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GST Rates

GST Rates

GST, i.e. Goods and Service Tax is a new type of tax that replaces all state and central taxes, like countervailing duty, excise duty, value-added tax (VAT), service tax, luxury tax, and entry tax. This single tax is aimed at simplifying all indirect taxes levied by the Govt. Services and goods should be taxed on the basis of value addition at every stage and not on the gross value of services or goods billed at every stage. Furthermore, the tax should eventually be borne at the point of consumption rather than at the point of production, though the tax department must be able to monitor value addition at every step and collect tax proportional to the value-added at every stage.

GST is a single tax from the service provider or manufacturer to the consumer. Taxes paid at each stage are credited in the subsequent value addition stage. Thus, with the elimination of all taxes paid in the earlier stages in the supply chain, GST charged by the final dealer is the ultimate tax borne by the customer.

In India –

● GST is levied on all services and goods imported, supplied, or produced in India
● Exports are not subjected to GST
● Goods that do not fall under the purview of GST include alcohol, petroleum products like petrol, crude oil, motor spirit, turbine fuel, natural gas, high-speed diesel, and electricity

Types of GST

There are three types of GST in India, namely –

● Central Goods and Service Tax (CGST)

CGST under Goods and Service Tax is a form of tax imposed on the supply of both services and goods within a state (intrastate) by the Central Government – CGST Act administers it.

● State Goods and Service Tax (SGST)

Under GST, State Goods and Service Tax is the tax imposed on intrastate supplies of both services and goods by the State Government – SGST Act governs this.

Both state and central governments must agree to combine their taxes in a suitable proportion for the revenue shared between them. Section 8 of the GST Act clearly states that the taxes must be imposed on all intrastate supplies of services and/or goods, but the GST rates in each case should not exceed 14%.

An illustration to understand SGST and CGST –

Let us assume, Rakesh is a dealer in Maharashtra who sold goods worth Rs. 10,000 to Manav, also residing in Maharashtra. The GST rates comprising the rates of both SGST (9%) and CGST (9%) is 18%. Under such a circumstance, Rakesh collects Rs. 1,800, of which Rs. 900 goes to the state government – in this case, Maharashtra Government – and Rs. 900 goes to the central government.

● Integrated Goods and Service Tax (IGST)

Another form of tax under GST, Integrated Goods and Service Tax is imposed on all supplies of services and/or goods between states (interstate). The IGST Act governs this type of tax. IGST is applicable on any supply of services and/or goods in case both of them export from and import to India.

Under IGST, export rates are zero and the taxes are shared between the state and central governments.
Here is an example –

Rakesh is a businessman in Maharashtra who sold goods worth Rs. 1,00,000 to Anand from Gujarat. The GST rate, along with IGST is 18%. In this case, the GST amount of Rs. 18,000 will be charged, which will go to the central government.

What do you mean by GST Rates?

GST rates are structured in a way that luxury products and services are placed in the higher tax brackets, while food items and essential goods are placed in the lower tax brackets.

The GST council included over 500 services and 1,300 goods under 4 GST slab rates of 28%, 18%, 12%, and 5%. This excludes 3% tax on gold and 0.25% tax on precious and semi-precious stones under GST.

81% of all services and goods fall in or below the tax slab of 18%. This implies that –

● Only 7% of the items are included under the exempted list
● 14% of the things fall under the tax rate of 5%
● 17% of the items attract a tax rate of 12%
● 43% of the items featured in the tax slab of 18%
● 19% of the items come under the 28% tax slab, which is the highest

GST Rate List:

Exempted GST Slab Rates – No Tax

7% of all services and goods fall under the exempted category. Some of the items for regular consumption under the exempted list include –

● Vegetables and fresh fruits
● Buttermilk, curd, milk
● Natural honey, jaggery
● Besan, flour, bread, cereal grains
● All forms of salt
● Fish, fresh meat, eggs, chicken
● Bangles, kajal, sindoor, bindi
● Colouring and drawing books
● Printed books, judicial papers, stamp, newspaper
● Handloom and jute
● Lodges and hotels with tariff below INR 1,000

5% GST Tax Rate

The category includes 14% of all services and goods. Some of these include –

● Footwear and apparel priced below INR 500 and INR 1,000 respectively
● Packaged food
● Frozen vegetables
● Skimmed milk powder
● Branded paneer
● Tea, coffee, spices
● Pizza bread
● Sabudana, rusk
● Cashew nuts, raisins
● Fish fillet
● Cream
● Kerosene
● Coal
● Incense sticks
● Medicines
● Revenue stamps or postage
● Fertilizers
● Economy class air tickets and rail tickets
● Small restaurants

12% GST Tax Rate

17% of all services and goods come under this category. Items included in the GST slabs include –

● Frozen meat, sausages
● Animal fat
● Ghee, cheese, butter
● Packaged dry fruits
● Fruit juices
● Sauces and ketchup
● Snacks
● Ayurvedic medicines
● All diagnostic reagents and kits
● Cell phones
● Fork, spoons
● Toothpowder
● Sewing machine
● Umbrella
● Spectacles
● Indoor games, like chess board, carom board, ludo, and cards
● Apparels priced above INR 1,000
● Non-AC restaurants
● Business-class flight tickets
● State-run lottery
● Work contracts

18% GST Tax Rate

43% of all services and goods attract a GST rate of 18%. Items included are –

● Pasta
● Biscuits
● Cornflakes
● Cakes and pastries
● Preserved vegetables
● Mayonnaise, jam
● Soups
● Ice cream
● Seasonings and mixed condiments
● Mineral water
● Footwear priced above INR 500
● Branded garments
● Camera
● Printers, monitor, speakers
● Electrical transformer
● Optical fibre
● Sanitary napkins, tissues
● Notebooks
● Headgear and parts
● Steel products
● Bamboo furniture
● Aluminium foil
● AC restaurants serving liquor
● 5-Star and luxury restaurants
● IT and Telecom services
● Financial services

28% GST Tax Rate

This category includes 19% of all services and goods. Some of these are –

● Chocolates that do not contain cocoa
● Waffles and molasses
● Chocolate-coated wafers
● Pan masala
● Chewing gum
● Beedi
● Aerated water
● Personal care products, like shaving cream, deodorants, aftershave
● Shampoo and dye
● Sunscreen
● Dishwasher, water heater
● Vacuum cleaner, washing machine
● Weighing machine
● Motorcycles, automobiles
● Race club betting
● Movie tickets priced above INR 100
● 5-Star hotel accommodation
● Private lottery

A few other goods and services that are likely to be costlier include –

● Courier and broadband services
● Mobile bills and cell phone tariffs
● Salon visits
● Tuition fees
● Insurance premiums
● Banking charges
● Real estate

What are the advantages of GST?

GST benefits the government as well as traders/manufacturers and consumers. Listed below are some of the advantages of Goods and Service Tax –

For State and Central Government

● Easy and simple administration
● Improved revenue collection and compliance
● Improved revenue effectiveness

For Traders and Manufacturers

● Easy compliance
● Uniformity in tax structure and rates
● Elimination of compounding effects of taxation
● Enhanced competitiveness
● Strive towards a common global market

For Consumers

● Payment of a single, transparent tax
● Reduced burden on taxpayers

GST aims to eliminate the fluctuation in product prices and bring equality in taxation across the country. Eventually, it aspires to lower the manufacturing cost of businesses and form a streamlined, unified market across the country.

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One Thought to “GST Rates”

  1. Wealthy Bites

    GST is considered to be one of the biggest tax reform in India which brought a nice uniformity in the whole tax structure of the country by the elimination of the cascading of tax which was there in the past duration.

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