GST Rates in India 2026: Complete Slab List by Category

One of the most common questions any Indian business owner asks is the simplest to phrase and the hardest to answer offhand: what GST rate do I charge? GST is a multi-rate tax, so the answer depends entirely on what you sell. This guide walks through the GST slab structure as it stands in 2026, how the rate is actually decided for a given product, and the important but confusing distinction between exempt, nil-rated and zero-rated supplies.

The GST slab structure in 2026

GST in India has always worked on multiple rate slabs rather than one flat rate, so that essentials are taxed lightly and luxuries more heavily. For most of GST's life the working slabs were 5%, 12%, 18% and 28%, alongside a 0% category and a cess on a few demerit goods. In 2025 the GST Council carried out a significant rate rationalisation that simplified this structure, consolidating the majority of goods and services into two principal slabs.

The way to understand the current system in 2026 is as a small set of bands:

1. 0% (nil-rated and exempt). Unbranded staples and essentials — many fresh and unpackaged food items, certain healthcare and education services, and other notified essentials — carry no GST. The intent is to keep the everyday cost of living untaxed.
2. 5% (merit rate). A large band of daily-use goods and essential services. This slab is designed to keep mass-consumption items affordable.
3. 18% (standard rate). The default working rate for the bulk of goods and services that are neither essential nor luxury. When in doubt about a general product, this is often the band it lands in — but you must still confirm it.
4. Special higher rate. A short list of luxury and sin goods attracts a notably higher rate. This is reserved for items the state deliberately taxes more heavily rather than a general slab.
5. Compensation cess. Over and above the GST rate, a cess continues on a narrow set of demerit and luxury goods such as tobacco products. Most goods and services attract no cess at all.

The headline of the 2025 rationalisation is that the middle slabs were largely folded into these principal bands, so that in 2026 most things you buy or sell sit at either 5% or 18%. This makes the system easier to reason about, but it does not remove the need to classify each product correctly — the band still depends on the code.

How the rate is actually decided: HSN and SAC codes

Here is the part that matters most in practice. The GST rate is not attached to a product's name — it is attached to its classification code. Goods are classified under the HSN (Harmonised System of Nomenclature) system, and services under SAC (Services Accounting Code). Every notified rate is published against these codes.

So the real task is:

1. Identify the correct HSN code for your goods, or the SAC for your service. This is a matter of what the item genuinely is, not what you happen to call it on your price list.
2. Look up the notified GST rate for that code. The rate follows the code precisely.
3. Apply that rate on your invoice, showing the HSN or SAC as required for your turnover.

Two products that look similar to a shopkeeper can sit in different slabs because they fall under different HSN headings. This is why classification disputes are common, and why getting the code right from the start protects you. If you sell across many product lines, keeping the correct HSN or SAC and rate stored against each item in your billing system means every invoice picks up the right rate automatically, instead of relying on memory. You can read more about how codes work in our guide to HSN codes if you need to nail down classification.

Exempt vs nil-rated vs zero-rated: the distinction that trips everyone

These three terms sound interchangeable and are constantly confused, but they mean genuinely different things — and the difference decides whether you can claim your input tax credit.

1. Nil-rated. The supply is within the scope of GST and is taxable, but the notified rate happens to be 0%. You charge no tax on the sale.
2. Exempt. The supply is specifically exempted from GST by notification, so no tax is charged. Crucially, for both nil-rated and exempt supplies, the input tax credit on purchases used to make them is generally not available — you cannot recover the GST you paid on your inputs.
3. Zero-rated. This is the special and valuable one. Exports of goods and services, and supplies to Special Economic Zone units, are zero-rated. The outward supply carries no tax, but unlike exempt supplies, you retain the right to claim or refund the input tax credit on your purchases. This ensures Indian exports are not burdened with domestic tax.

The practical upshot: an exporter is far better off than a seller of exempt goods, even though both charge no GST to the customer, because only the exporter gets their input tax back. Understanding which bucket your supply falls into is essential before you decide whether to claim input tax credit.

The composition scheme: a different way to pay

Not every small business charges GST at the slab rate on each invoice. Businesses below a notified turnover threshold can opt for the composition scheme, under which they pay a small fixed percentage of turnover as tax instead of collecting GST at the normal slab on every sale. The trade-off is real: composition dealers cannot charge GST separately on their invoices, cannot claim input tax credit, and cannot make inter-state outward supplies. The scheme suits a purely local retailer or small manufacturer who values simplicity over credit, but it is the wrong choice for anyone selling across states or supplying other businesses that want ITC.

GST is charged on value, not on MRP

A frequent point of confusion for retailers is the relationship between GST and the printed MRP. The maximum retail price on a packaged product is inclusive of all taxes — it is the ceiling price the consumer pays, with GST already built in. GST is not added on top of MRP. When you need to know the tax embedded in an MRP sale, you work backwards from the inclusive price using the applicable rate, rather than adding the rate to the MRP. Getting this wrong leads to over-charging customers and mis-stated output tax, so it is worth setting up your billing to handle inclusive pricing correctly where you sell at MRP.

Reverse charge: when the buyer pays the tax

For most supplies the seller collects and pays GST, but under the reverse charge mechanism the liability shifts to the recipient for certain notified goods and services and for some purchases from unregistered suppliers. The rate that applies is still the notified rate for that item — reverse charge changes who deposits the tax, not the slab. If reverse charge applies to something you buy, you pay the tax directly and, where eligible, can claim it back as input tax credit, so the classification of the item still matters exactly as it would on a normal sale.

How the rates changed and why

The direction of travel in GST has been toward simplification. The original four-plus-cess structure, while workable, created endless classification arguments at the boundary between slabs — was a particular snack 12% or 18%, was a fabric one rate or another. The 2025 rationalisation set out to reduce these disputes by collapsing the middle slabs into the two principal rates of 5% and 18%, keeping essentials at 0% and reserving a high rate for genuine luxuries and sin goods. For a small business this is good news: fewer slabs means fewer classification edge cases and simpler pricing.

That said, rationalisation does not mean the rates are frozen. The GST Council continues to meet and revise rates on specific items as circumstances change. The disciplined approach is to treat the slab structure as the framework, verify each product against its current notified rate, and update your item master whenever a change is announced.

Putting it to work on your invoices

Knowing the slabs is only useful if it shows up correctly on the bill your customer receives. A compliant GST invoice needs the right rate applied to the right taxable value, the correct HSN or SAC, and a clean split between CGST and SGST for local sales or IGST for inter-state sales. Doing this by hand invites arithmetic slips and wrong-slab errors that surface later at return time.

Storing the correct rate against each product once, then letting the system apply it on every sale, removes almost all of that risk — and keeps your output tax reconciling neatly to your returns. That is exactly what a dedicated GST invoicing tool is for, and it means the question "what rate do I charge?" gets answered once per product rather than once per invoice.