Understanding GST rates is important for both businesses and consumers in India. When the GST Council changes these rates, it affects different industries, trade groups, and everyone who buys goods or services. This can lead people and businesses to reassess their financial situations.
There is ongoing discussion about potential GST rate reductions on certain items and review of high-tax items. In this article, you'll learn what GST rates are and find the most recent updates on GST rates in India for 2024.
GST Rates
GST rates are the tax percentages applied to the sale of goods or services under different laws. If you run a business and are registered for GST, you need to issue invoices that show the GST amount charged on each sale. For sales within the same state (intrastate), the GST rates for CGST and SGST are roughly the same. For sales between different states (interstate), the GST rate is about the combined total of CGST and SGST rates.
Types of GST Rates and GST Rate Structure in India
There are different GST rates for regular taxpayers, which are 0 percent to 5 percent 12 percent 18 percent and 28 percent. Some rates, like 3 percent and 0.25 percent, are less common.
Businesses that qualify for the composition scheme pay GST at lower rates, such as 1.5 percent 5 percent or 6 percent on their total sales. There are also TDS and TCS rates under GST which are 2 percent and 1 percent, respectively. For interstate sales, the GST rate is the total of both CGST and SGST. For sales within the same state, the GST rate includes both CGST and SGST added together. To find out the GST amount on a sale you multiply the GST rate by the value of the supply shown on the invoice.Additionally some items like cigarettes, tobacco aerated drinks, petrol and motor vehicles are subject to extra taxes called cess which can range from 1 percent to 204 percent.The GST rates for some frequently used consumable products are listed in the table below. To find the GST rate for other items, simply look them up using the HSN code and GST rates finder.
Tax Rates
Products
0%
Milk, kajal (eyeliner), eggs, educational services, curd, lassi (a yogurt-based drink), and health services. Additionally, there are unbranded products like unpacked foodgrains, atta (flour), maida (refined flour), paneer (cheese), and natural honey. Other items include gur (jaggery), besan (gram flour), fresh vegetables, salt, prasad (religious offerings), palmyra jaggery (a type of sweetener), and phool bhari jhadoo (a decorative broom).
5%
Sugar, packed paneer (cheese), tea, coal, edible oils, raisins, domestic LPG (cooking gas), roasted coffee beans, PDS kerosene, skimmed milk powder, cashew nuts, footwear costing less than ₹500, milk food for babies, and apparel costing less than ₹1000. Other items on this list are fabric, coir mats, matting, and floor coverings. Spices, agarbatti (incense sticks), Indian sweets like mishti/mithai, life-saving drugs, and coffee (excluding instant coffee)
12%
Butter, computers, ghee (clarified butter), processed food, almonds, mobile phones, fruit juice, and preparations made from vegetables, fruits, nuts, or other plant parts. This also covers products like pickles, murabba (fruit preserves), chutney, jam, jelly, and packed coconut water. Additionally, everyday items like umbrellas are included.
18%
Hair oil, capital goods (such as machinery and equipment for businesses), toothpaste, and industrial intermediaries (products used in manufacturing). This list also covers everyday items like soap, ice-cream, pasta, toiletries, corn, and flakes. Additionally, products like computers, soups, and printers are included.
28%
Small cars, which may have an additional 1% or 3% cess, and high-end motorcycles, which can have a 15% cess. Consumer durables like air conditioners and refrigerators are also subject to GST. However, beedis, luxury items like BMW cars, cigarettes, and aerated drinks come with a higher 15% cess.
GST Rate Revisions
In 2024, the 53rd GST Council meeting took place later than usual because of the Lok Sabha elections, causing a delay. During this meeting, several GST rate changes were announced. More changes are anticipated in future meetings. Some of these GST rate revisions aimed to address issues with the current tax structure, while others were made to boost revenue. The following sections provide a summary of the changes to GST rates in India and the new rates for 2024.
The following table summarises the GST rate revisions:
Tax Rates
Products
0%
Milk, kajal (eyeliner), eggs, educational services, curd, lassi (a yogurt-based drink), and health services. Additionally, there are unbranded products like unpacked foodgrains, atta (flour), maida (refined flour), paneer (cheese), and natural honey. Other items include gur (jaggery), besan (gram flour), fresh vegetables, salt, prasad (religious offerings), palmyra jaggery (a type of sweetener), and phool bhari jhadoo (a decorative broom).
5%
Sugar, packed paneer (cheese), tea, coal, edible oils, raisins, domestic LPG (cooking gas), roasted coffee beans, PDS kerosene, skimmed milk powder, cashew nuts, footwear costing less than ₹500, milk food for babies, and apparel costing less than ₹1000. Other items on this list are fabric, coir mats, matting, and floor coverings. Spices, agarbatti (incense sticks), Indian sweets like mishti /mithai, life-saving drugs, and coffee (excluding instant coffee)
12%
Butter, computers, ghee (clarified butter), processed food, almonds, mobile phones, fruit juice, and preparations made from vegetables, fruits, nuts, or other plant parts. This also covers products like pickles, murabba (fruit preserves), chutney, jam, jelly, and packed coconut water. Additionally, everyday items like umbrellas are included.
18%
Hair oil, capital goods (such as machinery and equipment for businesses), toothpaste, and industrial intermediaries (products used in manufacturing). This list also covers everyday items like soap, ice-cream, pasta, toiletries, corn, and flakes. Additionally, products like computers, soups, and printers are included.
28%
Small cars, which may have an additional 1% or 3% cess, and high-end motorcycles, which can have a 15% cess. Consumer durables like air conditioners and refrigerators are also subject to GST. However, beedis, luxury items like BMW cars, cigarettes, and aerated drinks come with a higher 15% cess.
GST Rate Revision
In 2024, the 53rd GST Council meeting took place later than usual because of the Lok Sabha elections, causing a delay. During this meeting, several GST rate changes were announced. More changes are anticipated in future meetings. Some of these GST rate revisions aimed to address issues with the current tax structure, while others were made to boost revenue. The following sections provide a summary of the changes to GST rates in India and the new rates for 2024.
The following table summarises the GST rate revisions
Particular
New GST rate
Extra Neutral Alcohol is a type of alcohol used to make alcoholic drinks that people consume.
Exempt
When importing parts, components, testing equipment, tools, and tool kits for aircraft, regardless of their category, it is done to support maintenance, repair, and overhaul (MRO) activities under certain conditions.
5%IGST
Parts of Poultry keeping Machinery
12%
All milk cans (different materials), irrespective of use
12%
All types of cardboard boxes and cases, whether made from corrugated (wavy) paper board or regular (flat) paper board.
12%
All types of sprinklers, including fire water sprinklers
12%
All solar cookers, whether or not single or dual energy source
12%
Services provided by Indian Railways for everyday needs, like platform tickets, cloakrooms, and battery-operated car services, are exempt from GST. This also includes supplies and services within the railway system itself.
Exempt
Hostel accommodation services are not exempt from GST unless they meet certain conditions. To qualify for exemption, the rent must be up to ₹20,000 per person per month, and the accommodation must be provided for at least 90 days in a row. This rule applies to hostels not run by educational institutions.
Exempt
Corporate guarantee if in case it is for services or goods where whole ITC is available
Exempt
Services provided by Special Purpose Vehicles (SPV) to Indian Railways include letting Indian Railways use infrastructure built and owned by the SPV during the agreement period. Additionally, any maintenance services provided by Indian Railways to the SPV are also included.
Exempt
Imports of specified items for defence forces
IGST is exempt for five years till 30th June 2029
When importing research equipment or buoys for the RAMA program, which studies monsoons in Africa, Asia, and Australia, certain conditions must be met.
IGST is exempt
Imports in SEZ by SEZ Unit/developers for authorised operations with effect from 1st July 2017
Compensation Cess is exempt
supply of aerated beverages and energy drinks to authorised customers by Unit Run Canteens under the Ministry of Defence
Compensation Cess is exempt
Import of technical documentation for AK-203 rifle kits imported for the Indian Defence forces.
Compensation Cess is exempt
GST Rates Impact on Economy
GST has significantly changed the economy by creating a single taxation system for goods and services. Here are some of the key impacts of GST on the Indian economy:
Increased Competition: GST has led to lower prices for goods and services, which reduces the tax burden on consumers. This has boosted production and increased competition among businesses.
Simplified Tax Structure: GST has made tax calculation easier by replacing multiple taxes with a single system. This change saves both time and money.
Uniform Tax System: Before GST, there were multiple taxes at different stages of the supply chain, causing confusion for taxpayers. Now, GST provides a consistent tax rate, making it simpler for taxpayers.
Boost in Exports: GST has reduced production costs, enhancing competitiveness in the international market and leading to an increase in exports.
Conclusion
In conclusion, GST has streamlined the tax system in India by unifying rates and simplifying tax calculations. This has led to lower prices for consumers, increased competition among businesses, and a boost in exports. The recent GST rate revisions and exemptions continue to refine this system, making it more efficient and beneficial for both businesses and everyday consumers.
FAQs
Q,1 What are the different GST rates on goods? Ans. 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 ).
Q,2 Who decides GST rates? Ans. GST rates are decided by the GST Council. The council has 33 members, including the State Finance Ministers. The Council is headed by the Union Finance Minister.
Q,3 What is the difference between Nil GST and GST Exempt goods and services? Ans. 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.
