GST & invoices

What 5%, 18%, and 40% actually sit on after GST 2.0

The poster a lot of us memorized, 0 / 5 / 12 / 18 / 28, is how GST was taught in 2017. It is not how every invoice after 22 September 2025 is supposed to look. The 56th GST Council meeting compressed the middle. Everyday merit goods clustered at 5%. The working default became 18%. A 40% peak picked up many luxury and sin lines that used to wear 28% plus compensation cess. Tobacco still has its own ugly corner. If your CA sends a working paper with 12% on a blender, they might be looking at a credit note from FY 2024–25, or at an HSN that did not move.

I keep 12% and 28% in the GST calculator so you can reverse an old bill without pretending those are the current retail default. They are labeled as legacy on purpose.

What actually changed

Rate rationalisation is a schedule change, not a new tax. You still need an HSN or SAC, a place of supply, and a decision about exclusive versus inclusive. What changed is which percentage the schedule prints next to common goods. CBIC’s goods and services rate finder is the page I check, not a carousel on a news site. Last pass against that finder for the calculator’s default list: GST 2.0 from the 56th Council, notified for 22 September 2025, with later tariff tweaks in Notification 01/2026-Central Tax (Rate). If a newer notification exists the day you read this, the notification wins.

Source: CBIC GST goods and services rates.

Worked example: exclusive 18% intra-state

Taxable value ₹10,000. Rate 18%. GST = ₹1,800. Total = ₹11,800. Same-state supply: CGST ₹900 and SGST ₹900. IGST is zero. That split is the textbook intra-state case. The calculator will show it if you pick intra-state. It will not know whether your warehouse and your customer share a state. Place of supply is a legal test, not “where I clicked calculate.”

Worked example: inclusive 5% on an MRP

Sticker ₹210, tax included, 5%. Taxable value = 210 / 1.05 = ₹200. GST = ₹10. If you ship that pack to another state, the ₹10 is IGST, not a 5+5 split. E-commerce teams blow this when the warehouse and the billing entity share a city while the customer does not. Inclusive mode is algebra. If you type the exclusive figure into inclusive mode you understate tax by rate/(100+rate).

Worked example: 40% is not “28 plus cess rounded up”

Exclusive ₹20,00,000 at 40% is ₹8,00,000 tax and ₹28,00,000 total. Cess had its own base and exemptions. If the notification puts the HSN at 40%, use 40%. If it still carries cess, a simple peak-rate calculator will understate the outlay. That is an edge case, not a rounding bug. Confirm the HSN before you quote a client a round “luxury GST” number you saw on Twitter.

What this note adds that the calculator page does not

The tool page is a line check: type amount, pick rate, see split. This note is the schedule story. Debit notes and unamended contracts will keep 12% and 28% alive for years. Composition dealers cannot treat these rates as if they were regular taxpayers. Reverse charge still exists on specified services; neither this note nor the calculator will warn you. E-invoicing IRN generation lives in GSTN. If you need to know whether a supply is goods or a restaurant service, that is classification. The box will happily tax the wrong story at the right rate.

Related: the calculator’s inclusive versus exclusive toggle, and India financial tools for salary and IFSC when the invoice is only half the paperwork.

How I actually check a rate

I do not type “GST rate for X” into a search box and trust the first snippet. I take the HSN from the purchase order or from the supplier’s last invoice, open CBIC’s rate finder, and only then pick 5, 18, or 40 in the calculator. If the finder and the supplier disagree, the finder wins until a CA says otherwise. News explainers about GST 2.0 are useful for the story; they are not a schedule.

Composition dealers: these percentages are not your tax. Do not reverse-engineer a regular-taxpayer invoice and then file composition as if the arithmetic were the same. Reverse charge on specified services still exists; the calculator will not flash a warning. E-invoicing IRN generation, GSTR-1, and turnover tests live in GSTN. This site is a line check so you can argue with an invoice, not a filing desk.