Since July 2017, the Goods and Services Tax (GST) has transformed the way goods and services are taxed in India. Several indirect taxes have been merged into one singular tax through GST. On the one hand, it streamlines the whole tax process and increases compliance. It also reduces tax evasion. In 2024 and beyond, awareness about the GST rates applicable for different goods and services is vital. This is very essential for businesses, consumers, and tax professionals. Awareness of GST will help every individual navigate the tax system quite comfortably.
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What are GST Rates?
GST rates are tax percentages applied on goods and services in India. They fall under CGST, SGST, and IGST. Every GST-registered business must issue invoices displaying the amounts charged with GST based on the sales value. For domestic sales, as a matter of general policy, CGST and SGST rates are the same. For interstate sales, the IGST rate is the simple sum of the CGST and the SGST rates. That generally means it's higher.
GST Council has been entrusted to decide and review these tax rates. The council gathers at intervals and changes the rates where relevant. Things of luxury attract higher GST rates, and day-to-day items have lower rates. In this manner, the cost of all such day-to-day items remains within reasonable limits for the consumers.
Types of GST Rates and GST Rate Structure in India
The key GST slabs under direct regular taxpayers include 0% (nil-rated), 5%, 12%, 18%, and 28%. Besides those, there are a few relatively lesser-known rates as well, 3% and 0.25%.
Businesses that fall under the Composition scheme pay relatively lower rates at 1.5 %, 5% or 6% of their turnover. Besides all this, there is TDS at 2% and TCS at 1% under GST.
The whole GST amount for sales across states is called IGST. It contains both CGST and SGST while computing the charge for local sales. Here, simply multiply the rate with the assessable value as shown on the tax invoice.
The GST law also collects a cess on some products. Those products include cigarettes and tobacco, aerated drinks, petrol, and automobiles. The cess rates significantly differ from one another and could go as low as 1% while others are at an incredibly high rate of up to 204%. Knowing these rates is crucial for businesses and consumers. It helps everyone understand and manage their taxes effectively.
| Tax Rate | Products |
| 0% | Milk, Kajal, Eggs, Educational Services, Curd, Lassi, Health Services, Children’s Drawing & Colouring Books, Unpacked Foodgrains, Unbranded Atta/Maida, Unpacked Paneer, Gur, Besan, Unbranded Natural Honey, Fresh Vegetables, Salt, Prasad, Palmyra Jaggery, Phool Bhari Jhadoo, etc |
| 5% | Sugar, Packed Paneer, Tea, Coal, Edible Oils, Raisin, Domestic LPG, Roasted Coffee Beans, PDS Kerosene, Skimmed Milk Powder, Cashew Nuts, Footwear (< ₹500), Milk Food for Babies, Apparels (< ₹1000), Fabric, Coir Mats, Matting & Floor Covering, Spices, Agarbatti, Mishti/Mithai (Indian Sweets), Life-saving drugs, Coffee (except instant) |
| 12% | Butter, Computers, Ghee, Processed Food, Almonds, Mobiles, Fruit Juice, Preparations of Vegetables, Fruits, Nuts or other parts of Plants (including Pickle, Murabba, Chutney, Jam, Jelly), Packed Coconut Water, Umbrella, etc |
| 18% | Hair Oil, Capital Goods, Toothpaste, Industrial Intermediaries, Soap, Ice Cream, Pasta, Toiletries, Corn Flakes, Computers, Soups, Printers, etc |
| 28% | Small Cars (+1% or 3% cess), High-end Motorcycles (+15% cess), Consumer Durables (e.g., AC, Fridge), Luxury and Sin Items (e.g., BMWs, Cigarettes, Aerated Drinks) (+15% cess) |
HSN and SAC System
The HSN (Harmonized System of Nomenclature) and SAC (Services Accounting Code) are two of the core structuring elements of India's GST. The classification of HSN helps classify goods for GST, whereas SAC classifies services for GST, thus making the tax process uniform and simple.
HSN System
The World Customs Organization has, through its WCO system, implemented the HSN Code six-digit code for all kinds of products concerning nature and function. India applies this classification system in the classification of goods in its GST. Some may have additional digits for more elaborate classification.
The HSN system is compulsory for firms with an annual turnover above a certain limit. It streamlines international trade and facilitates businesses to comply with the tax rules easily. It also reduces disputes regarding how a product is classified for tax.
SAC System
The SAC Code is used for classification purposes under GST. Just like HSN codes for goods, SAC Codes ensure that all services are classified properly. SAC codes help service-based industries like telecom, banking, and consulting.
SAC System allows the filer of service-based companies to have easy tax filing and reporting. HSN as well as SAC, both codes are important in letting businesses adhere to GST, ensuring accurate tax reporting.
It, therefore lowers the complexity relating to the creation of classification of products and services for the businesses, reducing tax errors, and settlements with tax authorities.
What are the GST rates in India in 2024?
Changes in GST Rates
| Category | Old GST Rate | New GST Rate |
| Railways Goods and Parts under Chapter 86 | 12% | 18% |
| Pens | 12% | 18% |
| Metal Concentrates and Ores | 5% | 18% |
| Certain Renewable Energy Devices | 5% | 18% |
| Recorded Media Reproduction and Print | 12% | 18% |
| Broadcasting, Sound Recordings, and Licensing | 12% | 18% |
| Printed Material | 12% | 18% |
| Packing Containers and Boxes | 12% | 18% |
| Scrap and Polyurethanes | 5% | 18% |
New GST Rates Announced on 22 June 2024
| Items | Old Rate | New Rate |
| Uniform rate for all types of milk cans | -- | 12% |
| IGST rate for imports of aircraft tool kits | -- | 5% |
| Carton boxes and cases | 18% | 12% |
| All types of solar cookers | 5% | 12% |
| Uniform rate for all types of sprinklers | -- | 12% |
| Indian Railways – Platform tickets | -- | Exempt |
| Indian Railways – Facility of retiring rooms/waiting rooms | -- | Exempt |
| Indian Railways – Cloakroom services | -- | Exempt |
| Indian Railways – Battery Operated car services | -- | Exempt |
| Hostel accommodation service under certain conditions | -- | Exempt |
Decrease in GST Rates
| Category | Old GST Rate | New GST Rate |
| Vehicles equipped with retrofitting kits for disabled people | 5% | 5% (No change) |
| Keytruda for cancer | 12% | 5% |
| IGST on goods sold at the Indo-Bangladesh border | Applicability | NIL |
Conclusion
As of 2024, the GST rate structure is the essential backbone of India's economy. It segregates goods and services under different tax slabs. The taxation system, therefore, becomes easier as well as maintains the evergreen rates of essential products. The self-knowledge of businesses, as well as consumers about their respective GST rates, will help in financial planning as well as keep them updated on compliance requirements. The GST system will surely be in tandem with the changes of the Indian economy. Everyone is supposed to be aware of the GST rules. It imparts knowledge that may help navigate controversies in taxation for businessmen and consumers alike.
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This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not corpseed, and have not been evaluated by corpseed for accuracy, completeness, or changes in the law.
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