GST Rates in India – 0%, 5%, 12%, 18% and 28%

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The Goods and Services Tax (GST) is currently categorized into five slab rates 0%, 5%, 12%, 18% and 28% for goods and services. When the GST rates were announced by the GST Council, there were considerable discussions hitting around the country to understand the applicability across the various industries, businesses, and sectors.

This structure has drawn quite lot criticisms as well from a long time as it is not implying to its motto – one nation one tax. Currently, these slab rates have been introduced with an exception of gold and rough diamonds which are charged different rates.

To clarify such queries, the Finance Minister explained that these five slab rates have been created considering the poor masses of India. Even the single rate of 15% would have generated an equal amount of revenue to the Central and state governments, however, this would have increased the prices of basic goods which will be unaffordable for the common poor people of India. Since GST is more regressive and based on consumption, a single rate would have concluded that the rich and poor pay the same amount of taxes. This would create inequalities of wealth issues in India.

The GST rates have been one of the primary topics which have kept the attention of the entire market indices as it is a huge impact on the earnings of the companies and traders. The government has currently classified approximately 1211 items under the slab rates specified.

GST Rates in India

Apart from the five slab rates, certain basic goods and services are categorized as 0% tax under GST regime. These items include the following:

GST Rate 0%

Goods:

Fresh meat, fish, eggs, chicken, milk, curd, buttermilk, natural honey, jute, fresh fruits and vegetables, flour, besan, bread, Prasad, bindi, salt, kajal, sindoor, newspapers, printed books, judicial papers, stamps, bangles, jaggery, bones and horn-cores, handloom, bone meal, bone grist, children’s picture books and drawing books, human hair, cereal grains hulled, unpacked paneer, lassi.

Services:

Hotels and accommodation services that are below of Rs 1000 tariff value, grandfathering services, will come under 0% tax bracket.

GST Rate 5%

Goods:

Items such as fish fillets, packaged food products, milk cream, skimmed milk powder, paneer of branded companies, frozen vegetable packets, coffee (except instant), roasted coffee beans, tea, cashew nuts, cashew nuts with shell, spices of branded companies, pizza bread, sabudana, kerosene, coal, stent, medicines (life saving medicines), biogas, insulin, life boats, rusk, apparels below Rs 1000, footwears below Rs 500, raisins, snow and ice, kites, agarbattis, postage stamps, revenue stamps, first day covers, stamp postmarks, domestic LPG, edible oils, coir mats, floor covering, matting, Indian sweets.

Services:

Transport services like railways and airways, small restaurants as their main input used in the restaurants are petroleum which is currently outside the purview of GST regime.

GST Rate 12%

Goods:

Products such as frozen meat products, ghee, cheese, butter, namkeen products, dry fruits in packages, animal fat, fruit juice packs, sausages, Bhutia, ayurvedic medicines, tooth powder, coloring books and picture books (except children), agarbattis, cell phones, ketchup & other sauces, umbrella, sewing machines, exercise books, notebooks, spoons, forks, apparels which are priced above Rs 1000, fish knives, cake servers, skimmers, ladles, spectacles, corrective, playing cards, board games, carrom board, all types of diagnostic kits and reagents.

Services:

Air services for business class tickets, state-run lotteries, hotels that provide Non AC rooms, work contracts, fertilizers fall under the bracket of 12% tax rate of GST regime.

GST Rate 18%

Goods:

Most items fall under this category. This includes footwears costing more than Rs 500, intangible products such as trademarks, goodwill, software copyrights, food items such as biscuits (all types), cakes, pastries, cornflakes, pasta, flavored sugar preserved vegetables (not frozen), sauces, jams, ice-creams, instant food mix products, soup packets, curry paste, mixed condiments, mineral water, mayonnaise, mixed salad dressings, mixed seasonings. Cosmetic products such as kajal pencil sticks, tissues, tampons. Stationery products such as envelopes, notebooks, aluminium foil, weighing machinery (except electrical or electronic weighing machinery), printers (except the large multifunction printers), CCTV camera & equipment, optical fibre, bamboo furniture, electrical transformer, swimming pools, paddling pools.

Services:

Hotels and accommodation services which provide AC rooms and liquor. The room tariff may vary from Rs 2,500 to Rs 7,500, restaurants inside five-star hotels, telecommunication services, Information Technology services, branded clothes, financial services provided fall under the bracket of 18% tax rate of GST regime.

GST Rate 28%

Goods:

The last slab rate is 28%. The luxury items, liquor, and tobacco related products mainly fall under this bracket. The following items will be taxed under this bracket:

Chewing gums, Bidis, molasses, waffles and wafers coated with chocolate, paint, aerated drinks, pan masalas, deodorants, washing machines, shaving creams, after shave, hair shampoos, hair dye, wallpapers, sunscreen lotions, water heaters, ceramic tiles, ATM machines, vending machines, shavers, hair clippers, automobiles including high-end motorcycles (including cess), vacuum cleaners, private aircraft owned for personal use, chocolate which do not contain cocoa.

Services:

Private run lotteries which are authorized by the states, hotels and accommodation services provided with tariff rates greater than Rs 7,500, 5-star hotel restaurants, cinema theaters, race club bettings and gambling will fall under the bucket of 28% GST rate.

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