India VAT Rate 2026: 18% Standard Rate

How Much Is GST in India?

The standard GST (the local equivalent of VAT) rate in India is 18% in 2026, plus a reduced rate of 5% and a 40% rate on luxury and sin goods (the GST 2.0 slabs from September 2025). It applies to most goods and services sold in India. Standard VAT/GST rates worldwide range from around 5% to 27%.

How to calculate India GST

To add 18% GST to a net (tax-exclusive) price, multiply it by 1.18. To remove GST from a gross (tax-inclusive) price, divide it by 1.18.

• Add GST: INR 100 net × 1.18 = INR 118 gross (that is INR 18 of GST)
• Remove GST: INR 118 gross ÷ 1.18 = INR 100 net (that is INR 18 of GST)

Use the India GST calculator above for any amount, or compare India with every other country in our GST rates by country table.

Current VAT Rates

Historical VAT Rate Changes

• 2026: Current standard rate in force
• 2025: GST 2.0 — slabs simplified to 5%, 18% and 40%
• 2017: GST introduced, replacing a web of indirect taxes

Economic Impact

VAT contributes approximately 20-30% to India's total tax revenue. The current rate structure balances revenue generation with economic competitiveness within the Asia-Pacific region.

Zero-Rated Items

The following items are zero-rated for VAT in India:

• Exports of goods and services
• International transportation
• Some basic food items
• Children's clothing
• Books and newspapers
• Prescription medications

VAT Exempt Items

The following are exempt from VAT in India (no VAT charged, no input VAT recovery):

• Financial services
• Insurance services
• Healthcare and medical services
• Education and training
• Postal services
• Charitable activities

Reduced Rate Applications

Items subject to reduced VAT rates in India:

• 5% rate: Packaged foods, household essentials, medicines, footwear and most daily-use items
• 40% rate: Luxury and sin goods such as tobacco, aerated drinks, high-end cars and online gaming

India requires GST registration once aggregate turnover exceeds ₹40 lakh for goods or ₹20 lakh for services (lower in special-category states). Always confirm current thresholds and deadlines with the GST Network and CBIC, as they are reviewed periodically.

VAT Registration

• Registration Threshold: ₹40 lakh (goods) / ₹20 lakh (services)
• Voluntary Registration: Available below threshold
• Registration Process: Online via tax authority website
• Processing Time: Typically 2-4 weeks

VAT Returns and Payment

• Filing Frequency: Monthly GSTR-3B plus an annual return (quarterly QRMP option for small taxpayers)
• Filing Deadline: End of month following period
• Payment Methods: Bank transfer, online payment
• Late Filing Penalties: Varies by amount and delay

Cross-Border Trade

Special considerations for international transactions:

• Intra-EU Trade: Not applicable (non-EU country)
• Imports: VAT payable at point of entry
• Exports: Generally zero-rated
• Digital Services: Special rules may apply

For background on how the buyer accounts for VAT on intra-EU and cross-border B2B supplies, see the reverse charge mechanism. For B2C digital sales and low-value imports, see VAT on digital services and cross-border e-commerce.

Nearby Countries

What is the current VAT rate in India?

The standard VAT rate in India is 18% as of 2026. This applies to most goods and services unless they qualify for reduced rates or exemptions.

How do I calculate VAT in India?

To add VAT: multiply the net amount by 18%. To remove VAT from a gross amount: divide by 1.18. Use our calculator above for instant results.

Who needs to register for VAT in India?

India requires GST registration once aggregate turnover exceeds ₹40 lakh for goods or ₹20 lakh for services (lower in special-category states).

Can I reclaim VAT in India?

VAT-registered businesses can generally reclaim input VAT on business purchases. Non-EU tourists may claim VAT refunds on qualifying purchases when leaving the country — see our guide to VAT refunds for tourists and non-resident businesses.