter, Ghee & Cheese
12%
5%
Feeding Bottles, Sanitary Napkins, Baby Napkins & Other Medical Diapers
12%
5%
Packed Food Items like Namkeens, Mixtures & Bhujia
Sugar-high food, fizzy/ carbonated beverages, caffeinated beverages, flavoured non-alcoholic beverages, other unidentified non-alcoholic beverages, carbonated fruit drinks & fruit juice beverages
40%
High-performance vehicles, including motorcycles with over 350cc engine capacity, hybrid spark-ignition vehicles with over 1200cc engines or over 4000mm lengths, hybrid diesel vehicles with over 1500cc engines or over 4000mm lengths, yachts & pleasure vessels
40%
Firearms, including handguns, revolvers, rifles & pistols
40%
4. List of Industries Exempt from GST
Government services
Transportation of passengers/ goods, services provided by foreign diplomats in India & postal services
Agriculture
Cultivation, harvesting, warehouse operations, or renting/ leasing of agricultural machinery
Indian national flag, human hair, salt, uranium ore concentrate, electrical energy, non-government lottery supplies, government-to-government grant goods, puja samagri, government auction gifts, rakhi, waste, plastic/lac/shellac bangles, erasers, passenger baggage, satellites, spacecraft, launch vehicles, firewood, charcoal, deities, and services offered by GSTN to the central government/ state government/ union territories, admission fees payable to sports events, theatres, circuses, etc., charging fee up to Rs. 250
Impact of New GST Rates
Impact on Consumers: Lower prices on daily essentials and a nominal increase in luxury product costs.
Impact on Businesses: Simplified tax structure, easier compliance, better classification and pricing strategies.
Updated On Jun 25, 2026
Written By
Written By Reshma RawatAssistant Content ManagerCredit Cards, Credit Score, Personal Loan, Home Loan, etc.
Reshma Rawat is a passionate writer with a decade of experience in writing for a variety of domains (finance, technology, lifestyle, e-commerce, real estate, etc.). Currently, she is working as Assistant Manager - Content @MyMoneyMantra and writes blogs & webpages on financial products (loans, credit cards, insurance, government financial policies, mutual funds, etc.).
