Old vs New Structure
| Before 22 Sep 2025 | From 22 Sep 2025 |
|---|---|
| 5% | 5% — essentials and everyday goods |
| 12% | Removed — most items moved to 5% |
| 18% | 18% — standard rate |
| 28% (+ cess on some goods) | Removed — most items moved to 18%; luxury and sin goods to 40% |
| — | 40% — luxury and sin goods |
Exemptions (0%) continue for many essentials and services, and special rates of 3% (gold, silver, jewellery) and 0.25% (rough diamonds) remain.
Examples of What Changed
- Down from 12% to 5%: many packaged foods such as butter, ghee and namkeen.
- Down from 28% to 18%: air conditioners, televisions, cement and small cars.
- Now exempt: premiums for individual life and health insurance policies.
- Up to 40%: luxury and sin goods such as aerated sugary drinks and larger cars.
Calculating GST at the New Rates
| Situation | Formula | Example |
|---|---|---|
| Add GST | Price × rate ÷ 100 | ₹10,000 at 18% → ₹1,800 GST, ₹11,800 total |
| Remove GST | Inclusive price × rate ÷ (100 + rate) | ₹10,500 incl. 5% → ₹500 GST, ₹10,000 base |
| Within a state | Split into CGST + SGST | 18% = 9% + 9% |
| Between states | Charge IGST | 18% IGST |
Checklist for Small Businesses
- Re-map every product and service in your billing software to its new rate.
- Delete 12% and 28% from invoice templates so they cannot be selected by mistake.
- Revise price lists where the rate fell, and tell customers.
- Check that invoices show GSTIN, HSN/SAC, the rate and the CGST/SGST or IGST split.
- Review input tax credit on stock purchased before 22 September 2025.
Frequently Asked Questions
Is 12% GST still applicable?
No. The 12% slab was removed from 22 September 2025; most items moved to 5%.
What are the new GST rates?
Two main slabs of 5% and 18%, a 40% rate for luxury and sin goods, exemptions for many essentials, and special rates of 3% and 0.25%.
Do I need to change my invoices?
Yes. Any item still billed at 12% or 28% must be updated to its new rate, and invoices must show the correct CGST/SGST or IGST split.
How do I calculate GST included in a price?
Multiply the inclusive price by rate ÷ (100 + rate). For ₹11,800 at 18%: 11,800 × 18 ÷ 118 = ₹1,800.
This guide explains general rules for educational purposes and reflects the law as reviewed in October 2026. It is not tax or legal advice. For your own situation, please consult a Chartered Accountant or the official Income Tax Department and GST portals.