GST 2.0 — what changed in September 2025
The 56th GST Council meeting overhauled India's GST structure: the 12% and 28% slabs were abolished, leaving two main rates — 5% and 18% — plus a 40% rate for luxury and 'sin' goods, effective 22 September 2025. Many essentials (dairy, key medicines, educational items) moved to 0%.
Roughly: daily essentials, agricultural goods and most healthcare items sit at 5%; the broad middle of the economy — electronics, appliances, small cars, two-wheelers, most services — at 18%; and pan masala, tobacco, aerated drinks and luxury vehicles at 40%. If you're still quoting 12% or 28% on an invoice, you're using dead rates.
Adding vs removing GST — which mode you need
Add GST when you have a base price and need the final invoice amount: ₹1,000 at 18% becomes ₹1,180. Remove GST (also called reverse GST) when you have an inclusive price and need the base: an ₹1,180 MRP at 18% contains ₹180 of GST on a ₹1,000 base — not ₹212.40, which is what you'd wrongly get by taking 18% of the inclusive amount. The remove formula divides by (1 + rate/100) instead of multiplying.
That reverse calculation is the one people get wrong most often — sellers computing their pre-tax revenue from MRP, buyers checking whether a 'GST extra' quote matches the final bill, and anyone filing GSTR returns from inclusive figures.
CGST, SGST and IGST in plain words
Every GST charge is split between the Centre and the state. Sell within your state and the invoice shows CGST + SGST, each exactly half the total — an 18% charge appears as 9% + 9%. Sell across state lines and the same total is charged as a single IGST line instead. The buyer pays the same either way; only the split differs.
For registered businesses, the practical detail is input tax credit: GST you pay on purchases offsets GST you collect on sales, so the tax effectively applies only to your value addition. This calculator gives you the invoice-level numbers; credit flows are handled in your GSTR filings.
Frequently asked questions
›What are the current GST rates in India?
Since 22 September 2025: 0% on many essentials, 5% on daily-use and agricultural goods, 18% as the main standard rate, and 40% on luxury and sin goods (tobacco, pan masala, aerated drinks, luxury cars). The old 12% and 28% slabs were abolished by the GST 2.0 reform.
›How do I remove GST from an inclusive price?
Divide by (1 + rate/100). An ₹1,180 price including 18% GST: 1180 ÷ 1.18 = ₹1,000 base, so the GST is ₹180. Don't take 18% of the inclusive amount — that overstates the tax. Use the 'Remove GST' mode above.
›What is the difference between CGST, SGST and IGST?
Within one state, GST splits equally into CGST (Centre's half) and SGST (state's half) — 18% shows as 9% + 9% on the invoice. Between states, the full amount is charged as IGST. The total tax is identical; only how it's shared between governments differs.
›Is GST charged on the discounted price or the original price?
On the discounted price, provided the discount appears on the invoice. A ₹2,000 item sold at 10% off attracts GST on ₹1,800. Post-sale discounts have stricter conditions for GST adjustment.
›Who has to register for GST?
Businesses above the turnover threshold — generally ₹40 lakh for goods and ₹20 lakh for services (lower in some special-category states) — plus anyone selling inter-state or through e-commerce platforms, regardless of turnover. Thresholds and rules change; confirm current requirements on the official GST portal before deciding.