GST Slabs in India After GST 2.0: 2026 Small Business Guide

The Goods and Services Tax (GST) fundamentally changed India's indirect taxation system when launched. With its slabs and mechanisms, calculating GST correctly remains one of the most critical daily tasks for business owners.

Whether you're invoicing clients, setting your product's Retail Price, or filing monthly returns, this guide will simplify the math behind GST.

The GST Slabs Since September 2025

On 22 September 2025, the GST Council's "GST 2.0" reform replaced the old four-slab structure (5%, 12%, 18% and 28%) with two main slabs and a special rate:

1. 5% Slab: Most everyday goods, including many packaged foods, dairy products such as butter and ghee, personal-care items such as soap and shampoo, and many medicines. Most items that used to be taxed at 12% moved here.
2. 18% Slab: The standard rate for most services (IT, telecom and financial services) and for most manufactured goods, including TVs, air conditioners and small cars. Most items that used to be taxed at 28% moved here.
3. 40% Slab: Luxury and "sin" goods, such as pan masala, sugary and aerated drinks, and large cars and motorcycles.

Note: Many items remain exempt (0%), such as fresh fruit, vegetables and milk. The reform also exempted individual health and life insurance premiums. A few goods have special rates, such as 3% on gold and silver. Rates depend on each item's HSN or SAC code, so check the official rate schedule for anything you invoice.

CGST, SGST, and IGST Breakdown

When computing GST, the taxonomy depends entirely on where the supply happens relative to the seller's state:

• Intra-State Supply (Within the same state): The GST rate is split equally.
  • CGST (Central GST): 50% of the total rate.
  • SGST (State GST): 50% of the total rate.
• Inter-State Supply (Between two states): The entire rate is claimed sequentially.
  • IGST (Integrated GST): 100% of the total rate.

Calculating GST: Exclusive vs. Inclusive

1. Adding GST (Exclusive Price)

When adding GST to a base price.

• Formula: Total Price = Base Price + (Base Price × GST% / 100)
• Example: ₹1,000 at 18% GST = 1,000 + (1,000 × 0.18) = ₹1,180

2. Removing GST (Inclusive Price)

When you have the final MRP and need to find the base value and tax component. This is the mathematical step many businesses get wrong.

• Formula: Base Price = Total Price / (1 + GST% / 100)
• Example: ₹1,180 inclusive of 18% GST.
  • Base Price = 1,180 / 1.18 = ₹1,000
  • Tax Amount = 1,180 - 1,000 = ₹180

What is Input Tax Credit (ITC)?

For registered businesses, GST is not an expense—it's a pass-through. If you buy raw materials for ₹100 + ₹18 GST, and sell the finished good for ₹200 + ₹36 GST, you don't pay ₹36 to the government.

You claim an Input Tax Credit of the ₹18 you already paid, meaning your net tax liability is just ₹18.

To calculate GST quickly without the manual math, use our embedded calculator below.