GST Rates Explained: Slabs and Categories
An overview of the different GST rate slabs, how items are categorized, and what you need to know about exemptions.
Common GST Slabs
GST rates are typically divided into different slabs based on the type of goods or services. Common slabs include 5%, 12%, 18%, and 28%. Essential items usually fall under lower slabs, while luxury goods are taxed at higher rates.
Exemptions and Zero-Rated Supplies
Some goods and services are exempt from GST, meaning no tax is levied on them. Examples may include basic food items, healthcare, and education. Zero-rated supplies, such as exports, are also not subject to GST, but businesses can still claim Input Tax Credit (ITC) on related purchases.
How Items are Categorized
Items are categorized using a standardized system, such as the Harmonized System of Nomenclature (HSN) code for goods and the Services Accounting Code (SAC) for services. These codes determine the applicable GST rate for each item.
Staying Updated
GST rates and categories can change based on government decisions. It is important for businesses to stay updated on the latest notifications and circulars to ensure accurate tax calculations and compliance.