Published 7 October 2026
On 22 September 2025 the rates of GST on most goods were reset. The schedules that had governed goods since 2017 were withdrawn and replaced by new ones, and many everyday items moved to a lower rate. A few moved higher. Shop prices since then reflect the new rates, and older price comparisons, bills and articles reflect the old.
This article sets out what changed and how to read the new structure. It draws on the notifications themselves, issued by the Central Government on 17 September 2025.
A new rate notification for goods
Since 2017, the rates on goods had been set by a single notification, No. 1/2017-Central Tax (Rate), amended many times. Notification No. 9/2025-Central Tax (Rate) superseded it. It “shall come into force with effect from the 22nd day of September, 2025”. Notification No. 10/2025-Central Tax (Rate) replaced the companion notification listing exempt goods.
The new notification sorts goods into seven schedules. The rates it fixes are rates of central tax. An equal State tax applies within a State, and integrated tax at the combined rate applies between States. The total GST on each schedule is:
| Schedule | Central tax | Total GST | What it covers |
|---|---|---|---|
| I | 2.5 per cent | 5 per cent | many everyday goods |
| II | 9 per cent | 18 per cent | most other goods |
| III | 20 per cent | 40 per cent | luxury and “sin” goods |
| IV | 1.5 per cent | 3 per cent | gold, silver and jewellery |
| V | 0.125 per cent | 0.25 per cent | rough precious stones |
| VI | 0.75 per cent | 1.5 per cent | diamonds and precious stones |
| VII | 14 per cent | 28 per cent | pan masala and tobacco (now omitted) |
For most purchases, three rates now matter: 5, 18 and 40 per cent. The old 12 per cent and 28 per cent rates for general goods are gone. The 28 per cent schedule survived only for pan masala and tobacco. It was omitted from 1 February 2026 by Notification No. 19/2025-Central Tax (Rate), when those products moved to 40 per cent, and biris to 18 per cent.
What became cheaper, and what became dearer
Some examples, comparing the rate in force until 21 September 2025 with the rate from 22 September 2025:
| Item | Before | From 22 September 2025 |
|---|---|---|
| Toothpaste | 18 per cent | 5 per cent |
| Shampoo and hair oil | 18 per cent | 5 per cent |
| Toilet soap | 18 per cent | 5 per cent |
| Butter and ghee | 12 per cent | 5 per cent |
| Namkeen, packaged | 12 per cent | 5 per cent |
| Medicines for retail sale | 12 per cent | 5 per cent |
| Bicycles | 12 per cent | 5 per cent |
| Cement | 28 per cent | 18 per cent |
| Air-conditioners | 28 per cent | 18 per cent |
| Televisions above 32 inches | 28 per cent | 18 per cent |
| Small cars | 28 per cent | 18 per cent |
| Other cars | 28 per cent | 40 per cent |
| Sweetened and aerated drinks | 28 per cent | 40 per cent |
Small cars, in the new Schedule II, are petrol, LPG or CNG cars with an engine “not exceeding 1200cc” and a length “not exceeding 4000 mm”. Diesel cars qualify with an engine up to 1500cc and the same length. Larger cars are in Schedule III, at 40 per cent. Televisions up to 32 inches were already at 18 per cent, so for them nothing changed.
Many goods also carried compensation cess on top of GST before the change. The guide on compensation cess after GST 2.0 covers what became of it.
The 40 per cent list
Schedule III, the new top rate, is short and specific. As notified on 17 September 2025, it covers:
- sugared, flavoured, caffeinated and carbonated beverages, and certain other non-alcoholic drinks
- motor cars other than the small cars in Schedule II, and larger hybrids
- motorcycles above 350cc
- aircraft for personal use, and yachts
- revolvers and pistols, and smoking pipes
- specified actionable claims: betting, casinos, gambling, horse racing, lottery and online money gaming
Pan masala, cigarettes and other tobacco products joined the list from 1 February 2026.
Services changed too
The overhaul was not confined to goods. Notifications No. 15/2025 and 16/2025-Central Tax (Rate), of the same date, amended the rates and exemptions for services. Two changes affect most households: individual health and life insurance premiums became exempt, and hotel rooms up to Rs 7,500 a night moved to 5 per cent. Separate articles cover insurance and restaurants and hotels.
Reading a bill after the change
The rate on an invoice is fixed by the date of supply. The guide on time of supply explains how that is decided where a transaction straddles a rate change. A bill dated on or after 22 September 2025 for goods that moved to 5 per cent should show 5 per cent: 2.5 per cent central tax and 2.5 per cent State tax, or 5 per cent integrated tax.
The rate depends on the exact description in the schedule, not on the everyday name of the product. Where a product’s classification is in doubt, the schedule entry and its tariff heading decide.