From 22 September 2025 goods are taxed mainly at 5% (merit rate) or 18% (standard rate), with 40% for items such as aerated sugary drinks, large cars and motorcycles above 350cc, and many daily-use items moved to nil. Tobacco and pan masala moved to 40% on 1 February 2026, when compensation cess also became nil. The legal source is Notification 9/2025-Central Tax (Rate) as amended up to Notification 01/2026-Central Tax (Rate).
The new rate structure
| Total GST | Schedule | Typical goods |
|---|---|---|
| Nil | Notification 10/2025 | Fresh milk, paneer, salt, bread, notebooks, pencils, sanitary napkins |
| 5% | Schedule I | Packaged food, ghee, biscuits, toilet soap, toothpaste, medicines, bicycles, garments up to ₹2,500 |
| 18% | Schedule II | Cement, ACs, TVs, mobile phones, auto parts, paints, furniture |
| 40% | Schedule III | Sugary aerated drinks, large cars, motorcycles above 350cc, tobacco and pan masala |
| 3% | Schedule IV | Gold, silver, jewellery |
Goods not named in any schedule fall into the residual 18% entry. Building bricks are a special case at 12% total under Notification 14/2025-Central Tax (Rate).
What moved for shops
- Down to 5%: ghee, butter, chocolates, coffee, namkeen and bhujia, sauces, pasta and instant noodles, cornflakes, toilet soap bars, shampoo, hair oil, toothpaste, toothbrushes, bicycles, kitchenware, most medicines, bandages, diagnostic kits and glucometers.
- Down to nil: UHT milk, pre-packaged paneer and chena, all Indian breads, and 33 lifesaving drugs. Notebooks, pencils, sharpeners and erasers are also in the nil list of Notification 10/2025-Central Tax (Rate).
- Down from 28% to 18%: cement, air conditioners, televisions above 32 inches (all TVs are now 18%), dishwashers, small cars, motorcycles up to 350cc, buses, trucks and three-wheelers. All auto parts now carry a uniform 18%.
- At 40%: sugary and flavoured aerated drinks, caffeinated drinks, carbonated fruit drinks, cars outside the small-car limits, motorcycles above 350cc; tobacco from 1 February 2026.
Garments and footwear now use ₹2,500 per piece or per pair as the line between 5% and 18%.
Changes after September 2025
Notification 19/2025-Central Tax (Rate) dated 31 December 2025 moved pan masala, cigarettes and other manufactured tobacco to the 40% schedule and biris to 18%, with effect from 1 February 2026. On the same date Notification 03/2025-Compensation Cess (Rate) reduced compensation cess to nil, and Notification 19/2025-Central Tax made GST on these tobacco goods payable on the declared retail sale price. Notification 01/2026-Central Tax (Rate), in force from 1 May 2026, only re-numbered beverage tariff lines after the Finance Act, 2026.
The 57th GST Council meeting on 8 October 2026 recommended clarifications, for example that the toy entries cover all toys of heading 9503. Recommendations take effect only when notified, so bill at the notified rate until then.
Worked example: an invoice across the change date
A Jaipur electronics dealer sold a 43-inch LED TV for ₹30,000 on 20 September 2025. Under the old schedule a TV above 32 inches was 28%, so GST was ₹8,400. The same TV sold on 23 September 2025 at ₹30,000 is 18%: ₹5,400 GST, ₹2,700 CGST and ₹2,700 SGST. For a supply that straddles the date, the time of supply rules under Section 14 of the CGST Act decide which rate applies, based on when the goods were supplied, invoiced and paid for.
Update rates automatically in FundRaksha Book
In FundRaksha Book each item carries its HSN and current rate, so a rate change is one edit to the item master and every new invoice follows it. The first 300 invoices are free. Verify buyers before extending credit with FundRaksha Trust.
Last reviewed: 2026-10-21. Information for Indian businesses; not legal advice.