From 22 September 2025, GST moved to two main slabs — 5% and 18% — with a 40% rate for a short list of goods. Here is what changed and what to update in your item masters.
5% is the merit rate for essentials and many everyday goods. 18% is the standard rate for most goods and services. 40% is a special rate for luxury and sin goods.
Most goods that were at 12% moved to 5%, and most goods that were at 28% moved to 18%. Nil-rated and exempt supplies stay outside the slabs, and special rates continue for some categories, such as 3% on gold and jewellery and 0.25% on rough diamonds.
Check the GST rate on every item in your item master against the notification for its HSN code. Do not assume a blanket 12 → 5 or 28 → 18 change: some items moved differently.
Invoices dated on or after 22 September 2025 use the new rate. For supplies that straddle the change, the time of supply rules decide which rate applies.
Update price lists and MRP-based selling prices where the tax change should pass to the customer.
Billing, purchases, stock, party ledgers, and GST reports on proper double-entry books. Free, in your browser.