Understand India’s GST rate slabs, cess, IGST/CGST/SGST splits, and how to pick the right rate every time. Practical 2026 guide with steps, examples, and FAQs.
Quick Answer: As of September 2026, the GST rate of India follows slabs of 0%, 0.25% (select precious stones), 3% (gold and similar), 5%, 12%, 18%, and 28%. Some goods attract an additional Compensation Cess (e.g., tobacco, aerated beverages, luxury vehicles). Intra-state supplies split as CGST+SGST; inter-state supplies apply IGST. Always confirm via latest CBIC notifications.
Last verified: September 2026 | Category: Finance | Read time: 16 min
If you sell across states, change product lines, or onboard new SKUs, you’ve probably asked: “What’s the right GST to charge?” Misclassify a rate and margins vanish—or worse, you invite penalties. This guide gives you a precise, no-fluff framework to find and apply the correct GST rate of India every time.
I’ll show you how experts map HSN/SAC codes to slabs, when cess kicks in, how IGST vs CGST+SGST is chosen, and how to keep up with mid-year changes. Every step is hands-on—tested in real filings and reconciliations—so you can implement it today.
Definition: The GST rate of India is the tax percentage applied to taxable supplies of goods and services under the Goods and Services Tax law. It is organized into slabs (0%, 0.25%, 3%, 5%, 12%, 18%, 28%) plus a Compensation Cess on specified goods.
In practice, a rate is determined by the supply’s classification (HSN for goods, SAC for services), the place of supply (which decides IGST vs CGST+SGST), and any special notifications (like concessional rates or ITC restrictions). A common misconception is that “everything is 18%.” While 18% is the modal slab, many essentials are 0%/5%, and luxury/sin goods face 28% plus cess. Official rates flow from CBIC notifications issued under the GST Acts.
When we onboard new catalogs, we map each SKU to a slab and note any cess. Here’s the working summary we keep at hand (verify against the latest CBIC notifications):
Nuances we see in audits:
Authoritative sources: See CBIC’s GST rate notifications and schedules, and the GST Council’s meeting updates for decisions before notification.
The slab is only half the story. The tax split depends on place of supply (PoS):
How we avoid costly PoS errors:
Tip: Build PoS logic into your ERP so the system auto-selects IGST vs CGST/SGST based on ship-to and registration data.
Rates influence ITC eligibility and therefore pricing:
Pricing model we use:
| Criteria | Zero-Rated (Exports/SEZ) | Nil-Rated | Exempt |
|---|---|---|---|
| GST on outward supply | 0% | 0% | 0% |
| ITC eligibility | Allowed; refund available (subject to rules) | Generally blocked/refund not available | Generally blocked/refund not available |
| Typical use-cases | Exports, SEZ supplies | Specific essential items notified | Healthcare, education services as notified |
| Invoice type | Tax invoice (zero-rated) | Bill of supply | Bill of supply |
| Refund options | LUT/Bond route or IGST-paid refund | No | No |
| Compliance impact | Higher documentation but cash-flow choices | Simple but no ITC | Simple but no ITC |
What are the current GST slabs in India? The slabs are 0%, 0.25% (select precious stones), 3% (gold and similar), 5%, 12%, 18%, and 28%. Some goods also attract Compensation Cess. Rates are enforced via CBIC notifications, so always confirm the latest entry for your HSN/SAC and note the effective date.
How do I find the correct HSN or SAC for my product or service? Start with the product’s material, function, and end-use. Search the tariff headings and explanatory notes, then narrow to the most specific HSN or SAC. Cross-check synonyms and similar items. Keep a short memo explaining why you chose that code—it’s invaluable during audits.
When do I charge IGST versus CGST and SGST? Charge IGST for inter-state supplies and CGST+SGST for intra-state supplies. For goods, place of supply generally follows the destination of delivery; for services, it varies by category. Exports and SEZ supplies are zero-rated. Encode PoS logic into your invoicing system to prevent errors.
What is Compensation Cess and who pays it? Compensation Cess is an additional levy on specified goods like tobacco products, aerated water, and certain motor vehicles. It is charged over and above GST. If your HSN falls under the cess schedule, you must levy cess on the invoice and remit it in returns, just as you do for GST.
Are exports taxed under GST? Exports are zero-rated supplies. You can export without payment of IGST under an LUT/Bond and claim input tax credit refunds, or you can export with IGST and claim a refund of that IGST. Choose based on your cash-flow needs and refund timelines.
Is restaurant billing at 5% always without ITC? For the common concessional category of restaurants not serving alcohol, the 5% rate is without input tax credit. Some special categories or schemes may differ, so verify the exact notification entry for your case and ensure your pricing model doesn’t assume recoverable ITC improperly.
Does software attract GST as goods or services? Packaged/off-the-shelf software supplied on media is usually treated as goods (often at 18%), while SaaS and licenses delivered online are generally services (commonly at 18%). Confirm with SAC/HSN notes and specific notifications for your delivery model and contractual terms.
What’s the difference between nil-rated, exempt, and zero-rated? Nil-rated and exempt supplies bear 0% tax but typically don’t permit ITC refunds. Zero-rated supplies (exports/SEZ) are 0% but allow ITC and refunds. Invoices differ too: zero-rated uses a tax invoice, while nil/exempt use a bill of supply. The cash-flow impact is substantial.
Picking the correct GST rate of India isn’t guesswork—it’s a repeatable process: define the supply, map the right HSN/SAC, verify the slab and cess from CBIC notifications, apply PoS rules, and document everything. Follow the steps here, and you’ll protect margins, keep customers happy, and sail through audits.
Use ZenixTools to fast-track compliance:
References and official resources
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How many HSN digits must I print on invoices? The required digits depend on aggregate turnover thresholds notified by CBIC. Larger taxpayers must disclose more digits (often 6 or 8 for goods). Check the latest circular/notification applicable to your turnover bracket and ensure your ERP templates match.
Do I need to charge GST on freight or packing? Incidental expenses like freight, packing, and insurance that are part of the same supply are usually included in the value for GST. If you’re separately charging a notified taxable service, apply the correct SAC and rate. Keep documentation clear to avoid valuation disputes.
Can I change the GST rate on a product mid-year? You can’t choose the rate; you must apply the rate notified for that HSN/SAC on the relevant date. When CBIC updates a rate, apply it from the effective date. Manage cutover carefully: split invoices at midnight if needed and document the change in your rate log.
What happens if I use the wrong rate? Undercharge leads to short payment, interest, and potential penalties; overcharge causes customer disputes and ITC denial risks. Correct via credit/debit notes and amended returns as allowed. Keep evidence of the corrected classification and notify affected customers promptly.
Are online gaming and betting the same under GST? The law distinguishes categories, but as of 2026, online gaming (specified) generally attracts 28% on full face value. The valuation rules are strict. Always read the current notification and circulars applicable to your exact activity and platform design.
Does GST apply to advance payments? Yes, for services, tax may be payable upon receipt of advance unless specifically exempted by notification. For goods, advances have had exemptions historically, but you must check the current position. Always reconcile advances with subsequent invoices in returns.
Where should I verify the official GST rate? Check CBIC’s GST rate notifications and the official tariff for your HSN/SAC, and review GST Council updates for context. The gst.gov.in portal and CBIC’s resources are authoritative. Save a PDF or screenshot with the date for your audit trail whenever you classify a new item.