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Items in the 40% slab
| Item | Before 22 Sep 2025 | GST now |
|---|---|---|
| Pan masala, gutkha, cigarettes, chewing tobacco | 28% + compensation cess | 40% (from 1 Feb 2026) |
| Bidis | 28% | 18% |
| Aerated, sugary and caffeinated drinks | 28% + cess | 40% |
| Mid-size and large cars, SUVs; motorcycles above 350cc | 28% + cess | 40% |
| Yachts and aircraft for personal use | 28% + cess | 40% |
| Lottery, betting, casinos and race clubs | 28% | 40% |
What happened to compensation cess
Compensation cess ended on most goods on 22 September 2025 and on tobacco and pan masala on 1 February 2026. From that date these goods carry 40% GST, and separate central levies outside GST apply to some of them — check the latest notification before pricing.
Using these rates correctly
- The rate depends on the HSN (goods) or SAC (services) code — the description on your invoice must match the code
- Old stock sold after 22 September 2025 is billed at the new rate; revise MRP stickers where the law required it
- Where a rate fell, pass on the benefit — anti-profiteering complaints are still possible
- Keep purchase invoices: input tax credit follows GSTR-2B, not the rate you expect
Frequently asked questions
The GST Council placed bidis at 18% when it rationalised tobacco rates; the 40% rate applies to other tobacco products.
Last reviewed on 11 November 2026 by Vinay Jaglan, VJ & Associates. Law and portal screens change — verify before acting, or ask the office.
