GST Rates in 2023
GST, or Goods and Services Tax, is one of the most vital components levied on various services and goods for every Indian consumer and business. Whenever the concerned GST council declares any revisions in the GST rates, it impacts several trade bodies, industries, end consumers, etc., differently, which also hits the country’s economy. Owing to this change, everyone tends to analyse their position. With the help of a GST rate finder, you can quickly identify the latest and most accurate GST rates applicable for any service or product.
In this post, you can uncover the meaning of GST rates in India in 2023 to get a detailed insight into the latest changes made to it.
What is GST in India?
The Goods and Services Tax is abbreviated as GST. It refers to an indirect tax in India that has replaced several other types of indirect taxes, including services tax, VAT, and excise duty. The provision of different services and goods are subject to Goods and Service Tax (GST). For every value addition is also subject to the multi-stage, comprehensive, destination-based Goods and Services Tax Law in India. For the whole nation, there is just one domestic indirect tax legislation or GST.
Meaning of GST Rates
GST rates refer to the percentage of tax rates levied under the SGST, CGST, and IGST Acts on the sale of goods or services. Invoices featuring GST amounts applied on the supply’s value must be issued by a company that is registered under the GST statute.
For intrastate transactions, the rate of GST in India under SGST and CGST are roughly the same. On the other hand, the GST rate for interstate transactions (IGST) is almost equal to the combined rate of SGST and CGST.
What are the Components of GST?
Under this system, three taxes are applicable: IGST, SGST, and CGST.
- CGST: This is the tax that the Central Government collects when a transaction occurs within a state, such as a sale within Maharashtra.
- SGST: The tax that the state government collects on sales that take place within the same state, such as those that take place in Maharashtra.
- IGST: The Central Government collects this tax on sales that take place across states, like from Maharashtra to Tamil Nadu.
Types of GST Rates and GST Rate Structure in India
The standard slabs of GST applicable to regular taxpayers encompass rates of 0%, 5%, 12%, 18%, and 28%. Also, there are lesser-utilised GST rates like 0.25% and 3%.
For composition-taxable individuals, GST is levied at reduced or the nominal rates, which may stand at 1.5%, 5%, or 6% based on the turnover. Additionally, there are provisions for Tax Deducted at Source (TDS) and Tax Collected at Source under GST, with rates of 1% and 2%, respectively.
These rates represent the cumulative rate of GST in India for interstate transactions (IGST) or the combined sum of Central Goods and Services Tax and State Goods and Services Tax for intrastate transactions. The GST rate is multiplied by the supply’s assessable value to calculate GST amounts reflected on the tax invoice.
Furthermore, the GST law imposes cess in addition to the aforementioned GST rates on the sale of specific items such as tobacco, cigarettes, aerated beverages, motor vehicles, and petrol. Cess rates can widely vary, ranging from 1 to 204%.
The GST rate structure for various commonly consumed products is detailed in the table below.
| Tax Rates | Products |
| 0% | Milk, Eggs, Education Services, Curd, Health Services, Lassi, Children’s Drawing & Colouring Books, Unpacked Foodgrains, Unbranded Atta, Unpacked Paneer, Unbranded Maida, Gur, Unbranded Natural Honey, Fresh Vegetables, Palmyra Jaggery, Salt |
| 5% | Sugar, Tea, Edible Oils, Domestic LPG, Roasted Coffee Beans, PDS Kerosene, Cashew Nuts, Footwear (< Rs.500), Milk Food for Babies, Apparels (< Rs.1000), Fabric, Coir Mats, Matting & Floor Covering, Spices, Agarbatti, Sweets, Life-saving drugs, Coffee (except instant) |
| 12% | Butter, Ghee, Processed food, Almonds, Fruit Juice, Fruits, Nuts, Pickles, Chutney, Jam, Jelly, Packed Coconut Water |
| 18% | Hair Oil, Toothpaste, Industrial Intermediaries, Soap, Ice-cream, Pasta, Toiletries, Corn Flakes, Soups, Computers, Printers |
| 28% | Small cars (+1% or 3% cess), Luxury & sin items like BMWs, cigarettes and aerated drinks (+15% cess), High-end motorcycles (+15% cess) |
The GST Rates in 2023
The following changes were made in the GST rates in 2023-
| Category | Old GST Rates | New GST Rates |
| Railways Goods and Parts under Chapter 86 | 12% | 18% |
| Pens | 12% | 18% |
| Metal Concentrates and Ores | 5% | 18% |
| Certain Renewable Energy Devices | 5% | 12% |
| Recorded media reproduction and print | 12% | 18% |
| Broadcasting, sound recordings, and licensing | 12% | 18% |
| Printed material | 12% | 18% |
| Packing containers and boxes | 12% | 18% |
| Scrap and polyurethanes | 5% | 18% |
Decrease in the GST Rates
| Category | Old GST Rates | New GST Rate |
| If vehicles are equipped with retrofitting kits for disabled people, | Applicability | 5% |
| Keytruda for cancer | 12% | 5% |
| IGST is levied on goods sold at the Indo-Bangladesh border | Applicability | NIL |
GST on Loans and Advances
Prior to the introduction of GST, Service Tax was applicable to the allocation of loans at a rate of 15%. However, under the GST regime, this rate has been increased to 18%. Many individuals hold the view that the higher rates of GST in India, compared to the previous Service Tax rates, will lead to a 3% increase in the effective loan amount. Alternatively, some argue that the elevated GST rates will result in higher Equated Monthly Installments (EMIs). It is essential to clarify that GST is not imposed on the repayment of the loan or the payment of interest on the loan, dispelling any misconceptions.
GST is charged on specific components like processing charges and other applicable fees rather than the principal repayment and interest payment amounts. These additional charges encompass items such as Loan Processing and Loan Prepayment Charges, among others.
Since a significant portion of the loan repayment primarily constitutes the principal repayment and interest payment, the overall impact of GST on loans is expected to be minimal. To gain a deeper understanding of how GST affects loans, please refer to the provided details outlining the GST implications for various types of loans.
Below is a list of crucial loans and their respective GST rates for your reference.
- Home Loans– 18%
- Personal Loan– 18%
- Car Loan– 18%
GST on Cars
Following the introduction of rates of GST in India for automobiles, the tax rates for all privately used vehicles have been standardised at 28%, irrespective of whether the vehicle is powered by petrol or diesel. Additionally, there is a composition cess imposed on cars, which results in the effective tax rates for vehicles under GST ranging from 29% to 50%.
Nevertheless, vehicles utilising cleaner technologies like fuel cells (such as hydrogen fuel cells) and electric vehicles benefit from reduced, subsidised tax rates. For further insights into the GST regulations pertaining to automobiles, please explore additional information on GST for cars.
GST on Gold in India
With the inclusion of gold-based products, particularly jewellery, into the GST framework, a 3% GST rate is applied. However, when jewellery manufacturing is outsourced to a job worker, a 5% GST is imposed on the jewellery-making charges.
In this scenario, the jeweller is eligible to seek an input tax credit (ITC), which ultimately determines that the purchaser is only liable to pay a 3% GST charge on the final bill. For a more comprehensive understanding of GST regulations concerning gold and its implications on the gold industry, further information on GST for gold is available.
GST On Real Estate
Within the real estate sector, GST in India rate is exclusively imposed on the purchase of properties that are in the under-development stage. Following the integration of real estate into the GST framework, the tax rates applicable to both commercial and residential transactions were set at 12% until March 31, 2019.
However, starting from April 1, the GST rates for residential real estate changed. Non-affordable housing properties are now subject to a 5% tax rate, while affordable housing properties are taxed at a rate of 1%. It’s worth noting that ready-to-move-in properties are exempt from GST.
Furthermore, a range of building materials utilised in the construction of houses or flats, which fall under the purview of goods and services tax slabs, carry tax rates varying from 5% (e.g., sand, marble rubble) to 28% (e.g., cement). To gain a deeper insight into the impact of GST on the real estate sector in India, you can explore additional information on the subject.
Advantages Of GST
GST has eliminated chiefly the cascading impact on the sale of goods and services. The removal of the cascading effect has altered the cost of items. The GST regime lowers the cost of products by doing away with the tax on tax.
Additionally, technology plays a significant role in GST. The GST portal expedites the process by requiring all necessary online registration, return filing, refund applications, and notice response actions.
Conclusion
The goods and services tax slabs play an essential role in influencing the services and goods taxability in India. The GST Council revises the rates periodically to make sure that they are able to align with the country’s ever-evolving needs.
The latest change primarily focuses on providing relief to all the small taxpayers in order to boost economic growth. Lastly, individuals and businesses need to keep themselves updated on the current changes made in the GST in India rate. It helps to stay compliant with the law while avoiding penalties.
FAQs
Q1. What are the GST tax slabs in 2023?
The GST tax slabs in 2023 are 0%, 5%, 12%, 18% and 28%. The 0% slab is for essential items, 5% for items of mass consumption, 12% & 18% for standard goods and services, and 28% for luxury and demerit goods.
Q2. What items fall under 0% GST?
0% GST is levied on essential items like food grains, milk, fruits & vegetables, meat, eggs, fresh flowers etc.
Q3. What is the GST rate for apparel below Rs.1000?
Apparel below Rs.1000 now attracts 12% GST instead of 5% earlier. This change is effective from 1st Jan 2023.
Q4. Has GST rate increased for any item in 2023 budget?
Yes, GST rate on leather goods, finished gems, frozen mussels, chilled meat, tetra packs, etc. has been raised from 12% to 18% from 1st Jan 2023.
Q5. What is the GST rate on restaurant services?
GST rate on restaurant service is 5% without input tax credit. It is 12% with input tax credit.
Q6. Is petrol and diesel included under GST?
No, petrol, diesel, natural gas, aviation turbine fuel are still kept outside GST as of now.
Q7. What tax rate applies on hotel room rentals?
Hotel room rentals above ₹1000 per day are taxed at 18% GST. Those below ₹1000 are taxed at 12% GST.
Q8. Which services fall under the 18% GST slab?
Services like IT services, management consultancy, brokerage, sponsorship, legal services etc. fall under the 18% GST rate slab.