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The Goods and Services Tax (GST) in India is a tax system that has replaced various indirect taxes like service tax, value-added tax, and excise duty. Knowing the rates helps you understand the percentage of tax levied on the sale of goods and services as per the CGST, SGST and IGST Acts.
Understanding these rates is essential for businesses as well as consumers to comply with regulations and manage payments effectively.
The GST Council regularly reviews the tax rate slabs, which comprise: 5%, 12%, 18%, and 28%. In addition to these GST slabs, some goods and services come under the 0% tax slab, which means they are exempt from tax.
Four Major GST Slab Rates
Here are the 4 primary GST slab rates and the goods and services that are exempt from GST:
GST Rate |
Purpose |
|---|---|
0% |
Ensures that essential goods and services remain affordable and accessible to all |
5% |
Facilitates access to basic, everyday necessities |
12% |
Maintains a balance between keeping products affordable and generating necessary revenue |
18% |
Seeks to sustain tax revenue while keeping consumer prices reasonable |
28% |
Imposes the highest tax rate, along with additional cess on select items to regulate luxury and non-essential products |
Special Rates for Gold, Jewellery, and Luxury Items
In India, gold purchases are subject to a 3% Goods and Services Tax based on the value of the gold.
Refer to the following tables to know the list of goods and services that fall under the 5% GST slab rate:
Essential Goods in the 5% GST Category
Products |
Tax Rate |
|---|---|
Sugar |
5% |
Skimmed Milk Powder |
5% |
Raisin |
5% |
Domestic LPG |
5% |
Roasted Coffee Beans |
5% |
PDS Kerosene |
5% |
Milk Food for Babies |
5% |
Mishti/Mithai (Indian Sweets) |
5% |
Coffee (excluding instant) |
5% |
Footwear (below ₹500) |
5% |
Apparel (below ₹1,000) |
5% |
Packed Paneer |
5% |
Edible Oils |
5% |
Spices |
5% |
Fabric |
5% |
Coir Mats, Matting & Floor Covering |
5% |
Life-saving drugs |
5% |
Tea |
5% |
Cashew Nuts |
5% |
Agarbatti |
5% |
Coal |
5% |
Mishti/Mithai (Indian Sweets) |
5% |
Services Subject to 5% GST
Services |
Tax Rate |
|---|---|
Transportation by railways of passengers and goods |
5% |
Transportation of passengers- AC contract carriage, AC stage carriage, radio taxi |
5% |
Transportation of passengers by air (economy class) |
5% |
Renting of motor cab |
5% |
Leasing of aircraft |
5% |
Supply of tour operator services |
5% |
Goods transport agency (GTA) services |
5% |
Job in newspaper and book printing, textile yarns and fabric, etc. |
5% |
How the 5% GST Rate Affects Daily Expenses
The 5% rate in India affects daily expenses as it typically applies to everyday goods and services. It adds to the cost of living of middle and lower-income families.
Check out the following tables to know the list of goods and services that fall under the 12% slab rate:
Common Goods in the 12% GST Bracket
Products |
Tax Rate |
|---|---|
Butter |
12% |
Ghee |
12% |
Fruit Juice |
12% |
Processed food |
12% |
Almonds |
12% |
Preparations of Vegetables, Nuts Fruits, or other parts |
12% |
Packed Coconut Water |
12% |
Mobiles |
12% |
Computers |
12% |
Umbrella |
12% |
Services Covered by the 12% GST Rate
Services |
Tax Rate |
|---|---|
Supply of food and drinks in non-AC restaurants without liquor licence |
12% |
Accommodation in hotels and inns (room tariff ₹1,000-₹2,500) |
12% |
Transport of passengers by air (other than economy class) |
12% |
Transport of goods in containers by rail (other than Indian Railways) |
12% |
Services by the foreman of chit fund |
12% |
Transfer or use of Intellectual Property rights (other than IT software) |
12% |
Construction of complex, building or civil structure |
12% |
Key Sectors Impacted by the 12% GST Rate
It generally applies to non-essential goods and services, affecting the food, electronics, and transportation sectors. This rate strikes a balance between ensuring the affordability of products and services for the public and generating essential revenue.
Here are the products and services on which an 18% GST applies:
Goods and Services in the 18% GST Category
Products |
Tax Rates |
|---|---|
Hair Oil |
18% |
Soap |
18% |
Toiletries |
18% |
Toothpaste |
18% |
Industrial Intermediaries |
18% |
Capital goods |
18% |
Ice-cream |
18% |
Pasta |
18% |
Corn Flakes |
18% |
Soups |
18% |
Printers |
18% |
Services |
Tax Rate |
|---|---|
Supply of food and drinks in restaurants with liquor licence |
18% |
Food and drinks in restaurants with AC or central heating |
18% |
Outdoor catering |
18% |
Accommodation in hotels (room tariff ₹2,500 - ₹7,500) |
18% |
Bundled service (food and premises rental for events) |
18% |
Admission to classical dance, circus, and theatrical performances |
18% |
Composite supply of works contract |
18% |
Admission to cinemas (ticket price ₹100 or less) |
18% |
All other services not specified elsewhere |
18% |
How the 18% GST Rate Applies to Consumer Goods?
This rate applies to a wide range of consumer goods and services, which affects their retail prices. With this rate, the government seeks to sustain tax revenue while keeping the prices of goods and services reasonable for the public.
Why Do Most Goods Fall Under the 18% GST Rate
Most goods and services in India attract a tax of 18%. Everyday items that consumers frequently purchase fall under this GST slab. These include food items such as pasta, cornflakes, and biscuits. It also includes personal care products like toothpaste, hair oil, and soaps.
Most luxury goods and services in India attract a rate of 28% GST. This is the highest rate in India as per the income tax framework of the country. Refer to the following table to know the list of items with 28% GST:
High-End Products and Services in the 28% Category
Products |
Tax Rates |
|---|---|
Small cars (plus 1% or 3% cess) |
28% |
High-end motorcycles (plus 15% cess) |
28% |
Luxury items like cigarettes, BMWs, etc. |
28% |
Aerated drinks (plus 15% cess) |
28% |
Consumer durables such as air conditioners and refrigerators |
28% |
Services |
Tax Rate |
|---|---|
Accommodation in 5-star hotels (room tariff above ₹7,500) |
28% |
Admission to entertainment events, amusement facilities (theme parks, cinema, casinos, etc.) |
28% |
Services by race clubs |
28% |
Gambling |
28% |
Impact of the 28% GST Rate on Consumer Spending
The 28% GST slab applies to luxury products and services, tobacco products, and premium goods. These include luxury cars, air conditioners, cigarettes, and high-end electronics. The higher tax rate results in increased retail prices for these items, potentially discouraging consumers from purchasing them.
Understanding GST rates helps you make informed purchasing decisions. Here are some of the other benefits of knowing these rates.
Benefits for Consumers:
Transparency in Pricing
It promotes transparency by providing a clear breakdown of taxes that you need to pay for products and services. With only one unified tax, you do not need to worry about extra taxation on your purchases.
Lower Prices
Its introduction has eliminated multiple layers of taxation. This typically results in lower prices for goods and services. You benefit from reduced costs on everyday items, which make your purchases affordable.
Benefits for Businesses:
Elimination of Cascading Tax
It eliminates the cascading effect of taxes that existed in the previous tax regime. This lowers the overall costs for businesses, allowing them to offer lower pricing for products and services to consumers.
Simplified Tax Compliance
Another benefit is that the uniformity of the rates across India simplifies tax compliance. Businesses do not have to follow multiple state and central tax regulations, making it easier to carry out operations anywhere in India.
These rates are different for different categories of goods and services. The GST Council checks and changes these rates from time to time to meet economic needs and the requirements of consumers.
Essential items, like food, are usually taxed at lower rates to ensure they are affordable for the public. Conversely, the government taxes luxury items, like expensive cars, at higher rates. Higher taxes on these items help enhance the economy by bringing in more money from people who can afford them.
The GST Council has made a wide range of essential goods and services tax-exempt, meaning these attract 0% tax. Refer to the following tables for some of the goods and services exempt from tax in India:
Common Essential Goods Not Subject to GST
Types of Goods |
Examples |
|---|---|
Live Animals |
Asses, goats, poultry, cows, sheep, etc. |
Meat and Fish |
Fresh and frozen meat of cows, goats, sheep, pigs, horses, fish, etc. |
Natural Products |
Fresh and pasteurized milk, honey, cheese, eggs, etc. |
Live Trees and Plants |
Bulbs, flowers, roots, etc. |
Vegetables |
Tomatoes, onions, potatoes, etc. |
Fruits |
Bananas, apples, grapes, etc. |
Dry Fruits |
Walnuts, cashew nuts, etc. |
Tea, Coffee and Spices |
Coffee beans, turmeric, tea leaves, ginger, etc. |
Grains |
Wheat, oats, rice, barley, etc. |
Milling Industry Products |
Different types of flour |
Seeds |
Flower seeds, oil seeds, cereal husks, etc. |
Sugar |
Jaggery, sugar, etc. |
Water |
Mineral water, tender coconut water, etc. |
Baked Goods |
Bread, puffed rice, pizza base, etc. |
Fossil Fuels |
Electrical energy |
Drugs And Pharmaceuticals |
Human blood, contraceptives, etc. |
Fertilisers |
Goods and organic manure |
Newsprint |
Judicial stamp paper, rupee notes, envelopes, etc. |
Printed Items |
Printed books, maps, newspapers, etc. |
Pottery |
Clay lamps, earthen pots, etc. |
Services Exempt from GST Rates
Types of Services |
Examples |
|---|---|
Agricultural Services |
Cultivation, harvesting, farm labour, machinery rental, commission agents, etc. |
Government Services |
Postal service, RBI services, transportation by government, foreign diplomat services, etc. |
Transportation Services |
Goods transport by road/rail/water, air transport, toll payments, etc. |
Judicial Services |
Arbitration, services by lawyers or firms for small businesses |
Educational Services |
Faculty/student transport, exams, services by IIMs, mid-day meal scheme, etc. |
Medical Services |
Ambulance, veterinary services, charities, medical professionals |
Organisational Services |
Tour operators for foreign tourists, exhibition organisers for international events, etc. |
Other Services |
GSTN services to governments, admission fees to circuses, theatres, sports events, etc. |
It is essential to track all the news relating to this indirect taxation system to stay informed about the pricing of goods and services. For businesses, staying updated is essential to ensure timely and complete tax compliance.
How to Find Official GST Slab Rate Updates?
You can regularly check the official GST Council website for announcements and updates regarding these rates. The Council meets periodically to review and revise these rates.
Recent Changes in GST Rates for 2025
Refer to the following table to know the changes in the slab rates for various goods and services:
Category |
Old GST Rates |
New GST Rates |
|---|---|---|
Metal Concentrates and Ores |
5% |
18% |
Certain Renewable Energy Devices |
5% |
12% |
Scrap and polyurethanes |
5% |
18% |
Railways Goods and Parts (under Chapter 86) |
12% |
18% |
Pens |
12% |
18% |
Recorded media reproduction and print |
12% |
18% |
Broadcasting, sound recordings, and licensing |
12% |
18% |
Printed material |
12% |
18% |
Packing containers and boxes |
12% |
18% |
You can use a GST rate calculator to get the GST for various goods and services that you need to pay. You can use it easily whether you are a buyer, manufacturer, retailer/wholesaler.
Here are the steps you need to follow:
1. Enter the required information as per the customer type.
If you are a buyer, enter the net price and tax slab percentage.
If you are a retailer/wholesaler or a manufacturer, enter the cost of production, profit ratio percentage and tax slab percentage.
2. After completing the steps, you will get the following information:
Total price
Total tax/IGST amount
CGST amount
SGST/UTGST amount
The introduction of this simplified indirect taxation system has increased operational efficiency and fuelled business growth with easy compliance processes. Here are some reasons why compliance is important for businesses:
Legal Obligation and Penalties
It is a legal requirement for businesses in India. Failure to comply can lead to penalties, interest, and even legal action.
Credibility and Reputation
Businesses that adhere to GST regulations gain the trust of suppliers, customers, and authorities. This enhances their credibility and helps them create new business opportunities.
Financial Planning
By filing GST properly, businesses can assess their financial position and make informed decisions. It also allows them to forecast future tax liabilities, which is essential for financial planning.
To apply the accurate GST rate, businesses need to be aware of the current rate slabs associated with products and services. Using a GST rate calculator helps to compute tax liabilities accurately.
The penalty for a business for wrongfully charging a higher rate is 100% of the tax due or ₹10,000, whichever is higher. If the business collects extra tax from customers but does not submit it to the government, they face a penalty equal to 100% of the additional tax collected.
Businesses need to pay this tax upfront on the purchase of goods. However, they can only receive the Input Tax Credit after selling the goods. As a result, unsold products affect your working capital. This can be a crucial issue, especially for small businesses.
The GST Council revises the applicable rates periodically. The government recently revised the tax rates in the 54th GST Council meeting held on September 9, 2024.
The penalty for a business that wrongfully charges a higher GST rate is 100% of the tax due or ₹10,000, whichever is greater.
The Goods and Services Tax system allows businesses to claim ITC on the GST paid on goods and services purchased for business use. Follow these steps to claim ITC:
Use GSTR-2B to verify input tax credit (ITC) details.
Match invoice-wise ITC with books of accounts and GSTR-2B.
Declare matched ITC and output tax in GSTR-3B.
Follow up with suppliers for any mismatched ITC.
Reconcile differences and claim in the next month’s return.
Reverse any excess ITC claimed, along with applicable interest.
Yes, there is a 0% GST slab rate in India, which applies to essential goods and services. This means you do not need to pay tax on these goods and services.
The full form of GST is Goods and Services Tax. It allows for uniform prices to be set for goods and services all across India.
The GST on mobile phones is 18%. It was increased from 12% in April 2020. This means if the phone costs ₹10,000, the GST added to it will be ₹1800. This will make the cost of the phone ₹11,800.
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