GST Rates 2026: Updated HSN-Wise Guide, Old vs New Rates & HSN Rules

India’s GST rate structure changed substantially after the 56th GST Council meeting. For most businesses, the practical framework is now centred around a 5% merit rate and an 18% standard rate, with Nil/exempt supplies and a 40% special de-merit rate for select goods and services.

That does not mean every product simply falls into 5% or 18%. The correct rate still depends on the exact tariff heading, product description, value threshold and any exemption or special-rate notification.

This guide explains the important HSN-wise changes that matter in 2026, how HSN reporting works in GSTR-1, and how to avoid relying on an outdated rate table.

Quick Answer: What Changed for GST Rates in 2026?

The largest recent rate revision was not a blanket change made on 1 January 2026. Most of the broad rate rationalisation took effect from 22 September 2025.

Important current points are:

• The broad GST structure was rationalised around 5% and 18%, with a 40% special rate for select de-merit goods/services.
• Most revised goods and service rates approved at the 56th GST Council meeting took effect from 22 September 2025, except specified tobacco-related products that transitioned separately.
• Apparel and footwear value thresholds changed materially.
• Man-made fibre, man-made yarn and renewable-energy equipment received major rate reductions.
• Many medicines moved from 12% to 5%, while specified life-saving drugs moved to Nil.
• Auto parts were rationalised to a uniform 18% rate.
• Metal scrap did not become a blanket 18% reverse-charge supply. RCM applies in the notified unregistered-supplier-to-registered-recipient situation, while registered-to-registered scrap supplies have separate TDS compliance.
• From the May 2025 return period, GSTR-1/1A Table 12 uses stricter HSN reporting rules and HSN selection from the portal master.
• A 2026 notification aligned beverage tariff items under HSN 2202 with Finance Act, 2026 classifications.

1. Is There a “Complete HSN Code GST Rate List” for 2026?

A static blog page should not be treated as the final legal database for every HSN code.

The official GST system contains thousands of tariff entries, exemptions, value conditions and description-specific exceptions. A single chapter may contain goods taxed differently even when the first two or four HSN digits are the same.

For an exact product:

1. Identify the product’s correct technical/trade description.
2. Search the HSN on the GST Portal.
3. Check the applicable tariff item and description.
4. Verify the current rate notification and later amendments.
5. Check whether a value threshold, end-use condition, exemption, RCM provision or special valuation rule applies.

For difficult classifications, do not select an HSN only because a similar product appears in another seller’s invoice or marketplace listing.

2. HSN Digits Required in GST Invoices and GSTR-1

HSN disclosure depends mainly on the taxpayer’s Aggregate Annual Turnover (AATO) in the preceding financial year.

From the May 2025 return period, Phase 3 of Table 12 reporting was implemented on the GST Portal. Important system changes include:

• Table 12 is split into B2B and B2C sections.
• Taxpayers select HSN/SAC from the portal’s drop-down master instead of manually typing arbitrary HSN descriptions.
• The portal validates the minimum HSN length based on AATO.
• Businesses should reconcile their ERP/product master with the HSN master used in GSTR-1.

What about 8-digit HSN?

Eight-digit tariff classification is especially relevant for Customs/import-export documentation and precise tariff-item classification. It should not be described as a blanket domestic GST invoice rule for every taxpayer.

3. Important Old vs Current GST Rates

The following table highlights major verified changes that are useful for businesses in 2026. It is not an exhaustive list of every HSN code.

4. Apparel GST Rate in 2026: Practical Example

For qualifying apparel under Chapter 61 or 62:

• Sale value ₹2,400 per piece → GST at 5%
• Sale value ₹2,600 per piece → GST at 18%

Example:

The value condition must be applied to the relevant supply and classification. Do not automatically use an MRP-based test unless the notification specifically requires it.

5. Footwear GST Rate in 2026

For footwear under Chapter 64 under the current value-based structure:

• Sale value not exceeding ₹2,500 per pair: 5%
• Sale value exceeding ₹2,500 per pair: 18%

Before the September 2025 rationalisation, footwear not exceeding ₹1,000 per pair was in the 12% slab, while other footwear generally attracted 18%.

This is one of the clearest examples of why an old GST-rate table can now produce a wrong invoice.

6. Medicines and Healthcare: Do Not Use One Rate for Every Product

The 56th GST Council changes substantially reduced GST on healthcare products.

Important changes included:

• 33 specified life-saving drugs/medicines: 12% to Nil
• 3 specified life-saving drugs/medicines: 5% to Nil
• Other drugs and medicines covered by the rationalisation: 12% to 5%
• Various medical apparatus/devices: 18% to 5%
• Various medical equipment and supplies: 12% to 5%

A pharmacy, distributor or manufacturer should still map every SKU to the exact tariff entry because exemptions can be product-specific.

7. Renewable Energy and Man-Made Textiles

Two important inverted-duty corrections remain highly relevant in 2026.

Man-made textile inputs

The rate rationalisation reduced:

• Man-made fibre: 18% → 5%
• Man-made yarn: 12% → 5%

Renewable-energy equipment

Specified renewable-energy devices and parts for their manufacture were reduced:

• 12% → 5%

This directly corrects the earlier statement that solar modules/inverters had moved from 12% to 18%. That is not the current general rate direction reflected in the 56th GST Council rationalisation.

8. Metal Scrap GST: RCM Does Not Apply to Every B2B Sale

Metal scrap needs special care because the tax rate and the collection mechanism are different questions.

The GST Council retained 18% as the general rate for metal scrap in the relevant framework while introducing anti-evasion compliance measures.

Unregistered supplier → registered recipient

RCM was introduced for notified supplies of metal scrap by an unregistered person to a registered person.

In that situation, the registered recipient is responsible for paying GST under reverse charge, subject to the notified provisions.

Registered supplier → registered recipient

A normal registered-to-registered metal-scrap sale should not be described as a blanket 18% RCM transaction.

A 2% TDS mechanism was introduced for registered-to-registered metal-scrap supplies, subject to the applicable Section 51 and notification conditions.

This distinction is important for scrap dealers, manufacturers and purchasing teams because an ERP configured to apply RCM to every scrap invoice can create incorrect tax accounting.

9. 2026 Update: Beverage HSN 2202 Classification

One of the notable rate-notification updates during 2026 was Notification No. 01/2026-Central Tax (Rate), dated 30 April 2026.

It amended Notification No. 09/2025-Central Tax (Rate) to align GST entries with tariff classification changes made through the Finance Act, 2026.

5% notified entries

Specified fruit juice-based drinks and milk-based beverages were aligned under Schedule I at 5%, including tariff items:

• 2202 99 21
• 2202 99 29
• 2202 99 31
• 2202 99 39

40% notified entries

Other specified non-alcoholic beverages and caffeinated beverages were placed under the 40% schedule, including:

• 2202 99 90
• 2202 99 91
• 2202 99 99

This is a good example of why businesses should maintain 8-digit tariff-item level product masters when their products have closely divided classifications.

10. What Happened to the Old 5%, 12%, 18% and 28% Structure?

The 56th GST Council rationalised the broad rate framework into:

• 5% merit rate
• 18% standard rate
• 40% special de-merit rate for select goods/services

There are also Nil/exempt supplies and product-specific conditions.

For practical compliance, businesses should therefore stop using old generic charts that assume the historical 5% / 12% / 18% / 28% structure still applies unchanged to every category.

The correct question is:

“What is the current notified rate for this exact HSN/tariff description on the date of supply?”

11. Rate Changes and Old Stock: Which GST Rate Should You Apply?

A change in GST rate does not generally mean old stock must continue to be sold at the old rate merely because it was purchased earlier.

For a supply made after a rate change, determine the applicable rate using the time-of-supply provisions for change in rate of tax and the relevant notification/effective date.

For the September 2025 rationalisation, the GST Council’s official FAQ also clarified the treatment of existing ITC and supplies around the transition date.

Businesses that had stock on hand during the change should review:

• Date of supply
• Invoice date
• Payment date
• Effective date of the new rate
• ITC treatment if the outward supply became exempt
• Credit/debit-note requirements where genuinely applicable

Do not automatically issue a debit or credit note simply because an old rate appears on a historical purchase invoice.

12. Wrong HSN Code: Is There an Automatic ₹25,000 Penalty?

No. It is misleading to say that every incorrect HSN automatically attracts a ₹25,000 penalty per return period.

Possible consequences depend on what the error caused and the facts of the case.

An incorrect classification can result in:

• Short-payment of GST
• Interest under Section 50 where tax was paid late/short
• Demand proceedings under the applicable CGST Act provisions
• Penalty where the legal requirements for that penalty are met

Section 125

Section 125 is the general penalty provision. Where a person contravenes the Act or Rules and no separate penalty is provided, the penalty may extend to ₹25,000.

Section 126

Section 126 specifically provides general discipline for penalties. It states that a penalty should not be imposed for certain minor breaches or easily rectifiable documentation mistakes made without fraudulent intent or gross negligence, subject to the statutory conditions.

Therefore, the correct compliance message is:

Do not treat ₹25,000 as an automatic HSN-error fine. The consequence depends on the nature of the error, tax impact, conduct and the provision actually invoked.

13. How to Check the Correct HSN and GST Rate Before Billing

Use this workflow before updating Tally, SAP, Zoho, BUSY or any custom ERP.

14. GST Rate Update Checklist for Businesses

• ○ Review every active SKU/service code in your product master
• ○ Flag products still using pre-22 September 2025 rates
• ○ Check apparel and footwear value thresholds
• ○ Review man-made textile inputs
• ○ Review renewable-energy items
• ○ Review medicine/medical-device classifications
• ○ Check auto-parts mapping to the current 18% framework
• ○ Review metal-scrap RCM versus forward-charge treatment
• ○ Configure metal-scrap TDS where applicable
• ○ Check HSN 2202 beverage tariff-item changes introduced in 2026
• ○ Use 4-digit or 6-digit HSN in GSTR-1 Table 12 according to AATO
• ○ Reconcile ERP HSN descriptions with the GST Portal Official ↗ master
• ○ Keep the source notification/effective date in your tax master
• ○ Recheck classification when product composition or description changes

15. Common GST Rate and HSN Mistakes

Using a Google result without checking its date

A rate article written before September 2025 may now be materially wrong.

Using only a 2-digit chapter

“Chapter 64” identifies footwear broadly; it does not by itself capture every value condition and notified entry.

Copying a vendor’s HSN

Your supplier can also be wrong. Classification should be supported by the actual product.

Confusing HSN reporting with the GST rate

The number of HSN digits you must report and the percentage of GST applicable are separate compliance questions.

Applying RCM to every metal-scrap invoice

RCM for notified metal scrap is tied to the unregistered-supplier-to-registered-recipient scenario. It is not a blanket rule for all B2B scrap sales.

Treating an old article as a permanent rate chart

GST notifications are amended over time. Save an “effective from” date in your product tax master.

16. Official Sources to Use for Current GST Rates

For current classification and rate verification, prioritise:

1. GST Portal – Search HSN Code and current return utilities https://www.gst.gov.in/

2. GST Council – Recommendations of the 56th Meeting https://gstcouncil.gov.in/recommendations-56th-meeting-gst-council-held-new-delhi

3. GST Council – FAQs on 56th GST Council decisions https://gstcouncil.gov.in/frequently-asked-questions-faqs-decisions-56th-gst-council-held-new-delhi-0

4. GSTN Advisory – Reporting of HSN Codes in Table 12 of GSTR-1/1A https://tutorial.gst.gov.in/downloads/news/updated_advisory_hsn_table12_25042025.pdf

5. GST Council – April 2026 Newsletter https://gstcouncil.gov.in/sites/default/files/2026-05/newsletter_april_issue.pdf

6. CBIC – CGST Act / statutory provisions https://cbic-gst.gov.in/

Need Help With GST Classification or Return Filing?

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Information note: This article is a general compliance guide, not a substitute for transaction-specific professional advice. GST classification can depend on product composition, technical characteristics, value conditions and subsequent notifications.