structure of GST & Structure of GST

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GST Rate Structure

1. Exempted GST Rate (No Tax)

  • Coverage: 7% of goods and services.
  • Details: These items are not subject to GST, meaning they do not have any tax added to their sale price. This exemption typically includes essential goods and services that are basic necessities for daily living and those that have minimal impact on the overall tax revenue.
  • Examples:
    • Essential Foods: Fresh fruits and vegetables, milk, buttermilk, curd, natural honey, flour, besan (gram flour), bread, salt, jaggery.
    • Other Essentials: Fresh meat, fish, chicken, eggs, some cosmetics (like sindoor, kajal), educational materials (like drawing and coloring books), newspapers, and jute and handloom products.
    • Low-Cost Services: Hotels and lodges with a tariff below INR 1000 per night.

2. 5% GST Rate Slab

  • Coverage: 14% of goods and services.
  • Details: This lower rate applies to certain goods and services that are essential but not considered luxury items. The aim is to keep essential commodities affordable while still generating some revenue.
  • Examples:
    • Apparel and Footwear: Clothing items priced below INR 1000 and footwear below INR 500.
    • Packaged Food Items: Cream, skimmed milk powder, branded paneer, frozen vegetables.
    • Other Goods: Coffee, tea, spices, pizza bread, rusk, cashew nuts, raisins, ice.
    • Services: Rail and economy class air tickets, small restaurants.
    • Others: Kerosene, coal, agarbatti (incense sticks), postage stamps, fertilizers.

3. 12% GST Rate Slab

  • Coverage: 17% of goods and services.
  • Details: This rate applies to goods and services that are neither luxuries nor essentials but are still significant in daily life. The 12% slab aims to balance between taxing higher-end items and keeping some affordability.
  • Examples:
    • Edibles: Frozen meat products, butter, cheese, ghee, dry fruits.
    • Packaged Goods: Sausages, fruit juices, namkeen, ketchup, sauces.
    • Other Goods: Cellphones, spoons, forks, umbrellas, sewing machines, spectacles.
    • Games: Indoor games like playing cards, chess, carom.
    • Apparel and Services: Apparels above INR 1000, non-AC restaurants, business class air tickets, state-run lotteries.

4. 18% GST Rate Slab

  • Coverage: 43% of goods and services.
  • Details: This is one of the most common tax rates and includes goods and services that are considered non-essential but are still widely used. The 18% slab is designed to cover a broad range of everyday products and services.
  • Examples:
    • Edibles: Pasta, biscuits, cornflakes, cakes, preserved vegetables, jams, ice cream, mayonnaise.
    • Goods: Sanitary napkins, notebooks, steel products, bamboo furniture.
    • Services: AC restaurants that serve liquor, five-star and luxury hotel restaurants, telecom services, IT services.
    • Others: Branded garments, financial services.

5. 28% GST Rate Slab

  • Coverage: 19% of goods and services.
  • Details: This highest slab is reserved for luxury items and products that are considered non-essential. The goal is to tax high-end goods and services at a higher rate to generate substantial revenue.
  • Examples:
    • Luxury Items: Chewing gum, bidi, molasses, chocolate not containing cocoa, waffles, wafers coated with chocolate.
    • Personal Care Products: Deodorants, shaving creams, hair shampoos, dyes, sunscreen.
    • Appliances: Water heaters, dishwashers, washing machines, vacuum cleaners.
    • Vehicles: Automobiles, motorcycles.
    • High-Cost Services: 5-star hotel stays, race club betting, private lotteries, expensive movie tickets (above INR 100).

Additional Notes:

  • Gold: Taxed at a lower rate of 3% to keep it affordable for consumers.
  • Rough Precious and Semi-Precious Stones: Taxed at a special rate of 0.25%.
  • Impact: The introduction of GST has led to price adjustments across various sectors. For instance, items previously taxed under higher rates or multiple taxes might see price changes. Real estate has seen an increase, now attracting a GST of 12% compared to the earlier rate of 6%.

This structure is designed to ensure that essential goods and services remain affordable while imposing higher taxes on luxury and non-essential items to balance revenue generation and consumer affordability.