GST 2.0 unveiled: 22% luxury slab from July 1, 2026, what changes for businesses now

The 55th GST Council meeting concluded on May 24, 2026 with a decision that has been six years in the making: a new 22 percent GST slab on a defined list of luxury goods, effective July 1, 2026. This is the first major slab restructuring since GST launch in July 2017, and it formalises the rate rationalisation that the Group of Ministers has been working on since 2023.

The notified list, expected via CBIC notification in the first week of June, covers premium watches, branded leather goods, ceramic and porcelain tableware above a price threshold, yachts and personal watercraft, recreational firearms, and aerated beverages with added sugar content above 12 percent. The Council's reasoning is that these categories already attract compensation cess or have been disproportionately at the 28 percent rate, and the new 22 percent slab represents a calibrated middle ground that simplifies the regime while preserving revenue.

For businesses, the operational priority is the transition between June 30 and July 1. Invoices dated June 30 or earlier continue under the existing slab. Goods physically in transit on July 1 follow the rate prevailing at the time of supply, which under Section 14 of the CGST Act is determined by date of invoice issue or date of receipt of payment, whichever is earlier. Advance receipts for July-onwards delivery received before July 1 will need an addendum invoice for the rate differential.

The GSTR-3B form will add a new line in Table 3.1 for 22 percent outward supplies, and the GSTN portal is expected to push the schema update by mid-June. ERP and accounting system rate masters must be updated before June 25 to avoid mis-classification and filing errors. The bigger operational task is the HSN-level reclassification: businesses selling in the affected categories must map their existing SKU list against the notified HSN codes and rebuild their tax code logic accordingly.

Input tax credit eligibility on inputs purchased at 18 percent that are used to manufacture 22 percent outputs remains unrestricted, so there is no inverted duty structure refund complication. The cross-rate cases that need attention are mixed supply and composite supply scenarios where one component is at 22 percent and others at 18 or 12, which require care in determining the principal supply.

KAMRIT's GST desk is running a per-client transition playbook through June, covering HSN mapping, ERP rate-master updates, GSTR-3B prep, and advance-receipt addendum drafting for affected SKUs.