GST Rates

Q: What are the current GST rate slabs in India?

The primary GST rate slabs in India are 5%, 12%, 18%, and 28%. There are also special rates like 0%, 3%, and 0.25% for specific items.

Q: How often are GST rates revised?

GST rates are revised periodically by the GST Council. The most recent revision occurred during the 41st GST Council Meeting on August 27, 2020.

Q: What is the GST rate for services?

The standard GST rate for services is 18%. However, certain services may fall under other slabs like 5%, 12%, or 28%.

Q: What is a GST cess, and when is it applicable?

A GST cess is an additional tax levied on certain items like tobacco, aerated water, and luxury cars. The cess rate varies depending on the item and can range from 1% to 204%.

Q: What is the purpose of the HSN code in GST?

The HSN code is used to classify goods under the GST system, ensuring a standardized method for tax levy and compliance across international trade.

Introduction

The Goods and Services Tax (GST) in India is a comprehensive indirect tax levied on the manufacture, sale, and consumption of goods and services across the country. The GST Council, the governing body responsible for all GST-related decisions, regularly reviews and updates GST rate slabs. These rates vary depending on the nature of the goods or services, with luxury items typically attracting higher GST rates, while essential commodities are taxed at lower rates.

Overview of GST Rates in India

India’s GST rates are divided into four main slabs: 5%, 12%, 18%, and 28%. These rates are applied based on the classification of goods and services, with luxury and non-essential items typically attracting the highest rates. Over time, the GST Council has revised these rates multiple times to ensure they remain relevant to market conditions and economic needs.

Key GST Rate Slabs

5% GST: Applicable to essential goods and services.
12% GST: Applied to standard goods and services that are not considered luxury items but are also not essential.
18% GST: This is the most common slab and applies to a wide range of goods and services.
28% GST: Reserved for luxury items and non-essential goods, such as automobiles, luxury watches, and premium products.

Recent GST Rate Revisions

Since the introduction of GST, the council has periodically revised rates. The latest revision occurred during the 41st GST Council Meeting on August 27, 2020. This meeting did not result in major changes, reflecting a period of stability in GST rates. According to the Union Budget 2024-25, no further changes have been made to the GST rate structure.

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Types of GST Rates and Structures in India

The GST structure in India is designed to cater to different categories of taxpayers. The primary GST slabs include:

0% (Nil-rated): For certain essential items and services exempt from GST.
5%, 12%, 18%, and 28%: These are the most commonly used GST slabs.
Special Rates (3% and 0.25%): These are applied to specific items such as precious metals and stones.

Composition Scheme

Taxpayers under the composition scheme are subject to lower GST rates, such as 1.5%, 5%, or 6% on their turnover. This scheme simplifies GST compliance for small taxpayers by allowing them to pay a fixed percentage of their turnover as tax.

TDS and TCS in GST

Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) are also part of the GST system, with rates of 2% and 1%, respectively. These mechanisms ensure tax collection at the source of income and facilitate better tracking of tax liabilities.

GST Cess

In addition to the standard GST rates, a cess is imposed on the sale of certain items such as cigarettes, tobacco, aerated water, gasoline, and motor vehicles. The cess rates vary significantly, ranging from 1% to 204%, depending on the item.

GST Rates in 2024

The following are some of the changes that were made-

Category	Old GST Rates	New GST Rates
Railways Goods and Parts under Chapter 86	12%	18%
Pens	12%	18%
Metal Concentrates and Ores	5%	18%
Certain Renewable Energy Devices	5%	12%
Recorded media reproduction and print	12%	18%
Broadcasting, sound recordings, and licensing	12%	18%
Printed material	12%	18%
Packing containers and boxes	12%	18%
Scrap and polyurethanes	5%	18%

As per the recently held GST Council on 22 June 2024, the following GST rates were announced-

Items	Old Rate	New Rate
A uniform rate for all types of milk cans	–	12%
A uniform IGST rate applies to imports of aircraft tool kits	–	5%
Carton boxes and cases	18%	12%
All types of solar cookers	5%	12%
A uniform rate for all types of sprinklers	–	12%
Indian Railways – Platform tickets	–	Exempt
Indian Railways – Facility of retiring rooms/waiting rooms	–	Exempt
Indian Railways – Cloakroom services	–	Exempt
Indian Railways – Battery Operated car services	–	Exempt
Hostel accommodation service under certain conditions	–	Exempt

Decrease in the GST Rates

Category	Old GST Rates	New GST Rate
If vehicles are equipped with retrofitting kits for disabled people,	Applicability	5%
Keytruda for cancer	12%	5%
IGST is levied on goods sold at the Indo-Bangladesh border	Applicability	NIL

Kinds of GST Rates and Structures in India

The primary GST slabs for regular taxpayers are currently 0% (nil-rated), 5%, 12%, 18%, and 28%. There are a few GST rates that are less commonly used, such as 3% and 0.25%.

Furthermore, the taxable composition persons are required to pay General Service Tax at lower or nominal rates such as 1.5%, 5%, or 6% on their turnover. TDS and TCS are also concepts under GST, with rates of 2% and 1%, respectively.

These are the total IGST rates for interstate supplies or the sum of CGST and SGST for intrastate supplies. To calculate the GST amounts on a tax invoice, multiply the GST rates by the assessable value of the supply.

Furthermore, in addition to the above GST rates, the GST law imposes a cess on the sale of certain items such as cigarettes, tobacco, aerated water, gasoline, and motor vehicles, with rates ranging from 1% to 204%.

Products	Tax Rates
Milk	0%
Eggs	0%
Curd	0%
Lassi	0%
Kajal	0%
Educations Services	0%
Health Services	0%
Children’s Drawing & Coloring Books	0%
Unpacked Foodgrains	0%
Unpacked Paneer	0%
Gur	0%
Unbranded Natural Honey	0%
Fresh Vegetables	0%
Salt	0%
Unbranded Atta	0%
Unbranded Maida	0%
Besan	0%
Prasad	0%
Palmyra Jaggery	0%
Phool Bhari Jhadoo	0%

Products	Tax Rates
Sugar	5%
Tea	5%
Packed Paneer	5%
Coal	5%
Edible Oils	5%
Raisin	5%
Domestic LPG	5%
Roasted Coffee Beans	5%
PDS Kerosene	5%
Skimmed Milk Powder	5%
Cashew Nuts	5%
Footwear (< Rs.500)	5%
Milk Food for Babies	5%
Apparels (< Rs.1000)	5%
Fabric	5%
Coir Mats, Matting & Floor Covering	5%
Spices	5%
Agarbatti	5%
Coal	5%
Mishti/Mithai (Indian Sweets)	5%
Life-saving drugs	5%
Coffee (except instant)	5%

Products	Tax Rates
Butter	12%
Ghee	12%
Computers	12%
Processed food	12%
Almonds	12%
Mobiles	12%
Fruit Juice	12%
Preparations of Vegetables, Nuts Fruits, or other parts	12%
Packed Coconut Water	12%
Umbrella	12%

Products	Tax Rates
Hair Oil	18%
Capital goods	18%
Toothpaste	18%
Industrial Intermediaries	18%
Soap	18%
Ice-cream	18%
Pasta	18%
Toiletries	18%
Corn Flakes	18%
Soups	18%
Computers	18%
Printers	18%

Products	Tax Rates
Small cars (+1% or 3% cess)	28%
High-end motorcycles (+15% cess)	28%
Consumer durables such as AC and fridge	28%
Beedis are NOT included here	28%
Luxury & sin items like BMWs, cigarettes	28%
and aerated drinks (+15% cess)	28%

HSN and SAC Code System

All goods and services under GST are classified using either the HSN (Harmonized System of Nomenclature) code or the SAC (Services Accounting Code) system.

HSN Code System

The HSN code is an internationally accepted commodity description and coding system developed by the World Customs Organization (WCO). It is used by over 200 countries and covers more than 98% of global trade. In India, the HSN code is used for GST classification and levy, ensuring a standardized system for categorizing goods.

The HSN codes are categorized into sections and chapters, with each chapter containing a six-digit code representing a specific category of goods. The current version in use is the HSN Code 2017 Edition.

SAC Code System

The SAC code, developed by the Service Tax Department of India, is used to classify services under GST. The GST rates for services are set in five slabs: 0%, 5%, 12%, 18%, and 28%. If a service does not fall under a specific GST exemption or rate, the default rate of 18% is applied.

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Conclusion

The GST rate structure in India is designed to cater to a diverse range of goods and services, with rates varying based on the nature and necessity of the product or service. The GST Council continues to review and adjust these rates to meet the evolving needs of the economy. By understanding the various GST rates, businesses and consumers can better navigate the tax landscape and ensure compliance.

Frequently Asked Questions

What are the current GST rate slabs in India?