India’s migration to the GST regime, which subsumed nearly 17 indirect taxes, is perhaps one of the most noteworthy tax-related developments of the past few decades. One of the primary reasons behind this transition was to eliminate the cascading or “tax on tax” effect prevalent earlier.
GST seeks to reduce the overall cost of goods and services by levying a single tax, thus, ensuring uniformity in prices across India. It also makes the taxation system more transparent. This regime covers nearly 1300 varieties of goods and 500 kinds of services, primarily classified across 4 GST rates.
GST percentage in India have been divided into four GST rates – 5%, 12%, 18%, and 28%. The GST council revises inclusions under these rates from time to time in order to ensure efficient pricing of different categories of products.
The rate thus levied depends on whether a good or service is a necessity or luxury. In general, items of need invite a lower tax rate, i.e. 5% or 12%, and luxury products are in the slabs of 18% and 28%.
Apart from these, GST on gold is 3% and 0.25% of semi-precious and rough stones. Also, a minor portion of all goods and services under the GST regime does not invite any tax, including different salt types and, most recently, sanitary napkins.
In terms of goods, this tax slab primarily comprises household necessities. The following list shows a few of the items that invite a 5% GST.
The services that come under the 5% tax slab are shown in the table below.
|Motor cab renting without incurring the fuel cost||Print media advertisement space|
|Transport services in AC vehicles and radio taxis||Employment in newspaper printing|
|Aircraft leasing||Goods shipped in vessels from outside the national borders|
|Scheduled transport by air or travelling via chartered or non-scheduled flights for pilgrimage purposes|
|Tour operator services|
The 12% GST tax rate applies primarily to processed food when speaking of goods. The following table notes a few of the items in this tax slab.
|Frozen food||Other items|
|Frozen meat||Handmade matches|
|Fruit juices||Sewing machines|
|Dairy products, like butter, ghee, and cheese||Diagnostic kits and reagents|
|Sauces, ketchup, and mustard sauce, excluding salad dressing items, mayonnaise, curry paste, mixed dressings, and mixed condiments||Corrective spectacles, glasses for the same and flint buttons|
|Fish knives, ladles, forks, spoons, tongs, cake servers, etc.|
|Fixed Speed Diesel Engines|
|Notebooks and exercise books|
|Two-way radios or walkie-talkies that personnel in defence, paramilitary forces, and police use|
A 12% GST rate is also applicable to the following services.
The lion’s share of all goods and services are included within the 18% GST rate list. The goods that attract 18% GST are –
Some services that invite 18% GST are –
|Food or drinks at joints with AC/heating and/or liquor license||Accommodation renting above Rs.2500 and below Rs.5000 per day||Party arrangement and shamiana, food supplies||Hotel accommodation with related expense at or more than Rs.7501|
|Works contract supply||Outdoor catering||Performance arts, like a circus, theatre, folk, Indian classical, etc.||Movie tickets priced above Rs.100|
As per the GST rates chart, nearly 200 items invite a tax of 28%. Of these, most are luxury items and sin goods, like cigars. A few of such goods have been mentioned below.
Alongside GST, cess is also applicable to some of the items mentioned in the list above, like cigarettes, luxury cars, aerated beverages, etc.
Services that attract a 28% tax rate are noted in the following table.
Apart from these types of GST rates, few products that do not attract any GST or are exempt from taxation include –
Apart from all the services and goods mentioned above, the GST rate for loans and advances and stock market trading is 18%. GST rates on real estates in the affordable (within Rs.45 lakh) and non-affordable segments are 1% and 5% respectively.
The GST on gold is 3% of its value. However, if the gold is transformed into jewellery, an additional 5% GST is levied on the manufacturing costs. As a result, a total of 8% GST is levied on gold jewellery.
In India, the Atal Bihari Vajpayee government proposed the implementation of GST in 2000. Based on their experience creating State VAT, state finance ministers organised an Empowered Committee (EC) to develop a GST framework.
At the moment, the GST charged on mobile phones is 12%.
In India, the four major GST slabs include about 500 services and over 1300 items. Rates of 5%, 12%, 18%, and 28% are among them. The GST Council revises the products under each slab rate on a regular basis to reflect industry requests and market developments.
At the moment, the GST imposed on two-wheelers is 28%, the highest GST slab. However, petitions have been filed to cut the GST on two-wheelers to 18%.