The Goods and Services Tax (GST) law uses the “one nation, one tax” slogan. That doesn’t mean there’s one tax rate. It simply means there’s one rate for every individual product or service. Instead of assigning a separate tax rate to every item, the government created different GST slab rates. As a business, everything you sell falls into one of these categories.
What Are the GST Slab Rates?
Before GST, each state in India had its own taxes in addition to those charged by the central government. This meant the final price of an item could be different, depending on where you sold it. Under GST, every item is taxed at the same rate, whether you’re selling it in-state, to another state, or internationally. The GST rates for goods and services are all determined by these slabs.
There are five different GST slabs:
- Nil: Items in this slab are taxed at a rate of 0% GST. Goods that fall into this slab include essential products like milk, fresh fruits, and newspapers. Services in this slab include government works, renting a residential dwelling, and conducting religious ceremonies.
- 5%: Goods taxed at 5% include nonessential foods like cashews and cream, as well as postage stamps and fertilizers. Most restaurant services also fall into this category, as do economy airfares and the transport of goods by rail.
- 12%: This rate slab includes goods like frozen meat, sauces, sewing machines, and indoor games. Services taxed at 12% include business-class air travel and hotel rooms with declared rates between Rs 1,000 and 2,499.
- 18%: This slab covers a significant portion of India’s goods and services. It includes goods such as condensed milk, sugars, pasta, and shampoo. Services in this category include circuses and restaurants in hotels with room rates between Rs 2,500 and Rs 7,500.
- 28%: This category covers luxury items, such as pan masala, aerated water, dishwashers, and yachts. Services taxed at 28% include gambling and hotel rooms with rates of Rs 7,500 and higher.
How Do You Find the Correct GST Rates?
If you run a business, it’s important to charge the correct GST rate for every item. If you’re selling goods, you can look up the correct GST rate using the item’s harmonised system of nomenclature (HSN) code. For services, you can use the services accounting code (SAC). The current GST rates for any item are available on the Central Board of Indirect Taxes and Customs (CBIC) website.
Are GST Slab Rates Final?
The GST Council has the right to move goods and services into different rate slabs as it sees fit. In fact, since the GST regime launched, the council has changed the GST rates many items. If you run a business, it’s a good idea to keep up with the latest changes, which usually happen when the GST Council meets every other month. When the changes go into law, they’re automatically updated in the CBIC rate finder.
The GST slab rates have a big impact on your business. By staying updated and using the correct SAC and HSN codes, you can keep your company compliant with the latest rates.