The Goods and Services Tax (GST) rate slabs are determined by the GST Council, with regular reviews of rates for goods and services. These rates are designed to be higher for luxury items and lower for essentials, offering a structured approach to taxation. In India, GST rates are divided into four primary slabs: 5%, 12%, 18%, and 28%. Over time, the GST Council has made revisions to these rates to adapt to evolving economic conditions and demands.
The Evolution of GST Rates
Since the introduction of the GST regime, there have been several revisions in GST rates for various products. The most recent rate revisions took effect during the 41st GST Council Meeting on August 27, 2020, following a series of prior meetings where rate adjustments were discussed.
Key Rate Changes in 2023
Recent changes in GST rates for certain categories include:
– Railways Goods and Parts under Chapter 86: Increased from 12% to 18%.
– Pens: Increased from 12% to 18%.
– Metal Concentrates and Ores: Raised from 5% to 18%.
– Certain Renewable Energy Devices: Increased from 5% to 12%.
– Recorded Media Reproduction and Print: Increased from 12% to 18%.
– Broadcasting, Sound Recordings, and Licensing: Raised from 12% to 18%.
– Printed Material: Increased from 12% to 18%.
– Packing Containers and Boxes: Raised from 12% to 18%.
– Scrap and Polyurethanes: Increased from 5% to 18%.
Reductions in GST Rates
– Vehicles Equipped with Retrofitting Kits for Disabled Individuals: Reduced from 5% to 0%.
– Keytruda for Cancer: Reduced from 12% to 5%.
– IGST Levied on Goods Sold at the Indo-Bangladesh Border: Reduced from NIL to Applicable.
Diverse GST Rates in India
For regular taxpayers, the primary GST slabs are 0% (nil-rated), 5%, 12%, 18%, and 28%. There are also less common rates, such as 3% and 0.25%.
Additionally, composition taxpayers are subject to lower or nominal General Service Tax rates, including 1.5%, 5%, or 6% on their turnover. The concepts of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) are also applicable under GST, with rates of 2% and 1%, respectively.
It’s important to note that certain products, such as cigarettes, tobacco, aerated water, gasoline, and motor vehicles, are subject to additional cess, with rates ranging from 1% to 204%.
Revision of GST Rates announced in the 48th GST Council Meeting
HSN and SAC Classification System
Goods and services in India are classified using the Harmonized System Nomenclature (HSN) and Services Accounting Code (SAC) systems. The HSN code system, recognized internationally, is employed for goods, while the SAC code system is used for services.
The HSN code system, developed by the World Customs Organization, serves as a universal classification for goods and is employed in over 200 countries. The SAC code system, developed by India’s Service Tax Department, classifies services based on GST rates.
Understanding the dynamic nature of GST rate slabs and their impact on various products and services is essential for businesses and taxpayers. The HSN and SAC systems play a pivotal role in the precise classification and taxation of goods and services. Staying informed about these rate changes and classifications is crucial for compliance with GST regulations and efficient tax management.
The Bottom Line
It’s essential for businesses to correctly determine and apply the appropriate GST Rate to their products to ensure accurate taxation. The GST rates are typically included in invoices and other relevant documents for GST compliance.
Businesses must be aware of the New GST Rates applicable to their products, as these rates determine other regulatory requirements associated with them.
Do you need help Finding Your Products or service rate? CaptainBiz is the ultimate GST billing software that helps you provide the same and also Provides simple invoicing, real-time inventory management, and cost reduction, allowing you to grow your business seamlessly.
Also Read :
Frequently Asked Questions:
1. What is the GST rate for gold?
The GST on gold is 3% of its value. However, if the gold is converted into ornaments, an additional 5% GST is charged on the making charges. Therefore, the total GST on gold ornaments is 8%.
2. What are the different GST rates on goods?
In India, goods and services are categorized into four different GST rates, which are 5%, 12%, 18%, and 28%. These GST rate slabs are determined by the GST Council.
3. What is the highest GST rate in India?
The highest GST rate in India is 28%. This rate applies to various items, including automobiles, tobacco, aerated beverages, and air travel. Luxury items and some everyday products fall under this 28% GST rate.
4. Who decides the GST rates in India?
The GST Council is responsible for deciding the GST rates in India. This Council plays a crucial role in making decisions related to tax rates, exemptions, thresholds, and administrative procedures.
5. What is the GST rate charged on two-wheelers?
Currently, two-wheelers are subject to a GST rate of 28%, which is the highest slab for GST. However, there have been requests to reduce the GST on two-wheelers to 18%.