India scrapped its old 5, 12, 18 and 28 percent GST slabs in September 2025. In 2026 you work with four main rates: 0, 5, 18 and 40 percent. This guide shows what each slab covers, what moved, and exactly how the new rates change a freelance invoice.
Rates last reviewed: October 2026. Sources: Press Information Bureau release PRID 2164670 on the 56th GST Council decisions, and CBIC registration guidance.
What are the India GST rates in 2026?
India has four main GST rates in 2026: 0 percent for nil-rated essentials, 5 percent as the merit rate for mass-consumption goods, 18 percent as the standard rate for most goods and services, and 40 percent as a special rate for luxury and demerit goods. Two narrow special rates, 3 percent and 0.25 percent, also survive.
The structure is called GST 2.0. The 56th GST Council recommended it on 3 September 2025, and the new rates took effect on 22 September 2025, according to the Press Information Bureau release PRID 2164670. That date matters. Some pages still describe the reform as upcoming in April 2026. It is not upcoming. It has been in force for over a year.
For most freelancers the headline is simple: professional and digital services stayed at 18 percent. The big changes hit goods, consumer durables, and the goods you buy for your business, not the rate on a typical design, writing, development or consulting invoice.
| Rate | Role under GST 2.0 | Typical examples |
|---|---|---|
| 0% (nil-rated) | Essentials kept out of tax | Fresh milk, eggs, unpackaged foodgrains, core healthcare and education services, individual life and health insurance |
| 5% (merit) | Mass-consumption rate | Packaged foods, butter, ghee, cheese, soap, shampoo, toothpaste, apparel and footwear up to Rs 2,500, tractors and farm inputs |
| 18% (standard) | Default rate for most supplies | Most professional, IT, telecom and marketing services, cement, small cars, air conditioners, televisions, auto parts |
| 40% (special) | Luxury and demerit rate | Luxury cars, motorcycles above 350cc, aerated and caffeinated drinks, yachts, private aircraft, online money gaming |
| 3% / 0.25% (special) | Narrow item-specific rates | 3% on gold, silver and jewellery; 0.25% on rough precious and semi-precious stones |
What moved when the 12 and 28 percent slabs disappeared?
Every item that sat at 12 percent or 28 percent had to land somewhere. Most 12 percent goods dropped to 5 percent. Most 28 percent goods dropped to 18 percent. A small group of luxury and demerit goods rose to 40 percent, where the new rate replaces the old 28 percent plus compensation cess combination.
| Movement | What it covers | Why you should care |
|---|---|---|
| 12% to 5% | Daily essentials, packaged foods, dairy products, kitchen utensils, many agricultural inputs | Lower input costs if you buy these goods for resale or client work |
| 12% to 0% | Individual life and health insurance, some education materials such as pencils and exercise books | Insurance premiums no longer carry GST for individual policyholders |
| 28% to 18% | Cement, air conditioners, televisions, refrigerators, small cars, motorcycles up to 350cc, auto components | Big-ticket business purchases got cheaper, and your input tax credit on them fell too |
| 28% plus cess to 40% | Luxury cars, premium motorcycles, aerated drinks, other demerit goods | One combined rate instead of a rate plus a separate cess line |
| Stayed at 18% | Most services, including freelance professional, IT and creative services | Your service invoices did not change rate under GST 2.0 |
Watch out: tobacco is the exception. Cigarettes, chewing tobacco such as zarda, unmanufactured tobacco and beedi continue under the existing GST plus compensation cess arrangement for now. The 40 percent rate applies to them only from a later notified date, per the PIB FAQs on the 56th Council decisions.
How does GST show up on a freelance invoice?
GST is charged as CGST plus SGST on a sale inside your own state, each at half the slab rate, or as a single IGST charge at the full slab rate on a sale to another state. An 18 percent service is therefore 9 percent CGST plus 9 percent SGST intra-state, or 18 percent IGST inter-state.
That split did not change under GST 2.0. Neither did the basic invoice maths: GST equals your taxable value multiplied by the rate, and the client pays the taxable value plus GST. Where most errors happen is not the formula. It is using a slab that no longer exists, or applying the goods rate to a service.
Run your own figures through LancerBill’s GST calculator before you send the invoice. It carries the current India presets (0, 5, 18 and 40 percent) and splits CGST and SGST for you, so you can check an intra-state and an inter-state version of the same bill in seconds.
Worked example: a design invoice before and after GST 2.0
Assumptions: you are a GST-registered freelance designer in Maharashtra, billing a client in Maharashtra for a branding project in October 2026. Your fee is Rs 80,000. Design services are taxed at 18 percent, and that rate did not change under GST 2.0.
Step 1, work out the GST: Rs 80,000 x 18% = Rs 14,400.
Step 2, split it for an intra-state sale: CGST is Rs 80,000 x 9% = Rs 7,200. SGST is Rs 80,000 x 9% = Rs 7,200.
Step 3, total the invoice: Rs 80,000 + Rs 7,200 + Rs 7,200 = Rs 94,400.
Now change one fact. The same client is based in Karnataka instead. The split disappears and you charge IGST only: Rs 80,000 x 18% = Rs 14,400, so the invoice total is still Rs 94,400. The total is identical. Only the tax heads on the invoice change, which matters for how your client claims input tax credit.
Contrast that with a goods example where GST 2.0 did bite. A retailer sells an air conditioner with a taxable value of Rs 40,000. At the old 28 percent rate, GST was Rs 40,000 x 28% = Rs 11,200, and the customer paid Rs 51,200. At the new 18 percent rate, GST is Rs 40,000 x 18% = Rs 7,200, and the customer pays Rs 47,200. That is a Rs 4,000 difference on one unit, created entirely by the slab move.
When you are ready to bill, build the invoice itself with the free invoice generator and set the GST rate per line, so a mixed invoice with goods at 5 percent and services at 18 percent still totals correctly.
Which rate applies to what you sell? A three-question check
Most rate guides give you a long item list and leave you to search it. For a freelancer, three questions usually settle the rate faster. Work through them in order before you invoice.
| Question | If yes | If no |
|---|---|---|
| 1. Is the supply an export or a supply to an SEZ unit? | Zero-rated. You can supply under a Letter of Undertaking without charging GST and still claim input tax credit. | Go to question 2. |
| 2. Are you selling a service rather than goods? | Use 18% in almost every freelance case, including IT, design, writing, marketing, consulting and training delivered commercially. | Go to question 3. |
| 3. Is the good a named merit, luxury or special-rate item? | Use its named rate: 5% for mass-consumption goods, 40% for luxury and demerit goods, 3% for precious metals and jewellery. | The default for most other goods is now 18%, since the old 28% slab is gone. |
Scenario walkthrough: a freelance developer in Pune does three jobs in one month. Job one is a website build for a Pune cafe: a service, domestic, so 18 percent IGST or CGST plus SGST depending on the client’s state. Job two is the same build for a client in the United States: an export of services, zero-rated if the conditions for export of services are met and you have a Letter of Undertaking in place. Job three is selling a refurbished laptop to a local business: goods, not on any special list, so 18 percent. One freelancer, three invoices, two different rates and one zero-rated supply. The questions, not the item list, get you there.
Tip: if you reprice work after a slab change, model the net effect first. A lower GST rate on goods you buy also lowers the input tax credit you can claim. Check the margin impact with the business pricing calculator before you pass a headline saving on to clients.
Did GST 2.0 change who has to register?
No. GST 2.0 changed rates, not registration thresholds. You must register when your aggregate turnover in a financial year passes Rs 20 lakh for services or Rs 40 lakh for goods in most states, with lower limits in special category states. Some suppliers must register regardless of turnover, including many inter-state and e-commerce sellers.
That is why the reform confused some freelancers. Headlines focused on slabs, so it was easy to assume thresholds moved too. They did not. If you were below the services threshold before September 2025 and your turnover has not crossed Rs 20 lakh, your registration position is unchanged.
Voluntary registration is still an option below the threshold, and it can make sense if your clients are registered businesses that want input tax credit on your invoices. Weigh it against the filing burden before you opt in. Our companion guide on GST for freelancers in India covers registration, return filing and invoice requirements in full, and this guide stays focused on rates.
If you are new to invoicing generally, pair this with our step-by-step guide on how to write an invoice so the GST lines sit inside a complete, professional document.
Common mistakes with the new slabs
The first mistake is quoting from memory. Old templates, old blog posts and old rate charts still show 12 and 28 percent everywhere. If a rate source does not mention GST 2.0 or September 2025, treat it as stale.
The second mistake is extracting GST wrongly from a tax-inclusive price. To find the tax inside an 18 percent inclusive price, divide by 1.18 and then take 18 percent of the net figure, or multiply the total by 18/118. Never take 18 percent of the inclusive total. LancerBill’s GST calculator handles both directions, adding GST to a net price and removing it from a gross price.
The third mistake is assuming your service rate fell because goods rates fell. It did not. Charging a client 5 percent on a service that should be 18 percent leaves you liable for the shortfall when it is assessed, not your client.
Watch out: classification disputes usually start with mixed supplies. If you bundle goods and services in one price, the rate can follow the principal supply. Itemise lines on the invoice where you can, so each part carries its own correct rate.
Key takeaways
- India’s GST rates in 2026 are 0, 5, 18 and 40 percent, in force since 22 September 2025 under GST 2.0, plus special rates of 3 percent and 0.25 percent.
- The old 12 percent slab mostly moved to 5 percent, and the old 28 percent slab mostly moved to 18 percent, with luxury and demerit goods at 40 percent.
- Most freelance services stayed at 18 percent, split as 9 percent CGST plus 9 percent SGST intra-state, or 18 percent IGST inter-state.
- Tobacco products are the exception: they keep the old GST plus compensation cess until a later notified date.
- Registration thresholds did not change: Rs 20 lakh for services and Rs 40 lakh for goods in most states.
- Exports of services are zero-rated, so eligible freelancers can invoice foreign clients without GST under a Letter of Undertaking.
Frequently asked questions
When did the new India GST rates start?
The GST 2.0 rates took effect on 22 September 2025, following the 56th GST Council meeting on 3 September 2025. They were not delayed to April 2026. Any invoice dated on or after 22 September 2025 should use the 0, 5, 18 or 40 percent structure.
What GST rate do freelancers charge on services in India?
Most freelance services, including IT, design, writing, marketing and consulting, are taxed at 18 percent. Within your state that is 9 percent CGST plus 9 percent SGST. To a client in another state it is 18 percent IGST. GST 2.0 did not reduce the standard services rate.
Do I charge GST to a foreign client?
Exports of services are zero-rated. If the supply meets the export-of-services conditions, you can invoice without charging GST, typically under a Letter of Undertaking, and still claim input tax credit on your costs. Keep proof of foreign receipt and the client location evidence with the invoice.
What happened to the 12 percent and 28 percent GST slabs?
Both were abolished under GST 2.0. Most items at 12 percent moved down to 5 percent, and a few, such as individual life and health insurance, moved to 0 percent. Most items at 28 percent moved to 18 percent, while luxury and demerit goods moved to the new 40 percent special rate.
Did the GST registration threshold change in 2026?
No. The thresholds stayed at Rs 20 lakh of aggregate turnover for services and Rs 40 lakh for goods in most states, with lower limits in special category states. GST 2.0 changed rates only. Some suppliers, including many inter-state and e-commerce sellers, must register regardless of turnover.
Why is tobacco not at 40 percent yet?
Cigarettes, chewing tobacco, unmanufactured tobacco and beedi were carved out of the September 2025 change. They continue under the previous GST rate plus compensation cess, and the 40 percent rate will apply to them only from a later date notified by the government.
This guide is for general information only and is not financial, tax or legal advice.