India’s GST was overhauled in 2025 under “GST 2.0”, with slabs simplified mainly to 0%, 5%, 18% and a new 40% rate (plus a special 3% for gold/silver).

New GST slab structure (from 22 September 2025)

Most credible tax and finance updates describe the effective new structure like this:

  • 0% (nil rate) – Essential items and basic services put into the exempt/zero category, including many food staples, some healthcare items, and select education-related items.
  • 3% (special rate) – Kept only for precious metals like gold and silver; treated as a separate concessional slab.
  • 5% (merit rate) – Essentials and daily-use goods and services, such as most food products, many medicines and medical equipment, basic clothing, bicycles, several agricultural inputs, some EVs, and some insurance/health-related items moved down from 12% or 18%.
  • 18% (standard rate) – The main slab for “normal” goods and services, including electronics, cement, a wide range of consumer durables, vehicles, much of the services sector, and many items that were earlier in 12% or 28%.
  • 40% (de‑merit / luxury & sin rate) – Very high rate for luxury and “sin” goods such as premium cars, high-end SUVs, certain aerated/sugary drinks and other de‑merit products; this effectively replaces and raises the old 28% + cess zone.

Previously common slabs of 12% and 28% have been removed; most 12% items shifted to 5%, and a large share of 28% items moved down to 18%, leaving only luxury/sin items in the new 40% band.

Quick HTML table of the new slabs

html

<table>
  <thead>
    <tr>
      <th>GST slab (from 2025)</th>
      <th>Main idea</th>
      <th>Typical coverage (illustrative)</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td>0% (Nil / Exempt)</td>
      <td>No GST on core essentials and select services</td>
      <td>Basic food staples, some healthcare and education items/services [web:3][web:7]</td>
    </tr>
    <tr>
      <td>3% (Special)</td>
      <td>Concessional rate mainly for bullion</td>
      <td>Gold and silver [web:7]</td>
    </tr>
    <tr>
      <td>5% (Merit rate)</td>
      <td>Lower rate for mass‑consumption essentials</td>
      <td>Packaged food, many medicines, medical devices, basic apparel, bicycles, several agri inputs, some EVs [web:1][web:3][web:7][web:9]</td>
    </tr>
    <tr>
      <td>18% (Standard rate)</td>
      <td>Default GST for most goods and services</td>
      <td>Electronics, cement, vehicles, many consumer durables, a wide range of services [web:1][web:3][web:7][web:9]</td>
    </tr>
    <tr>
      <td>40% (De‑merit / Luxury & Sin)</td>
      <td>Highest GST for luxury and sin goods</td>
      <td>Premium cars/SUVs, certain aerated or sugary drinks, other luxury or de‑merit items [web:1][web:3][web:4][web:5][web:7]</td>
    </tr>
  </tbody>
</table>

What changed versus the old regime

  • The earlier six‑tier system (0%, 3%, 5%, 12%, 18%, 28% plus cesses) has been compressed.
  • 12% and 28% slabs were abolished; around 99% of 12% items went to 5%, and roughly 90% of 28% items moved to 18%.
  • A clear “two‑main‑slab” narrative (5% merit, 18% standard) is combined with special cases: nil, 3% (bullion) and 40% (luxury/sin).

These reforms were approved in the 56th GST Council meeting in early September 2025 and became effective from 22 September 2025 across goods and many services.

Why it matters (2025–26 context)

  • For consumers: Many daily‑use and FMCG items, basic apparel, and several appliances moved to lower slabs, so the overall tax on a typical household consumption basket is intended to come down.
  • For businesses/MSMEs: Fewer slabs mean simpler classification, better invoice and software handling, and fewer disputes about whether something is 12% vs 18% etc.
  • For policy: The high 40% slab is being used as a tool to discourage conspicuous luxury and sin consumption while keeping mass‑market goods more affordable.

If you tell me your sector (e.g., textiles, food, electronics, services), I can outline how that specific sector is treated under the new 2025 GST slab structure.