The GST rates from 22 September 2025: what changed for shops
Updated 30-10-2026
On 3 September 2025 the 56th GST Council meeting simplified the rate structure. From 22 September 2025 most goods and services are taxed at 5% or 18%, a short list at 40%, and the old 12% and 28% slabs are gone — except, for now, tobacco and pan masala.
The new structure in one minute
- 5% — the "merit" rate for everyday needs (many foods, personal care, medicines, agricultural machinery).
- 18% — the standard rate (most goods and services, including many items that were at 28%).
- 40% — a "de-merit" rate for a short list of luxury and sin goods (for example, bigger cars and motorcycles above 350 cc).
- Nil — some items moved to 0% (for example UHT milk, pre-packaged paneer, roti and khakhra, exercise notebooks).
- Special rates such as 0.25% (rough diamonds) and 3% (gold and jewellery) were not part of this change.
- Pan masala, gutkha, cigarettes and other tobacco products stay at their old rates plus compensation cess until a date the government notifies.
Examples from the official list
| Item (HSN) | Before | From 22-09-2025 |
|---|---|---|
| UHT milk (0401) | 5% | Nil |
| Paneer / chena, pre-packaged and labelled (0406) | 5% | Nil |
| Butter, ghee, butter oil (0405) | 12% | 5% |
| Cheese (0406) | 12% | 5% |
| Namkeen, bhujia, mixture, pre-packaged and labelled (2106 90) | 12% | 5% |
| Biscuits, pastry, cakes (1905) | 18% | 5% |
| Chocolates (1806) | 18% | 5% |
| Toilet soap bars (3401) | 18% | 5% |
| Hair oil, shampoo (3305) | 18% | 5% |
| Bicycles, not motorised (8712) | 12% | 5% |
| Exercise books and notebooks (4820) | 12% | Nil |
| Air conditioners (8415) | 28% | 18% |
| Television sets, monitors, projectors (8528) | 28% | 18% |
| Cement (2523) | 28% | 18% |
| Motorcycles up to 350 cc (8711) | 28% | 18% |
| Motorcycles above 350 cc (8711) | 28% | 40% |
A heading can hold items at different rates — check the exact description of your item, not just the first four digits.
What a shop should do
- Update the GST rate on each item in your billing software, and keep the HSN code with it.
- Bills dated on or after 22 September 2025 must use the new rate; bills before that keep the old one.
- Check your MRP stock: if the rate fell, the price you charge can come down with it.
- Watch purchases too: your supplier's new rate changes the input tax credit you claim.
In our app the new rates are part of the item suggestions, a bill dated after 22 September 2025 that still uses 12% or 28% is flagged when you prepare GSTR-1, and our free HSN finder shows the change for each heading.
Sources
Checked against the official text on 29-10-2026. This is general information, not tax advice.