Note: The information on this page may not be updated. For latest updates, click here.
Most people get confused when it comes to taxes since many of them do not stay updated with the latest taxation laws. In the past, India followed a cascading taxation system in which the tax was levied at different levels including taxes such as central excise duty, surcharges, service tax, Value Added Tax (VAT), additional customs duty, etc.
The Goods and Service Tax (GST) was introduced in India on 1st July 2017. Under GST, the goods and services are taxed differently based on the category they belong. This unified taxation system has brought the whole country under one taxation system. Before GST, the same product or service was priced differently based on the state and central taxes levied on it. Not only has GST reduced the burden to calculate the indirect taxes levied by the state governments and central governments but has also helped people understand the tax system better.
The types of taxes replaced by GST include:
- Service Tax
- Cess
- Surcharges
- Central Excise Duty
- Excise Duties on medicinal and toilet preparations
- Additional Excise Duties
- Additional Customs Duties (CVD)
- Special Additional Duty of Customs (SAD)
GST is a consumption-based tax and is imposed on different items at variable rates of 0%, 2.5%, 5%, 12%, 18%, and 28%. The taxes are paid to the state where the goods or services consumed. The categories are defined based on a specific criteria so that the essential goods and services are taxed at a lower rate than luxury goods and services.
The Indian GST is a dual GST model in which taxation is administered both by the Central Government and State Government. If a transaction is made in a single state, both Central GST (CGST) by the Central Government and State GST (SGST) by the State Government are levied whereas for inter-state transactions, Integrated GST (IGST) is levied by the Central Government.
GST collectively charges for the following types of taxes:
- Central Sales Tax
- State Value Added Tax (VAT)
- Entry Tax
- Purchase Tax
- Entertainment Tax
- Luxury Tax
- State cesses
- State Surcharges
- Taxes on betting, gambling, and lotteries
Benefits of GST
The Goods and Service Tax (GST) has changed the way business is conducted in India. Here are a few of the major benefits of GST:
- The price of goods used to be different in different states in India because each state had its own tax rules. The customer also ended up paying up a lot more price because of the number of taxes levied on the goods. GST has eliminated all that since it is a federal tax and no state governments can make their own rules.
- Tax system used to be really complicated since it did not follow a simple structure. People found it tough to follow the cascading taxation rules. GST is simple to understand and businesses can implement it easily.
- Businesses had to pay a lot of tax if they wanted to source raw materials from a different state. Now, they can do so easily and at a relatively affordable price. The consumer will also be able to get the products at better prices.
- GST has made tax evasion impossible. Every business needs to register for GST to carry out different types of transactions. GST has a minimal exemption list. Only petroleum, liquor, and stamp duty have been kept out of the GST system.
Also Read: GST Returns: How to File GST Return & Due Dates
GST Calculator
Since there is no need to know all the taxes levied on good or services, people can easily calculate GST. All they need to know is the GST category to which the good or service belongs to and find the amount inclusive of GST.
Total GST = [Original Cost of the product * GST % levied on it based on the category]/100
Net Price = Original Cost + Total GST
The GST rate for different types of products have been listed here:
| GST Slab | Goods and Services |
| 0% | Goods: Jute, fresh meat, eggs, milk, butter milk, curd, natural honey, fresh fruits, vegetables, flour, gram flour, bread, prasad, salt, stamps, judicial papers, printed books, newspapers, bangles, handloom, horn meal, cereal grains hulled, Palmyra jaggery, salt, drawing books, colouring books, Khadi purchased from Khadi and Village Industries stores, clay idols, brooms, Cotton seed oil cake, dried vegetables, and bangles of lac/shellac. Services: Hotels and lodges with tariff below Rs 1,000. |
| 0.25% | Goods: Rough precious and semi-precious stones including diamonds, admission to protected monuments |
| 5% | Goods: Fish fillet, apparel below Rs 1000, packaged food items, footwear below Rs 500, cream, skimmed milk powder, branded cottage cheese, frozen vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, kerosene oil, coal, medicines, stent, lifeboats, Cashew nut, Cashew nut in shell, Raisin, Ice, Bio gas, Insulin, Incense sticks, Incense cones, Kites, Postage or revenue stamps, stamp-post marks, Branded food items, walnuts, dried tamarind, roasted gram, Corduroy fabric, Oil cakes, Duty Credit Scrips, rosaries, pouches, wallets, mangoes sliced dried, Khakra and plain chapati / roti, branded Namkeens, Ayurvedic products, Unani, Siddha, Homeopathy medicines; Paper waste or scrap; Real Zari; Plastic waste, parings or scrap; Rubber waste, parings or scrap; Hard Rubber waste or scrap; Paper waste or scrap; Cullet or other waste or scrap of Glass; E-Waste; Biomass briquettes; Desiccated coconut, idli and dosa batter; finished leather; chamois and composition leather; Coir cordage and ropes, jute twine, coir products; fishing net and fishing hooks; worn clothing; Fly ash brick; aircraft tyres, puffed rice chikki, potato flour, chutney powder. Services: Hotels with room tariff less than Rs 7,500, Food parcels, Textile job work, Transport services, Supply of e-waste |
| 12% | Goods: Apparel above Rs 1000, frozen meat products, butter, cheese, clarified butter (ghee), packaged dry fruits, animal fat, sausage, fruit juices, umbrella, sewing machine, cell phones, ketchup, sauces, diagnostic kits, exercise books, note books, spoons, forks, ladles, skimmers, cake servers, fish knives, tongs, spectacles, playing cards, board games, wood, stone, metals, marble idols, kitchenware, statues, statuettes, pedestals, ceramic articles, porcelain items, ornamental articles, bells, gongs, non-electric of base metal, animal carving material, synthetic filament yarn, such as nylon, polyester, acrylic, artificial filament yarn, Condensed milk, refined sugar, sugar cubes, pasta, curry paste, mayonnaise, salad dressings, mixed condiments and seasoning, diabetic food, printing ink, hand bags, furniture wholly made of bamboo or cane Services: State-run lotteries, Non-AC hotels, business class air tickets, fertilisers, Work contracts |
| 18% | Goods: Footwear costing more than Rs 500, trademarks, goodwill, software, biscuits, cookies, cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, mineral water, tissues, envelopes, tampons, note books, steel products, printed circuits, camera, speakers, headgear and parts thereof, aluminium foil, beauty products, grooming products, wooden products, electrical spare parts, travel gear, hair products, home appliances, marble and granite, apparel, exercise equipment, machine spare parts, weighing machine, printers, electrical transformer, CCTV cameras, optical fibre, Tractor parts, raincoats, Medical grade disposable gloves, computer monitors(up to 20 inch), custard powder, Rice rubber rolls for paddy de-husking machine, kitchen gas lighters, aircraft engines, etc. Services: Hotels having room tariff of Rs 7500 and above, telecom services, IT services, branded garments and financial services, outdoor catering |
| 28% | Goods: Luxury and skin products, cigarettes, molasses, pan masala, aerated water, paint, sunscreen, wallpaper, ceramic tiles, water heater, dishwasher, weighing machine, washing machine, ATM, vending machines, vacuum cleaner, automobiles, motorcycles, aircraft for personal use Services: Private-run lotteries authorised by the states, race club betting, movie tickets |
Note: The items under different tax percentage slabs are subject to change are per Government directive and change in GST slabs.