What are the Different Types of Goods that are Taxable under GST?

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Published Date:  06-01-2024   Author:   pratis-amin
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Introduction

Since GST (Goods and Service Tax) was introduced in India, both entrepreneurs and end customers have divided opinions regarding its benefits and losses. However, to know how effective this new tax regime will be for users, it is important to have a clear idea about GST rates for different types of goods. Every year, the GST council, during the budget session, reviews the GST rates for goods, which affects businesses and end users. Year by year, the collection under this new tax regime keeps increasing. According to the GST council, the overall collection of 2023-24 crossed over Rs 1.60 lakh crore, which is 11% higher than the first half of 2022-23. This is because many products and services are taxed or exempted.

This article presents you with a GST taxable goods list and insight into this tax regime for better understanding.

What is a Goods and Service Tax?

GST was implemented on July 1, 2017, and since its establishment, the indirect taxation system has undergone a series of revisions.

GST eliminated several indirect taxes that were imposed on various goods and services because of this tax reform.  The Central Board of Indirect Taxes and Customs (CBIC) is the regulatory agency overseeing all modifications and adjustments pertaining to this tax.

Three Different Types of GST

Before we learn about the GST rates for goods, it is important to know three different types of GSTs levied on goods and services. These are-

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  • CGST– The Central Items and Services Tax, or CGST for short, is levied on certain items and services that are deemed standard. The tax rates for goods falling under it are subject to periodic revision. The central government receives all the money that is collected. According to the Central Goods and Services Tax Act of 2016, most central taxes, including Additional Custom Duty, Central Sales Tax, Central Excise Duty, and Service Tax, fall under the centralized portion of GST.
  • SGST– State Goods and Services Tax is a single, unified tax structure by the state. It consists mostly of a mix of different taxes, including state sales tax, luxury tax, and entertainment tax.
  • IGST– The Integrated Goods and Service Tax is levied over the supply of items or services that are moved from one state to another. Article 269A of the Indian Constitution states that the transportation of commodities in interstate trade and commerce is subject to the IGST. The government of India receives the collected money.

What is the GST Rate?

GST rates are the percentage rates levied under the CGST, SGST, and IGST Acts on the sale of goods or services. GST invoices on the value of supplies must be issued by a company that is registered under the GST statute.

For intrastate transactions, the GST rates in CGST and SGST are roughly the same. On the other hand, the GST rate for interstate transactions (IGST) is almost equal to the combined rate of CGST and SGST.

Overview of GST Rate Types and Structure

For all regular taxpayers, the primary GST slabs are now set at 0%, 5%, 12%, 18%, and 28%. A couple of the less popular GST rates include 3% and 0.25%.

Additionally, the composition taxable individuals are required to pay GST at nominal or lower rates, such as 1.5%, 5%, or 6% of their total sales. Under the GST, there is also the idea of TDS and TCS, with rates of 2% and 1%, respectively.

These rates combine both CGST and SGST for intrastate supply and the entire GST rate of IGST for interstate delivery. To get the GST amount on a tax invoice, multiply the GST rate by the assessable value of the supply.

Besides the above GST rates, there is a cess on selling items, including aerated water, tobacco, gasoline, and others. This could be between 1% to 204%.

Also Read: Different GST Tax Rates

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Understanding the Basics of HSN and SAC System

Under GST, all goods and services traded inside the nation are categorized using either the SAC code system or the HSN code system. The SAC Code is used to classify services, whereas the HSN Code is used to classify goods.

Based on the HSN or SAC code, the GST rates have been divided into five slabs: NIL, 5%, 12%, 18%, and 28%.

  • HSN System

The Harmonized System Nomenclature code number, or HSN code, was created by the World Customs Organization as a globally recognized system for classifying and identifying commodities. The HSN code serves as the foundation for customs duties in more than 200 nations.

The HSN code is currently used to classify more than 98% of goods used in international trade. The Indian government adopted the HSN code for GST classification and levy since it functions as a global categorization for items.

The HSN Code 2017 Edition is now in use for cross-border commerce transactions. All international commerce transactions were conducted using the HSN Code-2012 Edition prior to the introduction of the HSN Code-2017 Edition. The six-digit Harmonized System codes are listed in each chapter of the HSN Codes, which are separated into divisions.

Also Read: HSN Codes and Product Classification: Ensuring Accurate E-waybill Documentation

  • SAC System

The Services Accounting Code, or SAC Code, is a classification scheme for services introduced by the Service Tax Department of India. Under the SAC code, the general service tax rates are set in five slabs: 0%, 5%, 12%, 18%, and 28%. However, it is important to know that the default GST rate for goods and services is 18% if the service is not GST exempt or if the GST rate is not given.

GST Taxable Good List 2023

Year by year, the GST Council of India holds meetings to revise GST rates for different types of goods. In 2023, at the 51st GST Council Meeting, there have been some changes in rates and other updates. These are-

  • Water supply, public health, and other services provided to government agencies don’t fall under the GST slab. This includes composite services that include up to 25% of the mentioned services.
  • When a foreign-going vessel switches to a coastal run, it gets the conditional exemption from the IGST if it reconverts within six months.
  • Pure services provided to state, local, and municipal governments for Panchayat/Municipal functions are exempt from GST.
  • Bus operator businesses that trade online are exempt from CGST Section 9(5), which enables them to pay GST and obtain input tax credits.
  • Indian Railways will impose a forward charge for all services rendered, and ITC can be used to offset liabilities.

Below is the GST Taxable Good List

Tax Rates Products
0% Milk, Eggs, Education Services, Curd, Health Services, Lassi, Drawin and Colouring books for Children, Unbranded Natural Honey, Unpacked Foodgrains, Unbranded Atta, Unpacked Paneer,  Gur, Fresh Vegetables, Salt,
5% Sugar, Tea, Edible Oils, Domestic LPG, Roasted Coffee Beans, PDS Kerosene, Cashew Nuts, Footwear (< Rs.500), Milk Food for Babies, Fabric, Coir Mats, Matting & Floor Covering, Spices, Life-saving drugs, Coffee.
12% Butter, Ghee, Almonds (dry fruits), Fruit Juice, Fruits, Pickles, Chutney, Jam, Packed Coconut Water
18% Hair Oil, Toothpaste, Soap, Ice-cream, Pasta, Toiletries, Corn Flakes, Soups, Computers, Printers
28% Small cars (+1% or 3% cess), Luxury cars like BMWs, cigarettes and aerated drinks (+15% cess), High-end motorcycles (+15% cess), Online gaming, Carbonated Beverages, Air-conditioning machines,

Decreased GST Rates

Product Category Old GST Rates New GST Rates
Any vehicle carrying retrofitting kits for disabled people, Applicability 5%
Keytruda for Cancer Treatment 12% 5%
IGST is levied on goods sold at the Indo-Bangladesh border Applicability Nil

Also Read: New GST Rates 2023 – List Of Latest Goods And Service Tax Rates Slabs

Overview of GST Exemptions

GST rates for goods are not implied on all items; there are some exemptions. Certain products and services are exempt from GST and are called GST exemptions. In simple words, some products and services fall beyond the purview of the GST Act. These exemptions are subject to periodic changes. There could be many reasons behind the exemption of these goods from the GST tax. There are different types of GST Exemptions-

  • Absolute: Exemptions that are offered in full and without any limitations or requirements of any kind are known as absolute exemptions. The RBI service exemption is a prime example of an absolute GST exemption.
  • Conditional: Exemptions that include limitations, requirements, or restrictions on the type and scope of the exemption are known as conditional exemptions. For instance, hotel services are partially and not entirely exempt.
  • Partial: Only if the total value of the supplies to a registered person inside the state is less than Rs. 5000 per day is for an unregistered person free of GST under the reverse charge.

List of GST Types of Goods Exempted

Types of Goods Products
Live Animals Cows, goats, poultry, etc.
Fish Frozen or fresh
Live trees and plants

 

roots, flowers, foliage, etc.
Dry fruits

 

Walnuts, cashew nuts, and others

 

Milling industry products.

 

Different types of flours
Ornaments Glass, Plastic Bangles, and others

Conclusion

It is important to have a good insight into the GST taxable goods to know if products and services are subject to taxes. These GST rates of goods are decided by the GST Council every year during the meeting and are updated accordingly. These changes in GST on goods are done to help businesses and end users overcome the tax burden and help in the nation’s economic growth.

The most recent changes have been made with the intention of helping small taxpayers and accelerating economic growth. Moreover, having complete knowledge and updates about the list of GST types of goods will help to comply with legal requirements and prevent potential fines.

FAQs

1) Do businesses and consumers benefit from GST Rate exemption?

Ans: Yes, with no GST on certain products or services, the business doesn’t increase the price, which brings down the burden on buyers, too.

2) What are the Different GST Rate Slabs?

Ans: The GST Council has specified 1300 items and 500 services that will be taxed at various rates, primarily in the range of 5%, 12%, 18%, and 28%. There is a special rate of 3% and 0.25% under GST that applies to gold and special/semi-precious stones. The official listings make it clear that luxury items are positioned in higher tax slabs.

3) Which services or products fall under the 0% GST slab?

Ans: The Basic Savings Bank Deposit (BSBD) account, which a citizen is eligible to open under the Pradhan Mantri Jan Dhan Yojana (PMJDY), is subject to a zero percent GST tax on chargeable services. A small number of additional products and services are GST tax-free and are typically included on the list of necessities for the populace.

4) What are the 3 types of GST implemented?

Ans: Integrated Goods and Services Tax (IGST), State Goods and Services Tax (SGST), and Central Goods and Services Tax (CGST) are the three versions of GST implemented on goods and services. For imports and interstate transactions, an importer is required to deposit IGST, while all intrastate transactions require the taxpayer to deposit CGST and SGST.

5) Who is eligible to pay the GST Rate?

Ans: Any business that deals with products or service that doesn’t fall under the exemption should pay under the GST rate. The government must receive the collected GST once the relevant input tax credit has been claimed on the purchases. This collected tax is called the forward charge. In certain instances, the buyer or consumer uses a reverse charge model to pay the GST directly to the government.

6) Why are GST Council Meetings held?

Ans: The Central Government of India, along with representation from many state governments, established the GST Council. To update GST tax slabs on products and services, these councils convene on a regular basis.

7) What is the GST rate for a single residential house?

Ans: If your single-family home is part of an affordable housing initiative, you will have to pay a GST of 1%. If the project is not affordable residential housing, GST at the rate of 5% is due.

8) Is there a GST requirement for businesses supplying GST exempted goods?

Ans: No, businesses don’t have to pay any GST for exempt goods.

9) How to calculate GST on products?

Ans: There is a process to calculate GST on products. For example, if the price of the product is Rs. 1000, comprehend the GST on it. Suppose, in accordance with the amended regulations, that the goods are subject to an 18% GST. As a result, 180 rupees, or 18% of the 1000, will be taxed as GST. To compute the entire cost, which comes to Rs. 1,180 which is later added to the original selling price.

10) Do I need to use tax invoices while supplying GST-exempt goods?

Ans: A supply bill is needed instead of a tax invoice for goods falling under GST exemption.

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Pratis Amin

Pratish is a seasoned financial writer with a profound understanding of the financial world. With years of experience in content development, especially in finance and IT, and being a commerce graduate, he offers valuable insights to help readers navigate the complex landscape of money management, GST and financial planning. With simple reading content, but with great information, Pratish keeps himself updated with the finance industry. In spare time, he loves binge watching series and socializing.

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