What is GST and How Does It Work in India?
GST (Goods and Services Tax) is India's unified indirect tax system that replaced over a dozen central and state taxes including VAT, service tax, excise duty, and octroi. Introduced on 1st July 2017, GST follows a dual structure where both the central and state governments levy taxes on the same transaction.
GST Rate Slabs in India
India follows a multi-tier GST rate structure. The four primary non-zero rate slabs are 5%, 12%, 18%, and 28%. Essential goods like fresh food and health services are taxed at 0% (nil-rated), while luxury goods and sin products attract the highest rate of 28% along with additional cess.
CGST vs SGST vs IGST — What's the Difference?
For transactions within the same state (intra-state), the total GST is split equally between CGST (collected by centre) and SGST (collected by the state). For transactions across states (inter-state), IGST applies — which is collected by the centre and later distributed to the destination state. The total tax burden remains the same either way.
What is an HSN Code?
The Harmonised System of Nomenclature (HSN) is an internationally standardised system for classifying goods. Under India's GST regime, every product is assigned an HSN code that determines its applicable GST rate. Businesses with a turnover above ₹5 crore must use 6-digit HSN codes, while smaller businesses use 4-digit codes.
Items Exempt from GST
- Fresh and unprocessed vegetables, fruits, and dairy products
- Educational services by schools and colleges
- Healthcare and medical services
- Agricultural services and equipment
- Postal services by India Post
Disclaimer: GST rates are subject to revision by the GST Council. Always verify current rates with a tax professional or the official GST portal (gst.gov.in) for compliance purposes.