The Goods and Services Tax (GST) is a comprehensive indirect tax levied on the supply of goods and services throughout India. It replaced multiple indirect taxes levied by the central and state governments, unifying the indirect tax structure and streamlining compliance for taxpayers. The structure of GST and the slab rates are as follows:
- Dual GST Structure: GST in India follows a dual structure, comprising Central GST (CGST) levied by the central government and State GST (SGST) levied by the state governments. In the case of intra-state transactions (i.e., transactions within the same state), both CGST and SGST are applicable, with revenue being shared between the central and state governments. For inter-state transactions (i.e., transactions between different states), Integrated GST (IGST) is levied by the central government, and the revenue is apportioned between the central and state governments.
- Slab Rates: GST is levied at multiple slab rates, categorizing goods and services into different tax brackets based on their nature and essentiality. As of my last update, the GST Council has categorized goods and services into five main tax slabs:
- 0% (Nil Rate): Certain essential goods and services, such as fresh produce, grains, milk, education, healthcare, and transportation services, are taxed at a nil rate to ensure affordability and accessibility.
- 5%: Goods and services falling under this slab include essential items like household items, processed food, and transportation services.
- 12% and 18%: Goods and services falling under these slabs include a wide range of items, such as consumer durables, processed foods, restaurant services, and electronic items.
- 28%: Certain luxury goods and services, such as high-end electronics, automobiles, and luxury accommodations, attract GST at the highest slab rate of 28%.
- Special Rates: Some goods and services may attract GST at special rates or cesses, such as tobacco products, aerated drinks, and luxury cars.
- Exemptions and Composition Scheme: Some goods and services are exempted from GST, such as agricultural products, healthcare services, and educational services. Additionally, small businesses with annual turnover below a specified threshold can opt for the Composition Scheme, where they pay a flat rate of tax based on their turnover instead of the regular GST rates.
- GST Council: The GST Council, comprising representatives from the central and state governments, is responsible for deciding GST rates, exemptions, and other policy matters related to GST. The council meets periodically to review the GST structure and make necessary amendments based on economic considerations and revenue requirements.
It’s important to note that GST rates and exemptions are subject to change based on the recommendations of the GST Council and the evolving economic and fiscal landscape of the country. Therefore, taxpayers should stay updated on the latest GST notifications and announcements to ensure compliance with GST regulations