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.

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.