You are probably searching for a gist of the Goods and Services Tax (GST) and the basics of GST rates. You may have typed in GST wiki or GST Wikipedia in search of a quick explanation. You may have even called the GST helpline. Well, the following should help you understand. Here’s GST explained:
Before the GST was introduced, consumers had no choice but to carry the weight of double taxation at various levels on their purchases of goods and services because of indirect taxes like Sales, Service, Entertainment, VAT, and more.
However, the emergence of the Good and Service Tax has resulted in the nullification of the cascading effect of the taxes mentioned above. GST is a unified tax that you have to pay the central government on taxable goods and services. There has been more than one GST amendment since its implementation.
Should you pay GST Online?
You should know that you are liable to make a GST payment online if you are a business owner and have a yearly turnover that exceeds Rs. 40 Lakh. However, if your company is based out of a special category state like Himachal Pradesh, J&K, or one of the North-Eastern states, your yearly turnover threshold to pay GST is Rs. 10 Lakh for goods and Rs. 20 Lakh if you provide services.
How do GST rates work?
Five GST rates are applicable to taxable goods and services. According to the GST act, essential goods and services fall into the lowest GST tax rate bracket in India. The five GST rates are as follows – 5%, 12%, 18%, and 28%. The GST Council said that there are more than 1300 taxable goods and 500 taxable services that are a part of these GST slabs. Here is a GST rate list explained below:
5% GST rate
The products that are a part of the 5% bracket include bread, fish filet, pizza, woven carpets, ethanol, ayurvedic medicines, fertilizers, frozen vegetables, seasonings, oil, gas, vegetables, and so on.
The services that fall in the 5% GST rate category include standalone AC and non AC restaurants, eateries at public transportation like the ones in airports and railway stations, relatively small eateries, and eateries in hotels that charge you at least Rs. 7500 for a night for one room.
12% GST rate
In this GST tax rate section, the goods you will find are sewing machines, pickles, clarified butter, cellphones, fresh fruit drinks and juices,, reflective surfaces, canned foods, medications, diesel fuel, butter, sausage rolls, wooden frames, cheese, pressure cookers, frozen meats, and so forth.
This 12% GST rate bracket also covers services like business class flight tickets and movie tickets that are priced below Rs. 100.
18% GST rate
You will find commodities like croissants, breakfast cereal, tubes, cleaning products, lamp fittings, dried fruits, soups, sparkling water, torches, pumps, chocolate bars, deodorants, beauty cases, oil powder, bubble gum, noodles, hair gel, bubble gum, after-shave products, and processed sugar in this GST Tax rate bracket. You will also find many consumer electronics in this category like Television sets, refrigerators, washing machines, vacuums, hairdryers, heating systems, curling irons, and so forth. Finally, this bracket also covers musical instruments, stationery, and physical training equipment.
As far as the services go, that you can expect in this GST tax rate bracket to cover restaurants that are in hotels that charge you Rs. 7500 per room for a night, film tickets that cost Rs. 100, telecommunications, and financial services.
28% GST rate
The last GST rate slab is the 28% GST rate slab that covers relatively luxurious products such as pan masala, tobacco, airplanes, air cleaners, boats, fancy vehicles, liquor, aerated drinks, sun protection, and many other luxury commodities. As far as services go, this category covers five-star hotels and resorts that charge you a minimum of Rs. 7500 per room, lodges, and film tickets that cost over Rs. 200.
There you have it – a simple breakdown of the basics of GST rates. This should give you a decent idea of how GST tax rates work.