India VAT / Sales Tax

Detailed vat / sales tax rates and rules for India in 2026.

VAT / Sales TaxINR

India's GST regime underwent a major transformation with GST 2.0 reforms effective September 2025. The simplified structure has three main rates: 5%, 18%, and 40%. The general rate of 18% applies to the majority of supplies. The new 40% rate replaced the earlier 28% GST plus cess structure for luxury and sin goods. Daily-use items moved to lower rates, with goods like ACs, small cars, TVs, and motorbikes now at 18% instead of 28%. GST is administered jointly by the central government (CGST) and state governments (SGST), with an integrated GST (IGST) on inter-state supplies.

Standard Rate

18%

Registration Threshold

INR 40 lakh annual turnover for goods (INR 20 lakh for services; INR 20 lakh/10 lakh respectively for special category states)

Reduced Rates

0% — Essential food items including fresh fruits, vegetables, milk, eggs, paneer, roti, pizza bread, and unprocessed cereals5% — Daily-use items including soaps, shampoos, cheese, butter, soya milk, fruit juices, packaged foods, and transport services40% — Luxury and sin goods including premium cars, tobacco products, and aerated beverages (replaced 28% plus cess structure)

How India VAT / Sales Tax compares

India’s standard VAT / sales tax rate of 18% is the 53rd highest of 203 countries TaxAtlas tracks, above the global average of 13.7% and Asia’s regional average of 9.6%.