Various GST Tax Slabs in India
GST Tax Rate - Brief Description
The Goods and Services Tax (GST) has been one of the most controversial and talked about change in the tax structure of India. Before the GST regime took effect in India the tax structure was a mishmash of many different kinds of taxes, some of which was levied at the city level which created a lot of problems and was a source of corruption.
GST is perhaps the biggest tax-related reform in India since Independence bringing uniformity in the taxation structure and eliminating the cascading of taxes that was levied in the past. The GST Council meets from time to time to revise the GST rates for various products. It’s clear that the Government’s intentions are to have lower tax rate for goods and services which are essential needs and higher tax rates for goods and services that are considered as luxury supplies.
At the time of GST implementation former Finance Minister, the late Mr. Arun Jaitley said that the government wanted to keep the GST rates close to the original rates. But there were differences in case of some items because of the changes in the economy as well as customer preferences. Some commodities were kept in the high tax bracket (18-28%) but on scrutinizing the list, they found that these commodities should be considered as necessities and not luxuries. This is why the GST rates were revised for commodities such as notebooks, exercise books.
Various GST Tax Slabs in India 2020
Here’s a curated a list of GST rates structure for various goods and services, classified across the different GST tax slabs –
Goods | Services |
No taxes will be levied on goods like sanitary napkins, deities made of stone, marbles or wood, Rakhis without any precious metals like gold, silver, raw material used in brooms, Saal leaves and fortified milk, fruits, vegetables, bread, salt, bindi, curd, sindoor, natural honey, bangles, handloom, besan, flour, eggs, stamps, printed books, judicial papers, newspapers | All hotels and lodges who carry a tariff below Rs. 1,000 are exempted from taxes under GST. The list also includes IMM courses and bank charges on savings account, jan Dhan Yojana |
Goods | Services |
The goods which will attract a taxation of 5% under GST include skimmed milk powder, fish fillet, frozen vegetables, coffee, coal, fertilizers, tea, spices, pizza bread, kerosene, ayurvedic medicines, agarbatti, sliced dry mango, insulin, cashew nuts, unbranded namkeen, lifeboats , Ethanol- Solid biofuel pellets- Handmade carpets and other handmade textile floor coverings (including namda/gabba)- Hand-made braids and ornamental trimming in the piece | Small restaurants along with transport services like railways and airways, Standalone ACs non-ACs Restaurants and those which serve liquor, Takeaway Food, Restaurants in hotels with a room tariff less than Rs 7,500 (no input credit for these restaurants), will come under this category. Special flights for pilgrims (Economy Class) come under 5% |
3. GST Tax Slab of 12%
Goods | Services |
Items coming are the tax slab of 12% include frozen meat products, butter, cheese, ghee, pickles, sausage, fruit juices, namkeen,tooth powder, medicine,umbrella, instant food mix, cell phones, sewing machine, man-made yarn, Handbags including pouches and purses; jewellery box, Wooden frames for painting, photographs, mirrors etc, Ornamental framed mirrors, Brass Kerosene Pressure Stove, Art ware of iron, etc. | Business class air tickets will attract a tax of 12% under GST. The slab also includes movie tickets priced under Rs. 100 |
4. GST Tax Slab of 18%
Goods | Services |
As mentioned above, most of the items are part of this tax slab. Some of the items are flavored refined sugar, cornflakes, pasta, pastries and cakes, detergents, washing and cleaning preparations, safety glass, mirror, glassware, sheets, pumps, compressors, fans, light fitting, chocolate, preserved vegetables, tractors, ice cream, sauces, soups, mineral water, deodorants, suitcase, brief case, vanity case, oil powder, chewing gum, hair shampoo, preparation for facial make-up, shaving and after-shave items, washing powder,Refrigerators, Water Heaters, Washing Machines, Televisions (up to 68 cm), Vacuum Cleaners, Paints, Hair Shavers, Hair Curlers, Hair Dryers, Scent Sprays, Lithium-ion batteries, detergent, stones used in flooring, marble & granite, sanitary ware, leather clothing, wrist watches, cookers, stoves, cutlery, telescope, goggles, binoculars, oil powder, cocoa butter, fat, artificial fruits, artificial flowers, follage, physical exercise equipment, musical instruments and their parts, stationery items like clips, some diesel engine parts, some parts of pumps, electrical boards, panels, wires, razor and razor blades, furniture, mattress, cartridges, multi-functional printers, door, windows, aluminium frames, monitors and television screens, tyres, power banks for lithium ion batteries, video games, carriage accessories for disabled, etc | Restaurants located inside hotels with tariffs of Rs. 7,500 and above, outdoor catering(input tax credit to be available), movie tickets priced above Rs. 100, actual bill of hotel stay below Rs. 7,500, IT and Telecom services and financial services along with branded garments will be part of this tax slab. |
5. GST Tax Slab of 28%
Goods | Services |
Over 200 goods will be taxes at a rate of 28%. The goods which will be part of this category under GST are sunscreen, pan masala, dishwasher, weighing machine, paint, cement, vacuum cleaner. Other items include automobiles, hair clippers, motorcycles. | As mentioned above, five-star hotels, whose actual bill of hotel stay above Rs. 7,500, racing, movie tickets and betting on casinos and racing will come under this category. |
Articles outside the GST Tax Rate Slabs
- Gold, gems, jewellery – 3%
- Rough Precious & Semi – Precious Stones – 0.25%
GST Council Meetings - Updated
Some of the important GST council meetings held till date are mentioned below
In the 39th meeting of the GST council headed by the Finance Minister Nirmala Sitharaman on March 14, 2020, several major decisions were announced. The following are the rate cuts announced at the 39th GST Council meeting:
Item | Old Rate | New Rate |
Mobile phones and specified parts | 12 | 18 |
Handmade matches | 5 | 12 |
Other than handmade matches | 18 | 12 |
Aircraft MRO (Maintenance,Repair,Overhaul) services | 18 | 5 (With full ITC) |
Note : The tax rate changes are effective from 1 April 2020.
In the recently concluded 38th meeting of the GST council on 18 December 2019, The following are the rate cuts announced at the 38th GST Council meeting:
Item | Old Rate | New Rate |
| Lotteries (State-owned) | 12 | 28 |
| Lotteries (State-authorised) | 28 | 28 |
| Woven and non-woven fabrics | 12 | 18 |
| Sacks of Polythene and Polypropylene in nature | 12 | 18 |
GST Rates Impact on Economy
As GST has transformed the economy at its peak. It’s a game-changing reform for the Indian economy as it brings about net appropriate price for the goods and services considered under single taxation system. Mentioned below are some of the important GST rates impacts in the Indian economy :
- Increase in Competition: After the GST has been imposed, there has been seen a fall in prices of goods and services which ultimately has brought the final consumer to have less tax burden on the goods and services. There is seen a great scope of increased production, thus, increase in competition.
- Simple Tax Structure: GST has simplified the calculation of tax with the adoption of single taxation system. Under this, multiple taxation has been aborted which ultimately saves time and money.
- Uniform Tax Regime: Previously, there used to be multiple tax at every stage of supply chain, where the taxpayer got confused. But now, with GST, it is easier for the taxpayer to pay uniform tax.
- Increase in Exports: There has been seen a fall in the cost of production after the GST got imposed. This in return has brought competitiveness towards the international market resulting in rise in exports.
Protest against GST rates
With the implementation of GST, various traders, cloth merchants, private security agencies and many others went on protest against GST rates. Cloth merchants protested against the imposition of 5% sales tax on textiles under the GST regime. The newly added tax system in the country also made the iron, wire dying and steel traders to held a protest against high rates of GST. Steel traders were of opinion that the new tax system has nosedived 40% trade due to high rates and elaborated paper works under the new system.
Owners and employees of private security agencies also went on a silent protest against the levy of 18% GST on security services because the GST rate took away the major share of wage and benefits from the security personnel.
Frequently Asked Questions
1. What are the different GST rates on goods?
Currently five different GST rates are applicable on goods. These are 0.25% (eg. cut and semi-polished stones), 5% (eg. household necessities), 12% (eg. computers), 18% (eg. hair oil) and 28% (eg. aerated drinks ).
2. What are the different GST rates on services?
Four different GST rates are applicable on services. These are 5% (eg. tour operated services), 12% (eg. air travel except economy ), 18% (eg. outdoor catering) and 28% (eg. gambling).
3. What are the various types of GST?
There are 3 types of GST:
SGST: It is collected by the state and union territories in case of an intra-state transaction. For example, when a good is both manufactured and sold within Gujarat, SGST will be levied by the Gujarat government.
CGST: It is collected by the Central government in case of an intra-state transaction. In the above example, CGST will be levied, in addition to SGST, by the Central government.
IGST: IGST or Integrated GST is levied by the Central government when the location of a supplier of the good/service and the place of consumption lie in different states. The IGST so collected is subsequently divided between the State and Centre.
4. What is the GST rate on water and water-based products?
Four different GST rates are applicable on water and water-based products. These are 5%,12%,18% and 28%. It should be noted that no GST is levied on water, when not sold in sealed containers.
5. What is the major difference between Nil GST and GST Exempt goods and services?
Nil GST means no GST or zero GST is applicable on the goods and services. On the other hand, GST exempt goods and services refer to the goods and services which may have a higher GST rate but have been temporarily exempted from GST.
6. What is the GST rate on gold?
GST rate on gold as a good is 3%. Additionally, 5% GST is levied on making charges of the gold ornaments.
7. What is the GST rate for hospital services?
Both human health care services and veterinary medicals services are included in the GST Act. As per the existing rules, there is no GST on health care services provided by an authorized medical practitioner, licensed medical or paramedical clinic. Similarly, there is nil GST on health care services provided to birds/animals at authorized clinics.
8. What are the different GST rates on hotel accommodation?
Following are the updated GST rates on hotel accommodation, as per the 37th GST Council Meeting.
Transaction Value per unit per day (Rs.) | GST Rate |
Rs. 1000 and less | Nil |
Rs. 1001 to Rs. 7500 | 12% |
Rs. 7501 and more | 18% |
Ramesh Kumar Gupta (Team Taxaj)
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