Understanding GST Rates: Key Slabs, Items Affected, and How Taxbuddy Can Assist With Compliance
Updated: 17 hours ago
Steering through GST rates can feel overwhelming, especially when you consider the varying slabs from 0% to 28% that impact everything from daily essentials to luxury goods. You might be surprised to learn how these rates affect your purchases and business operations. Understanding which items fall under each slab is just the beginning. TaxBuddy stands ready to simplify your compliance journey, but the question remains: how can you leverage these insights to maximize your benefits and minimize your burdens ?
Table of content
GST Rates
Goods and Services Tax (GST) rates in India are set up in different tax groups, which range from 0% to 28%. Knowing about GST is important because it affects how much people pay for things and how businesses price their products.
The lowest rate, which is 0%, is for basic items like fresh food and some education services. This helps keep everyday needs affordable.
As the tax rates go up, they're 5%, 12%, 18%, and 28%. Each of these rates applies to different types of goods and services. For example, things that are considered luxury or harmful, like expensive cars and tobacco, fall into the highest group of 28%. This makes them harder for many people to buy.
The 12% rate is in the middle. It includes everyday products that aren't luxury items but still have a noticeable tax.
Understanding these tax groups helps people make smart buying decisions and helps businesses set their prices. By knowing how GST rates work, anyone can better handle the tax system.
12% GST Items
Understanding 12% GST items is important for managing taxes. Different items have different GST rates, which can affect how much money you spend. For example, fresh fruits and vegetables don't have any GST. This means people don't pay taxes on these essential foods, making them cheaper for everyone.
On the other hand, some goods, like processed foods and mobile phones, are taxed at 12%. This helps keep prices fair for everyday items. Luxury goods, like expensive cars or jewelry, have the highest GST rates, which can go up to 28%. This system encourages people not to buy too many non-essential items while helping the government earn money.
To handle these rules well, it's important to know which items fall into each tax group. Understanding how GST affects different products can help people make smarter buying choices and manage their money better.
Comparison with Other GST Slabs
When comparing GST slabs, there are important differences that can affect how much people pay for items. Knowing these GST slab differences is important, especially for budgeting.
GST Slab | Examples of Items |
0% | Fresh fruits, vegetables |
5% | Unprocessed food, sugar |
12% | Processed food, mobile phones |
28% | Luxury cars, tobacco |
For example, fresh produce is in the 0% slab, which means it costs less. In contrast, luxury items like high-end cars are taxed at 28%, making them much more expensive. The 12% slab includes mid-range items, such as processed foods and electronics, so shoppers should keep these rates in mind when buying.
Understanding the Types of GST Rates
GST rates are the percentage rates of goods and services tax under the CGST, SGST, and IGST Acts. Let us explain each type of GST:
Central Goods and Services Tax (CGST)
CGST applies to the goods and services considered to be standard, with the revenue collected allocated to the central government. Tax rates on them can be amended periodically. According to the Central Goods and Services Tax Act 2016, this part of the GST includes most of the central taxations such as Central Excise Duty, Central Sales Tax, Service Tax, and Additional Custom Duty.
State Goods and Services Tax (SGST)
SGST comprises taxation and levies under the state authority as a part of one uniform taxation structure. It includes State Sales Tax, Entertainment Tax, Luxury Tax, and Levies on Lottery. The revenue from these taxes goes to the state government.
Integrated Goods and Services Tax (IGST)
IGST is applicable to the goods and services transferred from one state to another. According to Article 269A of the Indian Constitution, IGST is for the inter-state trade and commerce activities involving the movement of commodities. The revenue from these taxes goes to the Government of India.
A business registered under the GST law has to include the GST amounts charged on the value items supplied in its invoices. The GST rates in CGST and SGST are nearly the same, while IGST is approximately the sum of CGST and SGST rates.
Items in the Highest GST Bracket
The highest GST bracket is 28%. This tax mainly affects luxury and vice goods. The goal is to make these items less affordable for regular people. This tax aims to reduce the buying of non-essential things while helping the government earn money.
Key items in the 28% GST bracket include high-end cars and motorcycles. These vehicles are often seen as symbols of wealth. Tobacco products and soft drinks also fall into this category. This shows a desire to reduce unhealthy habits in society.
The high GST rate does more than just raise prices. It also affects how people make buying choices. With extra taxes on certain items, the total cost can go up a lot. This makes people think twice before buying luxury and vice goods.
Structure of GST Rates in India
The primary GST slab for the regular Indian taxpayers are currently 0%, 5%, 12%, 18% & 28%. Additionally, there are a few lesser-used slabs like 0.25% and 3%. At the same time, the composition-taxable persons need to pay at lower rates like 1.5%, 5%, or 6% on their turnover. These are the businesses having annual turnover up to Rs. 1 crore and opting for a composition scheme. However, service providers cannot opt for this scheme. Here are the rates applicable to businesses under this scheme:
Business | CGST | SGST | Total |
Manufacturing and Trading | 0.5% | 0.5% | 1.0% |
Restaurants (not serving alcohol) | 2.5% | 2.5% | 5% |
The GST rates are multiplied by the assessable value of the supply to calculate its amounts in a tax invoice. Besides these taxes, the GST law levies cess on the sale of some items like tobacco, cigarettes, petrol, aerated water, and motor vehicles, with rates ranging from 1% to 204%.
The following rate table shows the GST rate structure for commonly used consumable products.
GST on goods
Tax Rate Slab | Products |
0% | Milk, curd, lassi, unpacked paneer, unbranded atta, unbranded maida, unpacked foodgrains, besan, prasad, eggs, kajal, child drawing and colouring book, unbranded natural honey, jaggery, salt, fresh vegetable, phool wali jhadu |
5% | Household items like sugar, tea, spices, edible oil, skimmed milk powder, milk food for babies, coffee, roasted coffee beans, packed paneer, raisin, domestic LPG, coal, PDS kerosene, cashew nuts, apparel up to 1000, fabric, footwear upto 500, matting and floor covering, Indian sweets, agarbatti, and Life-saving drugs |
12% | Computers, mobile, umbrella, butter, ghee, almonds, processed food items, fruit juice, Packed coconut water, preparation of fruits, vegetables, nuts and other parts of plants such as pickle, jam, murabba, chutney, etc. |
18% | Personal Care products such as soaps, hair oil, toothpaste, toiletries capital goods and industrial intermediaries, pasta, cornflakes, soups, ice creams |
28% | Small cars, luxury cars like BMWs, high-end motorcycles(+15% cess), consumer durables like ACs and refrigerators, cigarettes and aerated drinks (+15% cess) (beedies are not included) etc. |
GST on services
Tax Slab Rate | Services |
0% | Health services, education services |
5% | Railways-transportation of passengers, goods, transportation of goods in a vessel from outside India, transport by air (scheduled) or air travel for pilgrimage via chartered or non-scheduled flights, leasing of aircraft, renting a cab (without fuel cost), transport services in AC contract, stage or radio taxi, tour operator services, the printing of newspapers, print media ad space |
12% | Air travel excluding economy, transportation of goods through rail from a third party besides Indian Railways, food and drinks at restaurants without AC or heating or liquor license, accommodation rental exceeding Rs.1000 but less than Rs.2500 daily, construction of buildings for the purpose of sale, chit fund services by foremen, Movie Tickets less than or equal to Rs. 100, IP rights on a temporary basis, |
18% | Food or drinks at restaurants with AC/heating, food or drinks at restaurants with a liquor license, outdoor catering, supply of food, shamiyana, and party arrangement, accommodation rental exceeding Rs.2500 and less than Rs.5000 per day, circus, folk, theatre, drama, Indian classical, Movie Tickets which exceeds Rs. 100, supply of works contract |
28% | Entertainment events such as theme parks, joy rides, amusement facilities, water parks, merry-go-rounds, ballet, go-karting, race courses, casinos, Race club services, gambling, sporting events like IPL, food/drinks at AC 5-star hotels, 5-star hotels, or above accommodation |
Exemptions from GST
Besides the good and services taxed on the aforementioned rates under the GST Act, there are some exemptions from GST. Here are the lists of goods and services exempted from GST.
List of Exempted Goods
Sector | Description of Goods |
Animals | Fish fresh or chilled, live fish, prawn/shrimp seeds, sheep and goats, mammals, goods other than live horses, products of animal origin (not specified elsewhere), insects, birds |
Meat | Sheep and goat meat, meat of Bovine animals (fresh and chilled), meat of horses, asses, mules (fresh and chilled), pig fat, free of lean meat |
Milk products, eggs, and honey | Fresh milk, cream, curd, chena and paneer( other than bearing a registered brand name), lassi, buttermilk, bird eggs in the shell (fresh, preserved, and cooked), natural honey(other than a product with a registered brand name) |
Non-edible animal products | Human hair(unworked), waste of human hair, hoof meal, horn meal claws, semen including frozen semen |
Live trees and plants | Live trees and other plants, cut flowers, and bulb roots |
Vegetables | Tomatoes, potatoes, sweet potato (fresh and chilled), onion, garlic, cucumbers, cabbage, cauliflower, carrots, turnips, chicory, salad beetroot, radish |
Fruits and dry fruits | Coconuts (fresh and dried), bananas, pineapple, mangoes, oranges, limes, grapes, avocados, guavas, melons, apples, pears, cherries, apricots, other fruits such as kiwi fruits, strawberries, blackberry, Brazil nuts, almonds, hazelnuts, dates, walnuts, chestnuts |
Tea, coffee, spices | Unprocessed green leaves, coffee beans( not roasted), ginger (other than processed form), fresh turmeric( other than processed form) |
Edible grains | Wheat and meslin, maize, rice, oats, grain sorghum, jawar, bajara, ragi, buckwheat and canary seeds, barley (other than those in a container and having a registered brand name) |
Milling industry products | Wheat flour, flour of potato, Guar meal, cereal flour other than of wheat or meslin |
Oil seeds, fruits and parts of plants | All goods of seed quality, ground nuts, soya beans (whether or not broken), linseed, sunflower seed, rape or colza seed, melon seeds, other oil seed (cotton seeds, palm nuts and kernels, castor oils) |
Vegetable material and product | Vegetable material used primarily for plaiting, Betel leaves, unworked coconut shells, vegetable material for manufacturing of broomstick |
Jaggery | Jaggery of all kinds (including cane jaggery) |
Pizza, pasta, cake, bread | Beaten rice, puffed rice(muri), papped, bread |
Tea and coffee extract and essence | Prasadam supplied by religious places such as temples, gurudwaras, mosques, churches |
Water, mineral | Water (other than aerated, purified, mineralized, mineral), neera, non-alcoholic toddy |
Salts and sands | Salts of any types |
Drugs and pharmaceuticals | Human blood and its componen |
Fertilizer | All goods and organic manure |
Silkworm cocoon, yarn, waste | Silkworm laying, raw silk, silk waste, cocoon, khadi fabric |
Wool material and waste | Wool (not carded or combed), fine or coarse animal hair, waste of wool or fine or coarse animal hair |
List of Exempted Services
Name of Sector | Services Exempt |
Senior Citizens | The administrative fee collected by the National Pension System Trust. Services provided by old age homes run by state or central government of value up to Rs. 25000 to citizens over 60. Services provided by coal mines provident fund organisation to PF subscribers. Services provided by an unincorporated or non-profit entity registered under law to have members with membership fees of up to Rs. 1000. |
Farmers/Agriculture | Services provided by FSSAI to food businesses. Services for warehousing minor forest producing. Services by artificial insemination of livestock (except horses). Services for extending the electricity distribution network for agricultural use provided by the installation and commissioning by DISCOMS. |
Banking/Finance | Re-insurance services provided to insurance schemes like Pradhan Mantri Rashtriya Swasthya Suraksha Mission |
Government | Services provided by the government to ERCC by assigning the right to collect to mining leaseholders. Guarantees given by the central and state government to their undertakings/PSUs. |
Miscellaneous | GST applied on the actual rate instead of the declared tariff for hotel services. Import of services by UN or foreign diplomatic missions or other international organizations. |
GST Rates in India in 2024
GST rates will witness some key changes in 2024, with new rates passed during the last week of 2022. Further, rates are revised during the GST Council meetings from time to time. The objective of these changes is to correct the prevailing inverted tax structure and provide for revenue augmentation. We will now summarise the details of changes to GST rates leading to the new GST rates in 2024.
Highlights of GST Revisions
52nd GST Council Meeting
The 52nd GST Council meeting held on 7th October 2023 laid down the following recommendations:
A GST Amnesty Scheme will extend the filing time for appeals till 31 January 2024 against the three-month period for all the orders passed up to March 2023. 12.5 % pre-deposit of tax is required, with 2.5% paid in cash.
No GST will be charged on a personal guarantee by directors to the bank against loans and credit limits sanctioned to the company.
CGST Section 159 will be amended, with the automatic restoration of provisionally attached property after one year.
States will have the authority to tax Extra Neutral Alcohol (ENA) used in production of alcoholic beverages for human consumption.
The taxable value of a corporate guarantee between a holding company and its subsidiary is the real compensation or 1% of the guaranteed amount offered.
Highlights of the 51st GST Council Meeting
The highlights of the 51st GST Council Meeting held on 2nd August 2023 are as follows:
The valuation of the supply of online gaming and actionable claims in casinos will be done according to the amount deposited/ paid/ payable to the supplier by the player instead of the overall value of a single bet.
No changes in the 28% GST on the face value, irrespective of whether it is a game of skill.
The IGST Act, 2017 (which includes Schedule III of the CGST Act 2017) and the CGST Act, 2017 will provide clarity on the tax on the supplies in casinos, online gaming, and horse racing.
The CGST Rules, 2017 will not be amended to include specific provisions for the valuation of online gaming supply and the supply of actionable clams in casinos.
Revision of GST Rates in the 50th GST Council Meeting
Here are the highlights of the 50th GST Council Meeting held on 11th July 2023:
Item | Old Rate | New Rate |
Food and beverages in cinema halls | 18% | 5% |
Uncooked, unfried, and extruded snack palettes | 18% | 5% |
Food for Special Medical Purposes (FSMP) | - | Exempt |
Cancer-related medicine | - | Exempt |
Medicines for rare diseases | - | Exempt |
Imitation zari thread or yarn | 12% | 5% |
LD Slag | 18% | 5% |
Fish soluble paste | 18% | 5% |
Casinos, online gaming, and horse racing | 18% | 28% |
Revision of GST Rates in the 49th GST Council Meeting
The 49th GST Council Meeting held on 18 February 2023 had the following revisions:
Item | Old Rate | New Rate |
Rab/Liquid jaggery | 18% | Nil (sold loose) / 5% (sold labelled/pre-packaged) |
Pencil sharpeners | 18% | 12% |
Certain tracking devices fixed on durable containers | Applicable rate | Nil |
Authority, board, or a body set up by the Central or State Government including the National Testing Agency (NTA) for conducting entrance examination | Applicable rate | Exempt |
Coal rejects supplied to the washeries | Applicable cess rate | Exempt from cess |
Revision of GST Rates in the 48th GST Council Meeting
The following changes were made during the 48th GST Council meeting held on 17th December 2022:
Item | Old Rate | New Rate |
Ethyl alcohol sold to refineries to blend with motor spirit or petrol | 18% | 5% |
Husk of pulses, chilka and concentrates, chuni or churi, and khanda for cattle feed | 5% | Nil |
Sale of Mentha arvensis, similar to Mentha oil | No RCM | Under RCM |
Exceptional Cases in GST
Besides GST on business goods and services, there are a few exceptional cases you should know about.
GST on Loans
When taking loans from banks, GST is levied on the processing charges and other charges (loan prepayment charges) excluding the principal and interest payment.
Loan Type | GST Rate |
Personal Loan | 18% |
Car Loan | 18% |
Home Loan | 18% |
GST on Real Estate
GST rates vary for different building materials used in the construction process. For example, sand, rubble, marble, etc are taxable at 5% and cement at 28%. GST is applicable to real estate purchases bought as an under-construction property. No GST rates are applicable on a ready-to-move property.
GST on Cars
The GST rate on cars is 28% for all personal use vehicles, whether with a petrol or diesel-driven engine. A composition cess is also applicable to cars, taking the overall tax rate from 29% to 50%. However, lower rates apply to cars using sustainable technologies such as electric vehicles.
GST on Gold
The GST rate on jewellery is 3%, while 5% GST is applicable for making charges. This is usually charged as input tax credits by the jeweller. The GST charge applied to the final bill is 3%.
Impact of GST Rates on Daily Life
How do GST rates affect your daily spending? GST rates have a clear impact on how much money you spend. These rates change the prices of different products, which can influence what people buy. For example, the 12% GST rate is important for the cost of many common mid-range products.
Here is a simple table showing how different GST rates affect everyday items:
GST Rate | Item Category | Example Items |
0% | Essentials | Fresh fruits, vegetables |
5% | Basic Processed Food | Unpacked grains, snacks |
12% | Mid-Range Goods | Mobile phones, ghee, almonds |
18% | Standard Goods | Air conditioners, cosmetics |
28% | Luxury Goods | High-end cars, tobacco |
When shopping, GST rates influence your choices. Knowing about GST helps you understand prices better. This knowledge allows you to change how you spend money based on what things cost. By being aware of GST rates, you can plan your purchases wisely and manage your budget well.
The Significance of Goods and Services Tax (GST) Rates
The Goods and Services Tax (GST) is important because it helps make the tax system fair and simple. GST rates are set to make sure that both businesses and customers pay their share of taxes. This tax applies to goods and services across the country, making it easier to collect taxes.
One big benefit of GST is that it replaces many older taxes with one simple tax. This makes it easier for businesses to follow the rules. GST also helps reduce tax cheating because it makes the system more transparent. By having clear rates for everything, it becomes harder for people to avoid paying taxes.
GST rates are important for both buyers and sellers. When the GST rates are set right, they help businesses grow and make sure the government has enough money to provide services. At the same time, the rates help people understand how much tax they are paying on the things they buy.
Conclusion: How TaxBuddy Can Help with GST Compliance
TaxBuddy helps businesses with GST compliance. Many businesses find GST rules confusing, but TaxBuddy makes it easy. With TaxBuddy, businesses can manage their GST duties and keep up with changing rates and rules. TaxBuddy offers custom solutions for different types of businesses, making GST planning easier.
Using TaxBuddy's easy-to-use platform, businesses can track and sort their transactions based on the right GST rates. This helps them avoid expensive fines and ensures they report correctly. TaxBuddy also shows ways to save on taxes, helping businesses improve their plans.
TaxBuddy has features that make GST compliance simple. This allows businesses to focus on what's important to grow their company.
Whether a business is small or big, TaxBuddy provides the tools needed to stay on top of tax planning and compliance. By choosing TaxBuddy, businesses can navigate GST rules better and prepare for a smooth financial future. It's a smart choice to use their services for expert help with GST compliance.
Conclusion
GST has truly stood out as a landmark tax reform, with a positive impact on several industries. The revisions in GST mandates seek to improve the overall tax system in India. Regular GST Council meetings bring in relevant reformation helpful to different types of industries. Additionally, the GST tax slabs ensure that minimum tax is levied on basic products and services so that the general population is not burdened.
FAQ
1. What are GST rates?
GST rates are tax groups that range from 0% to 28% and apply to different goods and services in India.
2. What is the lowest GST rate?
The lowest GST rate is 0%, which applies to essential items like fresh fruits and vegetables.
3. What items are taxed at 12% GST?
Items like processed foods, mobile phones, and packaged snacks are taxed at 12% GST.
4. How do the GST slabs differ?
GST slabs range from 0% for essentials to 28% for luxury items, with different rates for various product categories.
5. Which items are in the highest GST slab?
Luxury goods like high-end cars, tobacco products, and soft drinks fall under the 28% GST slab.
6. What is the GST rate for food and beverages?
Fresh food has a 0% GST rate, while processed foods are taxed at 5% or 12%, depending on their type.
7. How does GST affect daily life?
GST rates impact the price of goods and services, influencing how much people pay for everyday items.
8. What is the GST on restaurant services?
The GST on restaurant services varies, with fine-dining restaurants taxed differently than casual ones.
9. How can businesses manage GST compliance?
Businesses can use tools like TaxBuddy to manage GST compliance, helping them track transactions and follow the latest rules.
10. How does TaxBuddy help with GST compliance?
TaxBuddy simplifies GST compliance by helping businesses track rates, avoid fines, and find tax-saving opportunities.
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