The Goods and Services Tax (GST) in India is a unified tax system that has replaced various indirect taxes to simplify the taxation process and enhance transparency. As of 2025, GST is levied at different rates based on the category of product or service. Essential items are exempt from tax, while luxury goods are taxed at higher rates: 0%, 5%, 12%, 18%, and 28%. The GST Registration process is essential for businesses and organizations involved in the supply of goods and services, ensuring they comply with tax regulations and qualify for input tax credits.
What are GST Rates?
GST rates in India are the tax percentages applied to goods and services under India's Goods and Services Tax system. They vary by category and typically fall into slabs like 5%, 12%, 18%, and 28%. Some essential items are taxed at 0%, while luxury goods have higher rates. To balance the interests of consumers with revenue collection, the government modifies these rates.
GST Rate Structure In India
- List of items fall under 0% GST Rate:
Essential goods and services fall under this category to ensure affordability. Items include:
- Goods: Fresh milk, eggs, unpackaged food grains, fresh fruits, and vegetables.
- Services: Educational services provided by charitable institutions, healthcare services, and non-AC public transportation.
- List of items fall under 5% GST Rate:
Basic necessity items are taxed at this rate. Examples include:
- Goods: Edible oils, sugar, tea, coffee, and coal.
- Services: Transport services such as railways and economy air travel.
- List of items fall under 12% GST Rate:
This slab covers goods and services that are considered standard-rated. Items include:
- Goods: Butter, ghee, computers, and processed food items.
- Services: Business class air travel and hotel accommodations priced between ₹1,000 and ₹7,500 per night.
- List of items fall under 18% GST Rate:
A significant portion of goods and services falls under this category, which includes:
- Goods: Hair oil, toothpaste, soaps, and industrial intermediaries.
- Services: Restaurants with air conditioning, IT services, and telecom services.
- List of items fall under 28% GST Rate:
Luxury items and sin goods are taxed at the highest rate to discourage their consumption. This includes:
- Goods: Luxury cars, high-end motorcycles, and tobacco products.
- Services: Entertainment events and amusement parks.
Goods and Services with New GST Rates In India
|
GST Rate |
Category |
Goods Examples |
Services Examples |
|---|---|---|---|
|
0% (Exempted) |
Basic services & Essential items |
Books, handwoven goods, milk, salt, fresh produce, and vegetables |
Healthcare, education, and non-air-conditioned public transit |
|
5% (Lower Tax Bracket) |
Products for mass consumption and necessities |
Tea, coffee, sugar, edible oils, and life-saving medications |
Cheap flights, trains, and taxi services |
|
12% (Standard Rate - 1) |
Processed food & intermediate goods |
Mobile phones, packaged meals, ghee, and butter |
Business class flights and lodging (between ₹1,000 and ₹7,500 per night) |
|
18% (Standard Rate - 2) |
Frequently utilized products and services |
Soaps, hair oil, toothpaste, IT hardware, branded garments |
Telecom services, restaurants with AC, IT, and software services |
|
28% (Luxury & Sin Tax) |
Luxury items & non-essential goods |
Luxury cars, tobacco, aerated drinks, high-end motorcycles |
Casinos, theme parks, premium hotel stays (above ₹7,500 per night) |
Recent Updates and Changes in GST Rates
In December 2024, the GST Council made notable decisions affecting GST applicability:
- Aviation Turbine Fuel (ATF): The Council decided against including ATF in the GST framework, permitting states to maintain their independent taxation on it. This choice was driven by worries about possible revenue losses for state governments.
- Taxation on Used Vehicles: An 18% GST rate was introduced on the sale of used or old vehicles, including electric vehicles, when sold by registered sellers. However, sales between individuals are still exempt from this tax.
- Differential Taxation on Popcorn: The Council introduced varying GST rates for popcorn based on its preparation:
- Non-branded salted and spiced popcorn: 5%
- Pre-packaged and branded popcorn: 12%
- Caramel popcorn: 18%
- This differentiation, especially the higher tax on caramel popcorn due to added sugar, sparked debates about the complexity of the GST system in India.
Understanding Cess Under GST
Certain goods attract an additional cess over and above the GST rate. The main goal of this is to prevent the consumption of goods that are thought to be harmful or luxuries. Items include:
- Tobacco products: Subject to high cess rates to discourage usage.
- Luxury cars: Attract additional cess to promote equity in taxation.
Harmonized System of Nomenclature (HSN) and Service Accounting Code (SAC)
To maintain consistency in classification, GST employs:
- HSN Codes: For classifying goods systematically.
- SAC Codes: For categorising services.
These codes are essential for businesses to ensure compliance and accurate tax filing.
Conclusion
Consumers and businesses should keep track of the latest GST rates and how they apply. The GST Council updates rates to match the economy and balance revenue with consumer needs. For accurate info, check official GST sites or consult tax experts. If you need help, JustStart can guide you with GST compliance
_1736747114_1741778359.webp)
