The old 12% and 28% slabs are gone. If your invoices, HSN mapping, or Excel records still reflect them, here's what's at risk — and how to check.
The 56th GST Council meeting collapsed India's four-slab GST structure (5%, 12%, 18%, 28%) into a much simpler system. Most goods that used to sit at 12% moved down to 5%. Most goods that used to sit at 28% moved to either 18% or a new 40% slab reserved for luxury and "sin" items — tobacco, pan masala, aerated drinks, large vehicles, casinos, and similar categories. The changes took effect from 22 September 2025, and by now they've been live long enough that the real-world compliance problems are starting to surface.
The reform itself is genuinely good news for compliance — fewer slabs means fewer classification disputes. But it created a one-time, high-stakes problem for every business and every CA handling their books: every single product and service now needs to be re-checked against the new rate structure, because the HSN/SAC code you used to bill at 12% might now sit at 5% or 18% — and using the old rate is a real, documented way businesses are losing money or facing penalties.
This is the exact failure mode GST 2.0 created: nobody sends you a notification saying "your product's rate changed." You're expected to re-check it yourself, against the updated HSN/SAC-to-rate annexures released by CBIC. If you're issuing invoices, filing GSTR-1/3B, or reconciling ITC using an old rate, three things go wrong quietly:
| Risk | Why it happens |
|---|---|
| Under/over-billing customers | Wrong rate applied at invoice generation |
| ITC mismatch for the buyer | Buyer's GSTR-2B shows a different rate than what they paid |
| Penalty on assessment | Section 122 — ₹10,000 or tax evaded, whichever is higher |
| Slab | Applies to |
|---|---|
| 0% (Nil) | Essential food items, select life-saving drugs, educational materials |
| 5% | Most items previously at 12%, plus household essentials moved down (soap, toothpaste, hair oil, etc.) |
| 18% | The new "standard" rate — most goods and services, most items previously at 28% |
| 40% | Tobacco, pan masala, aerated/caffeinated drinks, large vehicles (350cc+ engines), yachts, casinos, online money gaming |
A few niche rates (3%, 0.25%) continue to exist for specific categories like precious stones, and tobacco products currently remain under the older cess structure until separately notified.
The practical bottleneck here isn't knowing that you need to check — it's that doing this manually across hundreds of historical invoices, each possibly a PDF or scanned image, is exactly the kind of repetitive extraction work that eats a full day. Getting invoice data (HSN code, rate charged, CGST/SGST split) out of PDFs into a spreadsheet first is what makes the actual rate audit fast instead of a week-long manual exercise.
Generally no for past periods already filed — but you should correct the classification going forward immediately, and consult your CA on whether a credit/debit note is needed for recent invoices still within the amendment window.
No — under the current GST 2.0 structure, the 12% and 28% slabs have been removed for the standard framework. If you see either rate still applied on a recent invoice, that's a strong signal the classification needs review.
Yes — a 4-digit HSN is required on B2B invoices for turnover up to ₹5 crore, and a 6-digit HSN for turnover above ₹5 crore, per existing CBIC notification. GST 2.0 didn't change this threshold, only the rates attached to each code.
Convert the invoice PDFs to structured Excel/CSV data first (GSTIN, HSN, rate charged, CGST/SGST/IGST split), then sort and filter by HSN code in a spreadsheet — it turns a manual read-every-PDF task into a five-minute filter.
Convert GST invoice PDFs to structured Excel in about 8 seconds — see the HSN code and rate on every invoice at a glance, free to try.
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