New GST Rates 2026 — What Changed & How It Affects Your Invoices

4→3

Main tax slabs now

0/5/18/40%

Current GST rates

Sept 22

2025 — effective date

56th

GST Council meeting

What actually changed

The GST reform approved at the 56th GST Council meeting on 3 September 2025 became effective from 22 September 2025, and it removed the older 12% and 28% slabs from the structure. Most items that were taxed at 12% moved down to 5%, while most 28%-slab items moved to either 18% or the new 40% bracket, and a range of everyday goods — soap, shampoo, butter, ghee, packaged snacks, notebooks, and insurance — became cheaper as a result.

For businesses, this isn't just a rate change on paper — it directly affects how every invoice you raise (or receive) is taxed, and how your books reconcile against GSTR-1 and GSTR-3B.

The new slab structure at a glance

Slab	Applies to
0% (Nil)	Essential food items, select healthcare & education services
5%	Broad "merit rate" — packaged food, basic household goods, most items previously at 12%
18%	Standard rate — most goods and services, including consumer electronics
40%	Luxury & sin goods — tobacco, pan masala, large cars, aerated drinks, motorcycles above 350cc

HSN-level classification still decides the exact rate for borderline items — always confirm against the current HSN mapping before invoicing, not just the product category.

What you need to check on your invoices

HSN-to-rate mapping
Confirm your billing/accounting software is applying the current rate for each HSN code — not the pre-September-2025 rate.

CGST/SGST/IGST split
Rate changes flow straight into your tax split. Any invoice generated with an outdated rate will mismatch during GSTR filing.

Input Tax Credit recalculation
Slab shifts can change your effective ITC — worth a quick review if your input costs moved between the old 12%/28% brackets.

Pricing pass-through
Where rates dropped, the expectation is that the benefit is passed to the end customer — factor this into your pricing sheets.

Where GST Converter fits in

If you're still reconciling old invoices or bulk-processing PDFs from vendors who haven't updated their billing software, GST Converter extracts GSTIN, CGST/SGST/IGST, HSN code, and totals straight from the invoice PDF/image into Excel — so you can quickly spot rate mismatches across a batch instead of opening each PDF manually.

FAQs

When did the new GST rates come into effect?

The revised rates came into effect on 22 September 2025, following approval at the 56th GST Council meeting held on 3 September 2025.

Are the 12% and 28% slabs completely gone?

The 12% and 28% slabs have largely been removed, with most items shifted into the 5%, 18%, or new 40% categories.

What's taxed at the new 40% rate?

Luxury and sin goods such as aerated drinks, large cars, casinos, and motorcycles above 350cc now attract the 40% rate.

How do I know the exact rate for my product?

Match the product's HSN or SAC code against the latest official CBIC notification rather than assuming a rate from its general category — borderline items can differ.

Stop hunting for rate mismatches manually

Upload your invoices and get clean, structured Excel data in seconds — free to try.