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Understanding GST Rates Slabs And What Comes Under Them

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The Goods and Services Tax (GST) was among the most contentious and spoken about reforms in India’s tax system. Until the GST regime came into effect in India, the taxation system was a mixture of several varying types of taxes, some of which were imposed at the stage of the city, and that further helped to create a multitude of troubles and caused corruption.

A cascading tax impact was generated by the previous taxation system, which triggered a tax-on-tax situation which was not ideal to evaluate. This became a point of uncertainty and it cost a small fortune to retain the sophistication of such a program.

The Goods and Services Tax (GST) is a unified tax on the distribution of products and services from the vendor to the end customer. It seeks to eradicate the uncertainty and bring about a level playing field in product pricing across the nation.

GST Rates Slabs: What Are They?

GST was designed in such a manner as to put vital services and food products in the lesser tax brackets, whilst also luxury products and services were positioned in the greater tax brackets. The GST council has equipped more than 1300 goods and 500 services into four GST rate slabs 5 %, 12%, 18%, and 28%. This is apart from the tax on gold which is kept at 3 percent and rough precious and semi-precious stones which are placed under GST at a unique rate of 0.25 percent.

A total of 81 percent of all products and services drop below or within the tax slab of 18 percent. This implies 7 percent of items are removed from the register, 14 percent of items incur a 5 percent levy, 17 percent of items receive a 12 percent tax, and 43 percent of items incur an 18 percent tax slab, while just 19 percent of items fell below the 28 percent largest slab under the current structure.

Tax-Exempt

This category includes the 7 percent goods and services. Vegetables and fruit, milk, buttermilk, curd, organic honey, flour, croissants, all different types of salt, hulled cereal grains, jaggery, fish, fresh meat, eggs, chicken, bhindi, sketching and painting books, sindoor, postcards, court papers, printed/published books, newspapers, jute, and handicrafts, hotels which have rooms for or below rs 1000/-.

5% GST Rate Slab

This group comprises 14 percent products and services. Some of these include clothing below INR 1000 and shoes below INR 500, processed foodstuffs, skimmed milk powder, cream, canned vegetables, packaged paneer, tea, coffee, pizza bread, seasonings, sabudana, cashew nut, rusk, cashew nut in shell, grape, salmon fillet, ice, gasoline, coal, medication, agarbatti (burning incense), postage or income stamps, economy tickets of rail and flights.

12% GST Rate Slab

Edibles such as frozen meat and dairy products, butter, cheese, clarified butter, packaged dry fruits, animal fat, fruit juices, sausages, namkeen, ketchup & sauces, ayurvedic/herbal medicines, all diagnostic kits and reagents, spoons, mobile phones, forks, toothpaste, umbrella, sewing machine, shows, indoor games such as chessboard, playing cards, ludo, carom board, clothing above INR 1000, restaurants without AC, business class air ticket, work contracts and so on come under the 12% GST rate slab. 17% of products and services are in this category.

18% GST Rate Slab

This group accounts for 43 percent of products and services. Pasta, biscuits, muesli, pastries, preserved veggies, jams, soups, frozen yogurt, mayo, combined condiments and spices, mineral water, shoes costing more than INR 500, camera systems, speaker system, monitors, printers, battery-powered transformers, optical fibers, tissue papers, hygiene products, notepads, steel products, headgear and parts of same, Aluminum foil, bamboo furniture, AC restaurants serving liquor, five-star and extravagant hotel/restaurants, telecommunications services, IT services, designer clothes, and banking services and so on attract 18 percent GST.

28% GST Rate Slab

This group accounts for 19 percent of products and services. The remaining of the foodstuffs such as bubble gum, cigarette, molasses, cocoa-free chocolate, waffles and wafers covered with chocolate, soda water, personal hygiene products such as perfumes, pan masala, shaving creams, shampoo, hair coloring, sunblock, paint, boiler, stove, weighing machine, refrigerator, vacuum cleaner, cars, Under the 28 percent GST slab, cars, 5-star hotel rooms, race club bets, and movie tickets over INR 100, etc. is merged.

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