GST 2.0 Rate Changes: Old vs New Rates on 170+ Items (2026)

The single most useful number to remember about GST 2.0 is three: after 22 September 2025, almost everything you buy sits in one of three GST rates — 5%, 18%, or a 40% de-merit rate for a short list of luxury and sin goods. The old 12% and 28% slabs are gone. If you want the rate for a specific item right now, skip the guides and use our free GST 2.0 Rate Finder — it maps 170+ everyday goods and services from their old slab to the new one, with the effective date on each.

The changes came from the 56th GST Council meeting on 3 September 2025 and were made law through CBIC rate notifications 09/2025-Central Tax (Rate) through 17/2025-Central Tax (Rate), all dated 17 September 2025 and effective 22 September 2025. This post walks through what got cheaper, what got costlier, and three details — insurance, tobacco, and the tricky "same product, two rates" cases — that most coverage gets wrong.

The new structure: three rates instead of four

Before the reform, India ran a four-slab system: 5%, 12%, 18%, and 28%, with a compensation cess piled on top of 28% for cars, tobacco, and aerated drinks. GST 2.0 collapses that. The 12% slab mostly folded down into 5%. The 28% slab mostly folded down into 18%. A narrow new 40% rate replaced 28%-plus-cess for luxury cars, tobacco, and a few other de-merit goods.

Old slab	Where it went
0% (exempt)	Mostly unchanged; a few items newly exempted
5%	Mostly unchanged
12%	Removed — items moved to 5% (some to 18%)
18%	Mostly unchanged
28% + cess	Removed — most items to 18%, luxury/sin to 40%

The practical effect for a typical household budget is a net reduction, because far more items dropped a slab than climbed one. But "GST 2.0 made everything cheaper" is not accurate — a handful of things moved up, and a couple of headline hikes were deferred rather than applied.

What got cheaper

The biggest consumer wins came from the 28%-to-18% move. Cement dropped from 28% to 18%, which matters for anyone building or renovating — it is one of the largest single line items in construction cost. Small cars (petrol under 1200cc / diesel under 1500cc, up to 4 metres) and motorcycles up to 350cc went from 28% plus compensation cess to a flat 18%, a real drop once the cess is gone. Air conditioners, dishwashers, and large televisions also moved from 28% to 18%.

From the 12%-to-5% move, everyday items got cheaper: packaged foods, many medicines, and a range of household goods. Some daily staples were exempted outright.

Two items worth calling out because they are widely misreported. First, biscuits: pre-reform, cheaper biscuits sat at 12% and premium biscuits at 18%, a two-tier split that confused everyone. GST 2.0 unified biscuits to a single lower rate. Second, if you run a business, the rate on your inputs changed too — check the rate finder before you reprice, because your cost base may have shifted even if your output rate did not.

What got costlier — and the two hikes that did not actually happen yet

The clearest increases hit the 40% de-merit rate. Large and luxury vehicles, and a short list of sin goods, now attract 40%. For most buyers this is irrelevant; for a luxury car buyer it is a headline number.

Here is the detail almost every "GST 2.0 explained" article gets wrong. Tobacco products — cigarettes, pan masala, gutkha, chewing tobacco — were notified for the 40% rate, but the hike was deferred. Those products continue to attract their old rate (28% plus compensation cess) until the government's compensation-cess loan and interest obligations are fully discharged, under a separate notification. So if you look up cigarettes today, the effective rate is still the old one, not 40%. Bidis were excluded from the 40% bracket entirely. This is exactly the kind of "notified but not in force" nuance our rate finder flags per-item, rather than showing you a rate that is not actually being charged.

Insurance: the exemption everyone celebrated, and the exception nobody mentions

Individual health and life insurance premiums are now GST-exempt (previously 18%), including the reinsurance on those policies. That is a genuine saving on your personal mediclaim or term cover.

But there is a carve-out that changes the math for employers: group and corporate insurance stayed at 18%. Only individual and family-floater policies were exempted. If your company provides group health cover, the GST on that premium did not disappear. This individual-versus-group distinction is the single most common mistake we see in GST 2.0 summaries — they report "insurance is now exempt" as a blanket statement, which is wrong for anyone buying cover through an employer or a group scheme.

How to check any specific item

Rate tables in articles go stale, and they never cover the item you actually care about. Two faster options:

Use the GST 2.0 Rate Finder to search 170+ items by name or HSN code and see the old rate, new rate, and whether a change is in force or deferred. Then, once you know the rate, use the GST Calculator to work out the CGST/SGST/IGST split on an actual invoice amount. If you are raising invoices, the GST Invoice Generator applies the right split automatically based on the buyer's state.

For the reasoning behind India's move to fewer slabs and how it fits the broader tax picture, see our guide on the Income Tax Act 2025 changes.

The bottom line

GST 2.0 is a simplification, not a giveaway. Most items dropped a slab, a few luxury and sin goods climbed to 40%, individual insurance went exempt while group insurance did not, and the tobacco hike is on the books but not yet charged. The safest move before you buy, sell, or reprice anything is to confirm the current rate for the exact item — because "the new GST rate" depends entirely on which item you mean and whether its change is actually in force.

Check your item in the free GST 2.0 Rate Finder right now — search the product you care about and see its old rate, new rate, and effective status in one line.