In recent updates to the GST rates in India, several adjustments have been made to benefit specific categories of goods.
Category
|
Old GST Rate
|
New GST Rate
|
Applicability
|
Vehicles equipped with retrofitting kits for disabled individuals
|
Not specified
|
5%
|
Applies to vehicles modified for use by disabled individuals.
|
Cancer treatment drug (Keytruda)
|
12%
|
5%
|
Reduced rate for essential cancer treatment drugs.
|
Goods sold at the Indo-Bangladesh When you look at tax structures, there is also cess applied on certain itemsborder
|
Not specified
|
NIL
|
IGST is not levied on these goods.
|
Kinds of GST rates and structures in India
In India, the Goods and Services Tax (GST) system categorises goods and services into several tax slabs to ensure uniformity and transparency in taxation, as per GST law. These slabs include 0% (nil-rated), 5%, 12%, 18%, and 28%, with some items attracting additional cess. Here’s an overview of the kinds of GST rates and structures.
GST rates in India are structured based on the type of goods and services. The tax slabs range from 0% for essential items like milk, eggs, and educational services to 5%, 12%, 18%, and 28% for various other categories. Certain goods such as luxury items, high-end motorcycles, and consumer durables attract a 28% tax rate along with additional cess. Integrated GST (IGST) is applicable on interstate supplies, while Central GST (CGST) and State GST (SGST) are applied on intrastate supplies, ensuring comprehensive coverage across the country.
Here is an overview of GST rates:
GST Rate
|
Applicable Goods and Services
|
Purpose
|
0%
|
Essential goods such as milk, eggs, curd, and educational services.
|
Ensures affordability and accessibility for essential items and services.
|
5%
|
Items like coal, edible oils, tea, domestic LPG, and life-saving drugs.
|
Promotes accessibility to basic necessities.
|
12%
|
Goods such as butter, ghee, computers, fruit juice, and packed coconut water.
|
Balances affordability and revenue generation.
|
18%
|
Products like hair oil, capital goods, toothpaste, industrial intermediaries, and toiletries.
|
Aims to maintain tax revenue while ensuring reasonable consumer prices.
|
28%
|
High-end items like luxury cars, motorcycles, consumer durables (e.g., ACs, fridges), and sin goods like cigarettes and aerated drinks.
|
Applies the highest GST rate with additional cess on some items to manage luxury and non-essential goods.
|
When you look at tax structures, there is also cess applied on certain items
Certain goods like cigarettes, tobacco, luxury cars, and aerated drinks attract a cess in addition to the GST rate, aiming to discourage consumption while generating additional revenue for specific purposes.
The GST framework in India, governed by GST law, aims to streamline taxation across goods and services while promoting transparency and ease of compliance. By categorising items into different tax slabs and applying cess where necessary, GST ensures equitable taxation based on the nature and consumption of goods and services in the country. This system also integrates provisions for TDS under GST and TCS under GST, which are mechanisms to ensure compliance and streamline tax collections under the GST regime.
HSN and SAC system
In India, all goods and services traded are classified under either the HSN code system or the SAC code system for GST purposes. The HSN (Harmonized System Nomenclature) code is used to classify goods, while the SAC (Services Accounting Code) system is used for services. These codes determine the GST rates applied, which range from NIL to 28%. The HSN code, developed by the World Customs Organization, is a globally accepted system for categorising goods in international trade. In contrast, the SAC code, developed by India's Service Tax Department, classifies services based on their nature and applies GST rates accordingly, ensuring uniformity in tax treatment across various service categories.
What is the impact of GST?
The implementation of GST has brought several benefits, including the following:
- Streamlined tax system: GST has streamlined the taxation system in India, reducing the complexity of the tax structure and making compliance easier for taxpayers.
- Improved efficiency: GST has reduced the cascading effect of taxes and has eliminated multiple taxes, resulting in improved efficiency.
- Reduced tax liability: GST has reduced tax liability, benefiting both businesses and consumers.
- Improved competitiveness: GST has made goods and services more competitive by reducing the overall tax burden.
- Boost to the economy: GST has been a major economic reform, with the potential to boost India's GDP by 2% to 2.5%.
Why Bajaj Finserv Business Loan?
While navigating the intricacies of GST rates is essential for business success, access to adequate financing is equally crucial for fuelling growth and expansion. With Bajaj Finserv Business Loan, businesses can access tailored financing solutions designed to meet their unique needs.
With loan amounts up to Rs. 80 lakh and flexible repayment options, our business loan can help you take your business to the next level. Here are some benefits of opting for our business loan:
- Quick disbursal of funds
- Low interest rates
- No collateral required
- Approval within 48 hours
- Flexible repayment tenure of up to 96 months
Whether you are looking to invest in infrastructure, expand your operations, or optimise working capital, Bajaj Finserv Business Loan offers the financial support you need to thrive in today's competitive market.