GST Rates in India: Complete Guide for Businesses
Comprehensive guide to GST slab rates in India — 5%, 12%, 18%, 28%. Learn which goods and services fall under each slab, exemptions, and how to calculate GST.
GST (Goods and Services Tax) replaced multiple indirect taxes in India on July 1, 2017. Understanding GST rates is essential for every business owner, freelancer, and consumer. This guide covers all four GST slabs, exemptions, and practical examples.
GST Rate Structure in India
India follows a four-tier GST rate structure: 5%, 12%, 18%, and 28%. Additionally, some essential items are exempt (0% GST), and certain luxury/sin goods attract a cess above 28%. The rate depends on whether the item is essential, standard, or luxury.
0% GST (Exempt Items)
Items with no GST:
- Fresh fruits, vegetables, and milk
- Rice, wheat, and other cereals (unbranded/unpackaged)
- Fresh meat, fish, and eggs
- Bread and salt
- Healthcare and educational services
- Books, newspapers, and periodicals
- Handloom products
- Agricultural services
5% GST Slab
Items under 5% GST:
- Packaged food items (branded cereals, spices)
- Sugar, tea, and coffee (except instant)
- Edible oils and fats
- Coal and domestic LPG
- Footwear below ₹1,000
- Apparel below ₹1,000
- Transport services (railways, air economy)
- Small restaurants (turnover < ₹1.5 crore, no ITC)
12% GST Slab
Items under 12% GST:
- Processed/frozen foods
- Butter, cheese, and ghee
- Fruit juices and namkeen
- Mobile phones and accessories
- Sewing machines
- Umbrella and spectacles
- Business class air travel
- Hotels (room tariff ₹1,000-₹7,500)
18% GST Slab
Items under 18% GST (most common):
- Most consumer electronics (laptops, cameras)
- Footwear above ₹1,000
- Apparel above ₹1,000
- Hair oil, soap, and toothpaste
- Capital goods and industrial machinery
- IT and software services
- Financial services (banking, insurance)
- Restaurants with AC/liquor license
- Telecom services
- Hotels (room tariff above ₹7,500)
28% GST Slab
Items under 28% GST (luxury/sin goods):
- Automobiles (cars, SUVs) + cess
- Aerated drinks and energy drinks
- Tobacco products and pan masala + cess
- Luxury items (yachts, private aircraft)
- Cement
- Air conditioners and dishwashers
- Gambling, betting, and lottery
- Movie tickets above ₹100
CGST, SGST, and IGST Explained
How GST is split:
- Intra-state sale: GST splits equally into CGST (Central) + SGST (State)
- Example: 18% GST = 9% CGST + 9% SGST
- Inter-state sale: Full GST charged as IGST (Integrated GST)
- Example: 18% GST = 18% IGST
- The total tax remains the same — only the split changes
GST Registration Threshold
When GST registration is mandatory:
- Annual turnover exceeds ₹40 lakh (goods) or ₹20 lakh (services)
- For special category states: ₹20 lakh (goods) or ₹10 lakh (services)
- Inter-state supply of any value
- E-commerce sellers (no threshold)
- Casual taxable persons
- Input service distributors
Input Tax Credit (ITC)
ITC allows businesses to claim credit for GST paid on purchases against GST collected on sales. This prevents cascading taxes (tax on tax). For example, if you pay 18% GST on raw materials and charge 18% on finished goods, you only remit the difference to the government.
Businesses under the Composition Scheme (turnover < ₹1.5 crore) pay a flat 1-6% tax but cannot claim ITC or charge GST on invoices. This is simpler but may not suit businesses with high input costs.
How to Calculate GST
GST calculation formulas:
- GST Amount = Base Price × GST Rate / 100
- Price including GST = Base Price × (1 + GST Rate / 100)
- Base Price from GST-inclusive price = Total Price / (1 + GST Rate / 100)
- Example: Item costs ₹1,000 + 18% GST = ₹1,000 + ₹180 = ₹1,180
Calculate GST instantly for any amount and rate
Use GST CalculatorFrequently Asked Questions
18% is the most common GST rate, covering the majority of goods and services including electronics, professional services, restaurants, and most manufactured goods.
Residential rent is exempt from GST. Commercial rent attracts 18% GST. However, if a registered person rents a residential property, 18% GST applies under reverse charge mechanism (from July 2022).
GST rates are revised by the GST Council which meets periodically (usually quarterly). Rate changes are announced after council meetings and typically take effect from the next month or quarter.
No, individual consumers cannot claim GST refund. Only registered businesses can claim Input Tax Credit. Consumers bear the final GST cost. However, tourists can claim refund on goods purchased and taken out of India.