All you should know about GST rates in India

Introduction GST or the Goods and Services Tax, has been one of the biggest tax reforms in India. It has attempted to bring uniformity in the tax structure which had previously been quite complicated for the general population as well as the government and businesses. The GST tax rates have been revised from time to time as per the decisions of the GST Council. Several state legislatures and industrial authorities have maintained their rights to put forth their opinions to revise tax rates. Presently, GST has been structured in such a way that basic essential items have lower tax brackets than luxury services and products. The rate list and the tax slabs shall be discussed in this article.

Types of GST

One must note that there are basically three types of GST.

  • CGST- Central Goods and Services Tax is applicable on the goods and services which are considered to be standard and tax rates can be amended periodically. All the revenue collected is allocated to the central government. As per the Central Goods and Services Tax Act 2016, it is the centralized part of GST that includes most of the central taxations namely Central Sales Tax, Central Excise Duty, Service Tax, Additional Custom Duty among various other centralized taxations.
  • SGST- State Goods and Services Tax comprises of various taxations and levies under the state authority which are part of one uniform taxation structure. It mainly includes a combination of various taxes namely Entertainment Tax, Levies on Lottery, State Sales Tax and Luxury Tax among various other types. The revenue collected here belongs to the state government. The mainstream framework is designed by the central government.
  • IGST- Integrated Goods and Services Tax is charged on the supply of goods and services as transferred from one state to another. As per the Article 269A of the Indian Constitution, the inter-state trade and commerce activities which involve movement of commodities levy the IGST. The revenue collected is sent to Government of India.

Input tax credit under GST

Input tax means taxes paid on the input and input tax credit means that when you pay tax for the output you can deduct the amount of input taxes paid by you and only the balance amount is paid by you.

For eg :- when we buy goods from the dealer we have to pay the amount of GST to the dealer and at the time we sell the goods we collect the amount of GST from the customers. Now you can adjust the amount of input tax with output tax and balance amount shall be paid.

ITC can be claimed for business purposes, it is not available for the goods and services used for the Personal use, Exempt supplies, and for those supplies for which ITC is not specifically available.


Relation between HSN code and SAC code

HSN code stands for the harmonised system of nomenclature and SAC is stands for service accounting code. HSN code is used for classifying all the goods under the GST Act, whereas SAC is used for classifying the services under the GST Act.

GST rates are that percentage of rates on which any goods or services are charged to GST.


GST rate under composition scheme

Businesses with annual turnover upto rupees 1 crore can opt for the composition scheme. In calculating the total turnover all business with the same PAN is added to calculate the annual turnover under composition scheme. Composition scheme is not applicable for the service provider.

These are following rates for composition scheme

Business CGST SGST Total
Manufacturing and Traders  0.5% 0.5% 1.0%
Restaurants not serving alcohol 2.5% 2.5% 5%

GST Tax Rates on common items

GST tax rates have been considered as per the necessity of the goods they are levied upon. The following table shall give you an idea of the different tax slabs for some basic items. As one may notice, it has been taken care that items of basic necessities reach the population with minimum tax rates.


GST tax rate for Goods

Tax Rate Slab Products
0% Milk, unbranded atta, unbranded maida, gur, , eggs, kajal, curd, lassi, child drawing and colouring book, unpacked foodgrains, unpacked paneer, besan, prasad, unbranded natural honey, fresh vegetable, jaggery, salt, Phool wali jhadu.
5% Household items like edible oil, sugar, tea, spices,  coffee, packed paneer, coal, raisin, domestic LPG, roasted coffee beans, PDS kerosene, skimmed milk powder, cashew nuts, footwear upto 500, milk food for babies, apparel up to 1000, fabric, matting and floor covering, agarbatti, Indian sweets and Life-saving drugs.
12% Computers, processed food items, Butter, ghee, almonds, Mobile, fruit juice, Packed coconut water, umbrella, preparation of vegetables,fruits, nuts  and other parts of plants including pickle murabba, chutney, jam etc.
18% Personal Care items like hair oil, toothpaste, soaps, toiletries Capital goods and industrial intermediaries. Ice creams, pasta, cornflakes,soups. 
28% Small cars, consumer durables like ACs and refrigerators. Luxury cars like BMWs, cigarettes and aerated drinks (+15% cess) (beedies are not included here) High-end motorcycles(+15% cess) etc.

GST rates for services

Product Rates
0% Education services, Health services
5% Railways-Transportation of goods, passengers,Transportation of goods in a vessel from outside India,Renting a motor cab (without fuel cost)Transport services in AC contract or stage or radio taxi,Transport by air (scheduled) or air travel for the purpose of pilgrimage via chartered ornon-scheduled flights,Tour operator services,Leasing of aircrafts,Print media ad space,work of printing of newspapers.
12% Transportation of goods in containers through rail from a third party other than Indian Railways, Air travel excluding economy, Food /drinks at restaurants without AC or heating or liquor license, Renting of accommodation for more than Rs.1000 but less than Rs.2500 per day, Chit fund services by foremen, Construction of building for the purpose of sale, IP rights on a temporary basis, Movie Tickets less than or equal to Rs. 100
18% Food or drinks at restaurants with liquor license, Food  or drinks at restaurants with AC/heating, Outdoor catering, Renting for accommodation for more than Rs.2500 and  less than Rs.5000 per day, Supply of food, shamiyana, and party arrangement, Circus, Indian classical, folk, theatre, drama, Supply of works contract, Movie Tickets which exceeds Rs. 100
28% Entertainment events such as amusement facility, water parks, theme parks, joy rides, merry-go-round, race course, go-karting, casinos, ballet, sporting events like IPL, Race club services, Gambling, Food/drinks at AC 5-star hotels, 5-star hotels or above accommodation

Exemptions under GST

Supplies of goods or services which are taxable at NIL rate of tax are exempt supplies. Certain supplies due to their nature are exempted from the GST. Supplies which are notified by the government are exempted from GST

List of services exempt from tax
Name of Sector Services Exempt
Senior Citizens
  1. GST is exempted on the administrative fee collected by National Pension System Trust.
  2. The services provided by coal mines provident fund organisation to PF subscribers.
  3. The services provided by old age homes which are run by state government or central government to the citizens who are aged more than 60 year of value up to Rs. 25000.
  4. The services which are provided by an unincorporated body or non-profit entity as registered under law to have members with membership fees of up to Rs. 1000.
Farmers/Agriculture
  1. Services which are provided by FSSAI to food businesses.
  2. Services by way of warehousing minor forest producing.
  3. Services by artificial insemination of livestock (except horses)
  4. Services which are provided by the installation and commissioning by DISCOMS by extending the electricity distribution network for agricultural use.
Banking/Finance
  1. Re-insurance services as provided to insurance schemes such as Pradhan Mantri Rashtriya Swasthya Suraksha Mission.
Government
  1. Guarantees as given by central and state government to their undertakings/PSUs.
  2. Services as provided by government to ERCC by assigning the right to collect to mining lease holders.
Miscellaneous
  1. GST is applied on the actual rate for hotel services instead of declared tariff.
  2. Import of services by foreign diplomatic missions or UN or other international organizations.

List of goods exempt from GST

Sector Description of Goods
Animals Live fish, Fish fresh or chilled, prawn/shrimp seeds all other goods other than live horses, products of animal origin (not specified elsewhere), sheep and goats, mammals, Birds, insects
Meat Meat of Bovine animals fresh and chilled, sheep and goat meat, meat of horses, asses, mules fresh and chilled, pig fat, free of lean meat, 
Eggs Honey and Milk products Natural honey(other than honey bearing a registered brand name), fresh milk, milk and cream, curd, lassi, buttermilk, chena and paneer( other than bearing a registered brand name), Birds eggs in shell, fresh, preserved and cooked.
Non edible Animal Products Human hair, unworked, waste of human hair, semen including frozen semen, Hoof meal, horn meal claws,
Live Tree and Plants Live tree and other plants bulbs roots and cut flower
vegetables Tomatoes, cucumbers, potatoes, onion, garlic, cabbage, cauliflower, chicory, carrots, turnips, salad beetroot, radish, sweet potato (fresh and chilled)
Fruits and Dry fruits Coconuts (fresh and dried), Brazil nuts, almonds, hazelnuts, walnutes, chestnuts, bananas, dates, pineapple, avocados, guaves, mangoes, oranges, limes, grapes, Melons, apples, pears, apricoats, cherry, other fruits such as strawberry, black berry, kiwi fruits
Tea, coffee, spices Coffee beans( not roasted), unprocessed green leaves, fresh turmeric( other than processed form), ginger (other than processed form), 
Edible Grains Wheat and meslin, oats, maize, rice, grain sorghum, buckwheat and canary seeds, jawar, bajara, ragi, Barley (other than those put up in container and bearing a registered brand name)
Milling industry products Wheat flour, Guar meal, flour of potato, cereal flour other than of wheat or meslin
Oil seeds, fruits and parts of plants All goods of seed quality, soya beans (whether or not broken), Ground nuts, linseed, rape or colza seed, sunflower seed, Other oil seed (palm nuts and  kernels, cotton seeds, castor oils), melon seeds, 
Vegetable material and product Vegetable material of a kind used primarily for plaiting, unworked coconut shell, Betel leaves, vegetable material for manufacturing of jhadoo or broom sticks.
jaggery Jaggery of all kind including cane jaggery
Pizza, cake, bread, pasta  Puffed rice(muri), beaten rice, papped, bread
Tea and coffee extract & essence Prasadam supplied by religious place like temple, mosque, churches, gurudwara, 
Water, mineral Water (other than aerated, mineral, purified, mineralized), Non alcoholic toddy, neera 
Salts & sands Salts of any types
Drugs & pharmaceuticals Human blood and its component
Fertilizer All goods and organic manure
Silkworm cocoon, yarn, waste Silkworm laying, cocoon, raw silk, silk waste, khadi fabric
Wool material & waste Wool, not carded or combed, fine or coarse animal hair, waste of wool or of fine or coarse animal hair

Exemption from goods and services with circular number.

Circular number Date Description
109/2019 22/07/2019 Supply of services by residential welfare society to its members by way of contribution upto 7500 per month per member for providing services and goods for common use of its members in a housing society or residential complex are exempt from tax.
101/2019 30/04/2019 The upfront amount such as premium, salami, cost price, development charges, payable in respect of service by way of granting of long term lease of industrial plot for development of infrastructure facility is exempt as per Notification No. 12/2017.
28/2018 1/04/2018 Room rent in hospitals is exempt.s
31/2018 2/12/2018
  1. Services provided by senior doctors,consultants, to the hospitals, whether they are considered as an employee or not is exempt.
  2. The amount is charged by hospitals including food from the patient is exempt from GST. However food provided  to relatives is taxable.
  3. Cost of exploration, development, production royalty charged for providing petroleum to government of india  is not consideration for service and is not taxable. 
  4. Any fees,penalty paid by the consumer dispute redressal commission will not liable for GST.
34/2018 03/01/2018 Transmission or distribution of electricity by an electricity transmission or distribution utility is exempt from GST. 
51/2018 31/07/2018 Transportation of patients Services provided by the private service providers to the state government and amount is received in the form of fee is exempt if amount is provided as:
  1. pure service
  2. Composite supply of goods and services in which the value of supply of goods does not exceed 25% of the value of composite supply.
52/2018 09/08/2018
  1. Fortified toned milk are considered as  NIL rate of GST.
  2. Supply of safe drinking water for public purposes, if the drinking water  is not supplied in a sealed container is exempt from GST.
55/2018 10/08/2018
  1. Services provided by the private Industrial training institute  of designated trades notified under apprenticeship act, 1961 are exempt.
  2. Services provided by government ITIs to individual trainees/students are exempt.
66/2018 26/09/2018 If the residential program,held  for the advancement of spirituality, yoga or of charitable trust, then the fee charged on residential programmes(including lodging and boarding) are exempt.
16/2017 15/11/2017 The GST rate on loading, unloading packing, storage or warehousing of agricultural produce is Nil.

32nd GST Council Meeting

The meeting was held on 10th January, 2019. Several decisions were made, among which a key one was the introduction of a GST composition scheme for individuals and businesses with a turnover of INR 50 lakhs providing mixed services with a tax rate of 6%. They featured a focus on smaller businesses. There were no revisions on GST rates.


GST Tax Rates post 31st GST Council Meeting

Before After List of Goods and Services
5% Nil
  1. Vegetables provisionally preserved but unsuitable for immediate consumption.
  2. Vegetables cooked/uncooked (branded)

5%
  1. Parts of manufacturing renewable energy devices as per chapter 84, 85 or 94 of tariff.
12% Nil
  1. Music Books
12%  5%
  1. Natural Cork
  2. Fly Ash Blocks
  3. Walking Sticks
18%  5%
  1. Marble rubble
18% 12% 
  1. Agglomerated cork
  2. Cork roughly squared or debugged
  3. Articles of Natural Cork
  4. Movie Tickets lesser than or equal to Rs 100
  5. Premium on Third Party insurance on Vehicles.
28% 5%
  1. Accessories for Handicapped Mobility Vehicles.
28% 18% 
  1. Power banks
  2. Movie tickets priced over Rs 100
  3. Video game consoles, equipment used for billiards and snookers. Other sports related items as per HSN Code 9504.
  4. Retreated and used pneumatic rubber tyres.
  5. Colour television sets and monitors up to 32” inches.
  6. Digital and video camera recorders.
  7. Pulleys, transmission shafts, cranks and gear boxes as per HSN 8483
  8. Tax rate on Air travel of pilgrims reduced.

Goods and Services recommended for exemption of taxes

The following is the list of goods which are recommended for the exemption of tax-

  • The gifts given to the President, Prime Minister, Governor, or Chief Minister of a State, are auctioned. These proceeds received by the Government are used for public and charitable causes and they are recommended for exemption of taxes.
  • The gold supplied by Nominated Agencies to exporters of articles of gold jewellery is eligible for tax exemption.
  • The vehicles which are imported for temporary purposes under the Customs Convention on the Temporary importation of Private Road Vehicles are eligible for exemption of IGST and Compensation cess.

The following list provides the selected services which are eligible for exemption of tax-

  • The loans guarantee services provided by Government to its undertakings and PSUs for bank loans.
  • Services which are supplied by the banks to Basic Saving Bank Deposit (BSBD) account holders as per the Pradhan Mantri Jan Dhan Yojana(PMJDY).
  • There are various services supplied by rehabilitation professionals recognised under the Rehabilitation Council of India Act, 1992 at hospitals, schools and the rehabilitation services as established by the Government and charitable institutes as registered under Section 12AA of Income Tax Act, 1961. These services are also eligible for exemption of taxes.

30th GST Council Meeting

The meeting was held on the 28th September, 2018. The key decision was to decrease the revenue gap under the GST regime in contrast to the previous VAT regime. A calamity cess was introduced to help disaster affected states. No other significant GST rates were changed for goods and services.


29th GST Council Meeting

The meeting was held on the 4th of August, 2018. The key decision was to provide a cashback of 20% to digital transactions made under the limit of INR 100. This was done in order to promote cashless transactions throughout the country. It was also decided to form a panel to examine the different taxes and compliance relief proposals made for small taxpayers and MSMEs.


GST Rate revision after 28th GST Council Meeting

The 28th GST Council meeting was held on the 21st of July, 2018. Two Major changes were observed in GST rates throughout the country. The GST return filing mechanism was also significantly developed. Also, GST migration was reopened. It was also decided that there shall be nil return filing by SMS.

The rates of 45 goods and 2 services were revised in this meeting-

Before After  Goods and Services
5% NIL
  1. Circulation and Commemorative coins
  2. Stone/Marble or Wood Deities
  3. Coir pith compost
12%  Nil
  1. Sanitary Napkins
  2. Raw material for broom
18% Nil
  1. Rakhi (of material other than precious or semi-precious value)
  2. Sal leaves and its products
  3. Khali dona
12% 5%
  1. Chenile and other fabrics under 5801
  2. Handloom dari
  3. Phosphoric acid (fertilizer grade)
  4. Handmade Carpets, textile floor coverings
  5. Knitted cap/topi having retail sale value beyond Rs. 1000
28%  5%
  1. Kota stones and similar stones (other than polished ones)
  2. Ethanol for sale to oil marketing companies for blending with fuel
  3. Solid Bio fuel pellets
28%  5%
  1. Marine Engine
18%  12%
  1. Bamboo Flooring
  2. Hand operated rubber roller
  3. Brass kerosene pressure stove
  4. Zip and Slide Fastener
  5. Handicrafts (Excluding Handmade)
  6. Handbags including purses and pouches/jewellery box
28% 12%
  1. Fuel Cell vehicle
28% 18%
  1. Televisions up to 68 cm
  2. Glaziers’ putty, grafting putty, resin cements
  3. Refrigerators, freezers, water coolers, milk coolers, ice-cream freezer
  4. Washing machines
  5. Food grinders and mixers
  6. Vacuum Cleaners
  7. Paints and varnishes (including enamels and lacquers)
  8. Shavers, Hair chippers
  9. Hair cleaners
  10. Storage water heaters
  11. Immersion heaters
  12. Hair dryers, Hand dryers
  13. Electric Smoothing irons
  14. Scent Sprays
  15. Toilet Sprays
  16. Pads for application of cosmetics/ toilet preparations
  17. Lithium-ion batteries
  18. Powder puffs
  19. Special purpose motor vehicles
  20. Work Trucks (Self-propelled)
  21. Trailers and semi-trailers
  • Fortified Milk was levied a 5% tax but is now exempt of taxes.
  • The following services have also noticed a change in the rate of GST-
Before After Name of Service
12% Nil Supply of Multimodal transportation
18%  5% Supply of e-books

Some Special cases in GST

  • GST on Loans and Advances

    In the case of taking loans from banks, it should be noted that GST is only levied on the processing charges and other charges paid to the bank which excludes the principal repayment and interest payment. The other charges include the loan processing fees, loan prepayment charges and few other charges. It can be understood that since a major portion of the loan repayment comprises of principal amount payment and interest payment, there is a negligible effect of GST on Loans. the following table represents the GST rates on major loan types-

    Loan Type GST Rate
    Personal Loan 18%
    Home Loan 18%
    Car Loan 18%
  • GST on Cars

    The GST rate on cars has been fixed at 28% for all personal use vehicles which features a petrol or diesel driven engine. Apart from GST, there is also an additional charge of composition cess which is applicable to cars over and above the GST Rate. Thereby, the overall tax rate which is applicable on vehicles and automobiles ranges from 29% to 50% which can be seen to be comparatively higher than other items. However, lower rates of taxation are applicable to cars driven by cleaner technologies like fuel cells and electric vehicles. GST rate on electronic cars has been reduced to 5% from 12% (Budget 2019).

  • GST on Real Estate

    Different GST rates are applicable to various building materials used in the construction of houses and flats which ranges from 5% (sand, rubble, marble, etc) to 28% (cement, etc). GST thereby is applicable to real estate purchases only if they are being purchased as an under construction property. Till 31st March, 2019, the GST rate applicable on such properties was 12%. From 1st April, the applicable GST rates have been fixed at 5% for non-affordable housing properties and only 1% for affordable housing properties. There are no GST rates applicable in the case when a ready to move property is purchased.

  • GST on Gold

    The GST rate fixed on items made of gold, mainly including jewellery is 3%. A 5% GST rate is applicable for making charges as taken by gold designers and makers who manufacture the gold jewellery. This is usually charged as ITC or input tax credits by the jeweller and overall the GST charge applied to the final bill is only 3% for the purchase of gold jewellery items.

  • GST on Food

    There are variable charges on food items which mainly depend on their manufacturing and brand labelling. The food items which made fresh and might not carry a brand name doesn't have any GST rate applied on them. The packaged food items and processed or semi-processed food items feature GST rates ranging from 5% to 18%. No food items have been placed in the highest 28% tax slab. However, there are some common food items like chocolates and baked items which do levy an 18% GST rate.

  • Conclusion

    GST has truly stood up to the expectations of various industries as a landmark tax reform in India. There are several industries which have been affected by it mostly in the positive sense. The general population is overall quite satisfied with the updated tax reforms which have been customised as per the necessity of the products.
    Regular GST Council meetings have performed well to bring in relevant reformation which shall be helpful to different types of industries and the needs of the citizens. The GST tax slabs have been considerably fixed such that the majority population receives their basic products and services with minimum tax levied. One must keep a track of the updated GST lists to have a record of the tax rates meant for different items.


Frequently Asked Questions

Q- What are the benefits of GST?

The Goods and Services Tax has been introduced in India with the purpose of unifying the tax structure such that it eases the process of tax exemption for several units. There have been several benefits of the GST for the Central and State Governments as it makes the process of administration easier, controls leakage in a better way and also increases the efficiency of the revenue system. For the industries and businesses, compliance has become easier and transparent. Manufacturers and exporters have also observed a gain as the overall cost of production has decreased. For the general consumer, GST relieves them of several other tax burdens as the single tax ends all other hassles.


Q- How can one calculate the GST on a product?

To understand the GST on a product, let’s imagine a product of price set at Rs 1000. As per the updated rules, let’s say that the GST levied to the product is 18%. Therefore, the amount charged as GST will be 18% of the 1000 which is Rs. 180. This amount is added to the original selling price for the total amount to be calculated which would come at Rs. 1,180. Similarly, GST can be calculated for any product by going through the list of GST Tax Slabs and identifying the rates on different products.


Q- What are the different GST rate slabs?

The GST council set up has identified 1300 goods and 500 services to be put into different tax slabs of mainly four figures- 5%, 12%, 18% and 28%. This does not include the tax on gold and special/semi-precious stones placed at special rate of 3% and 0.25% under GST respectively. As one can understand by going through the official lists, the more basic and essential items are placed lower in the list and luxury items are placed in higher tax slabs.


Q- Which services cost Nil GST Tax?

There is a Nil GST tax on the chargeable services which are offered on Basic Savings Bank Deposit (BSBD) account which can be opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY). There are few other services and goods which cost nil GST tax which are usually counted under the most basic needs of the citizens.


Q- What is the importance of GST Council Meetings?

The GST Council is set up by the representatives of various state governments of India including the Central Government of India. These councils regularly hold meetings to update the GST tax slabs on goods and services. Some of the major GST council meetings which can be noted are the 28th, 29th, 30th, 31st and 32nd GST Council Meetings last held on 10th January 2018 which have determined the present structure of the GST tax rates.


CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.