GST rates explained: slabs, everyday items and how to find the rate for your product

GST in India now works mainly on two rates, 5% and 18%, after the GST Council's rationalisation that took effect on 22 September 2025. Essentials stay at nil, gold is at 3%, and a 40% rate applies to demerit goods such as tobacco, pan masala, aerated drinks and large cars. The rate for any item is tied to its HSN or SAC code, so the way to find your rate is to find your code and read the schedule against it.

The slabs as they stand in FY 2026-27

Rates are notified under Section 9 of the CGST Act through rate notifications (the original Notification 1/2017-Central Tax (Rate) for goods and 11/2017 for services, as amended by the September 2025 notifications). What you charge is CGST plus SGST for a sale within your state, or IGST for a sale to another state, adding up to the schedule rate. The table shows the effective rate.

The old 12% and 28% slabs still exist on paper for a handful of transitional items but almost everything was moved to 5% or 18%. Compensation cess on tobacco and pan masala continues in a modified form. Because the schedule changed in one sweep, rate lists printed before September 2025 are unreliable; use the current schedule on cbic-gst.gov.in.

Everyday rates for a kirana or general store

A Kochi grocery and household store sells a mix that spans three slabs. Typical positions after the rationalisation:

• Loose rice, wheat, pulses, fresh fruit and vegetables: nil.
• Pre-packaged and labelled rice, atta and pulses (with a registered brand or declaration): 5%.
• Biscuits, namkeen, packaged snacks, chocolates, ice cream: 5% for most, with some confectionery at 18%.
• Soap, shampoo, toothpaste, hair oil, detergent: 5%.
• Notebooks, pencils, erasers, maps: nil or 5%.
• Bottled water: 5% for 20-litre jars, 18% for smaller packaged drinking water.
• Aerated drinks: 40%.
• Cigarettes and pan masala: 40% plus cess.
• Utensils, plastic containers, small kitchen tools: 5% to 18% depending on material.

Because the store sells mostly to consumers, prices on the shelf must be inclusive. The rate is applied inside the MRP, not on top. On the till invoice the store shows the rate-wise taxable value and tax for its own return, but the customer pays the printed price.

Everyday rates for a restaurant or cloud kitchen

Restaurant services are treated under SAC 9963. A Bengaluru cloud kitchen delivering through apps and its own website charges 5% and cannot claim ITC on its inputs (the 5% rate is conditional on not taking credit). That means the GST on its rent, kitchen equipment, packaging and delivery bags becomes a cost.

When an app such as a food delivery platform delivers the order, the platform is liable to pay the 5% under Section 9(5) and the restaurant reports these sales separately. Sales from your own counter or website remain your liability. Alcohol is outside GST; if you serve it, that part of the bill carries state VAT and the food part carries GST.

Everyday rates for a service business

Most services are at 18%. A Pune freelance designer, a Ludhiana transporter and a Jaipur exporter face different entries:

• Design, IT, consulting, advertising, accounting, legal (from a firm): 18%.
• Goods transport agency (GTA) by road: 5% without ITC, or 12% with ITC if the GTA opts for it at the start of the year. Many small transporters work under reverse charge where the registered recipient pays the tax. Check the current option scheme for GTAs before the financial year starts.
• Job work on textiles, printing, and some manufacturing services: 5% or 18% depending on the entry.
• Works contracts and construction: 18% (with some government contracts differently treated).
• Renting a commercial property: 18%. Renting a residential property to a registered business: 18% under reverse charge.
• Coaching and private tuition: 18%. Education by a recognised institution leading to a qualification: nil.
• Beauty parlours, gyms, salons: 18%.
• Exports of services with payment in foreign exchange: zero-rated, so 0% with refund of ITC (or under LUT without paying tax).

Zero-rated is different from nil-rated. Zero-rated supplies (exports and supplies to SEZ) let you claim ITC on inputs; nil-rated and exempt supplies do not.

How to find the rate for your product or service

1. Find the HSN or SAC code. Goods use HSN, services use SAC starting with 99. Use the HSN and SAC lookup with a product description, then read the chapter and heading to make sure it fits. Our HSN and SAC guide explains the structure.
2. Read the rate schedule against that code. The CBIC GST rate finder on cbic-gst.gov.in lists every schedule entry with the HSN. Search by code, not by product name, because names are ambiguous ("water" appears in six entries).
3. Check the conditions attached. Many 5% entries have conditions: price thresholds for footwear and garments, "pre-packaged and labelled" for foods, "without ITC" for restaurants and GTA.
4. Match your supplier's invoice. If your supplier charged you 18% on the same goods and you charge 5%, one of you is wrong. Ask before you print price tags.
5. Note the effective date. When a rate changes, Section 14 decides which rate applies based on the dates of supply, invoice and payment. For most small businesses, the invoice date rule is enough: if you invoiced and supplied after the change, the new rate applies.

When in doubt between two entries, the more specific entry wins over the general one. If you still cannot decide, ask your CA or seek an advance ruling; do not simply pick the lower rate.

Rate on invoices versus MRP: working backwards

For B2B invoices, you add GST on top of the agreed price. For retail sales at MRP, the price already includes tax and you work backwards. The formula is:

Taxable value = MRP × 100 ÷ (100 + rate)

A Kochi electronics shop sells a mixer grinder with MRP ₹4,130 (18%):

• Taxable value = 4,130 × 100 ÷ 118 = ₹3,500
• CGST 9% = ₹315
• SGST 9% = ₹315
• Total = ₹4,130

The invoice shows ₹3,500 as taxable value and ₹630 as tax. The shop does not add ₹743 on top of ₹4,130. The reverse GST calculator does this split in one step.

If the shop gives a 10% discount before tax, the discount is shown on the invoice and tax is charged on the discounted value (Section 15(3)). Selling price ₹3,717 inclusive: taxable value ₹3,150, tax ₹567.

A worked example: one mixed invoice at a Kochi electronics shop

A registered customer in Kochi (same state) buys the following in one bill:

Taxable value ₹34,800; CGST ₹2,846; SGST ₹2,846; invoice total ₹40,492. Each line carries its own rate, and the invoice must group tax by rate for the HSN summary in GSTR-1. If the same customer had a Tamil Nadu GSTIN and the TV was shipped there, the whole invoice would carry IGST at the same rates (18% and 5%) instead of CGST plus SGST, as explained in our CGST, SGST and IGST guide.

Note the ceiling fan at 5%. Small appliances moved around in the September 2025 changes; the shop should verify each appliance's current entry rather than assuming 18% across the board.

What to watch out for

• Old rate lists. Rate cards from before 22 September 2025 are wrong for most items. Update your item master once and re-check when the Council meets.
• Mixed and composite supplies. A gift hamper with items at different rates is a mixed supply taxed at the highest rate in the pack (Section 8). A laptop sold with a bag is a composite supply taxed at the laptop's rate.
• Conditional 5% entries. Charging 5% on a restaurant bill and also claiming ITC on the kitchen equipment is a compliance failure that shows up in audit.
• Price thresholds. Apparel and footwear have per-piece price limits that decide 5% or 18%. Selling a ₹2,200 shirt at 5% because most of your stock is under the limit is a mistake.
• Charging GST on MRP. Consumers complain, and Legal Metrology officers act on it.
• Freight and packing. These are part of the value of the goods and take the goods' rate, not a separate 18% (Section 15(2)).
• Rate on advances. For services, GST is payable when you receive an advance; for goods, small businesses pay only on invoice (Notification 66/2017).
• Cess. Aerated drinks, tobacco and some vehicles carry compensation cess that is separate from the 40% rate and is not eligible as credit against GST.

How VyaparKit helps

The GST calculator and reverse GST calculator let you move between exclusive and inclusive prices for any rate. The HSN and SAC lookup helps you find the code before you read the schedule. In the GST invoice tool you save each item once with its HSN and rate, and every invoice then applies the rate per line, splits CGST, SGST or IGST from the place of supply, and rounds correctly. Rates on saved items are yours to set; confirm them against the current schedule.

Next steps

• List your top 20 items by sales, find the HSN or SAC for each, and record the current rate against it.
• Check the conditions on any 5% entry you use (price limits, pre-packaged, no ITC).
• Reprice retail items so the MRP includes tax, and set your billing to work backwards for retail sales.
• Ask each supplier to confirm the rate on their invoices matches what you charge on resale.
• Note the next GST Council meeting date and re-check your item master after it.