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What are the GST Rates in India? Your Complete Guide

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Posted on
Oct 09, 2024

The introduction of the Goods and Services Tax (GST) in India has revolutionised the country’s indirect tax system. As a business owner or consumer, it is crucial to understand the various GST rates and GST percentages in India. This comprehensive guide will walk you through the different GST rates in India, the importance of GST HSN code list and how to calculate GST charges for your goods and services.

Contents Hide

1 Importance of HSN Codes Under GST

2 Current GST Rates and Slabs

2.1 Also Read About: How to deal with late Payments under GST

3 GST Rate Structure

4 Common GST Rates for Consumable Products

5 Calculating GST Amount

6 Recent Updates and Changes

7 Conclusion

7.1 Also Read About: What is GST Business Loan

8 FAQs

8.1 What are the Differences between TAN, PAN and TIN

8.2 How to Start a Profitable Tea Business in India

Importance of HSN Codes Under GST

The Harmonised System of Nomenclature (HSN) codes play a crucial role in making the GST system systematic and globally accepted. Using the GST HSN code list eliminates the need to upload detailed descriptions of goods, saves time and simplifies the filing process, as GST returns automate the process.

Dealers and service providers must provide an HSN / SAC-wise summary of sales in their GSTR-1 form if their turnover falls within specified slabs. This makes the GST HSN code list an essential tool for businesses to ensure compliance and accuracy in their GST filings.

Current GST Rates and Slabs

Tax Rates	Products	Purpose
0%	Certain essential items, such as fresh fruits and vegetables, milk, curd, educational services, health services, unpacked food grains, unbranded atta / maida, salt, unpacked paneer, etc.	Ensures affordability and accessibility for essential items and services.
0.25%	Rough, precious and semi-precious stones, such as cut and polished diamonds.	Promotes accessibility and affordability; also encourages growth of the gem and jewellery industry.
3%	Gold jewelry, gold biscuits or gold in any semi-manufactured form.	Aims to balance revenue generation with accessibility.
5%	Coal, edible oils, PDS kerosene, domestic LPG, sugar, tea, life-saving drugs, coffee, spices, packed paneer, footwear (<₹500), fabric, Indian sweets, etc.	Promotes accessibility to basic necessities.
12%	Processed foods, butter, cheese, ghee and mobile phones. Also includes computers, packed coconut water, almonds, fruit juice, umbrella, jam, jelly, etc.	Balances affordability and revenue generation.
18%	Hair oil, capital goods, toothpaste, industrial intermediaries, soap, ice-cream, pasta, toiletries, corn, flakes, computers, soups,printers, etc.	Aims to maintain tax revenue while ensuring reasonable consumer prices.
28%	Luxury items like small cars (+1% or 3% cess), luxury cars, high-end motorcycles (+15% cess), as well as consumer durables such as AC, fridge, cement, paint. Also includes sin goods like tobacco products and aerated drinks.	Applies the highest rate with additional cess on some items to manage luxury and non-essential goods.

GST Rate Structure

The total GST percentage is the sum of the Central Goods and Services Tax (CGST) and the State Goods and Services Tax (SGST) for intrastate supply or the Integrated Goods and Services Tax (IGST) for interstate supply. To calculate the GST charges on a tax invoice, multiply the assessable value of the supply by the applicable GST rates in India.

In addition to the standard GST percentage, the law levies cess on the sale of certain items, such as:

Cigarettes and tobacco products
Aerated water
Petrol
Motor vehicles

Cess rates vary widely, ranging from 1% to 204%.

Common GST Rates for Consumable Products

Product Category	GST Rate
Essential items	0% or 5%
Processed foods	12%
Restaurants	5%
Luxury items	28%

Calculating GST Amount

Determine the applicable GST percentage for the goods or services being supplied using the GST HSN code list.
Calculate the GST amount using the formula: GST Amount = (Original Price × GST Rate) ÷ 100
Add the GST amount to the original price to arrive at the final price.

For example, if a product costs ₹1,000 and the applicable GST rate is 18%, the calculation would be:

GST Amount = (1,000 × 18) ÷ 100 = ₹180

Final Price = 1,000 + 180 = ₹1,180

Understanding the various types of GST percentages and how to calculate GST charges is crucial for businesses, especially MSMEs, to ensure compliance and maintain a healthy cash flow. An online business can benefit from a business loan to manage its working capital requirements and pay its GST charges on time.

Recent Updates and Changes

The GST Council regularly reviews and revises the GST rates in India for various products. The most recent rate revision went into effect at the 41st GST Council Meeting on August 27, 2020.

According to the Union Budget 2024-25, the government has made no changes to the GST percentage slabs.

Conclusion

Understanding the different GST rates in India is essential for businesses and consumers alike. By familiarising yourself with the various GST percentage slabs, the GST HSN code list and calculation methods, you can ensure compliance and make informed decisions. MSMEs can benefit from a business loan to manage their working capital requirements and pay their GST charges on time. With flexible business loan eligibility criteria and competitive interest rates for business loans, online businesses can easily avail of an MSME business loan or a line of credit to meet their financial obligations and maintain a healthy cash flow. As the GST system continues to evolve, it is crucial to stay updated with the latest rate revisions and amendments to ensure transparency and efficiency in the tax system.

FAQs

What are the different types of GST percentages in India?
The primary GST rates in India are 0%, 5%, 12%, 18% and 28%. There are also some lesser-used rates, such as 3% and 0.25%.
How can I determine the applicable GST percentage for my goods or services?
You can refer to the GST HSN code list to determine the applicable GST rate for your goods or services.
What is the importance of the GST HSN code list?
The GST HSN code list plays a crucial role in the GST system. It eliminates the need to upload detailed descriptions of goods, saving time and simplifying the filing process.
How can MSMEs manage their cash flow to pay their GST charges on time?
MSMEs can avail of a loan for business or a line of credit to manage their working capital requirements and pay their GST charges on time.