Unit – 4

GST RATES
Introduction
 GST council is the apex constitutional authority to decide
policies. It recommendations to union and states relating to
different aspects of GST (ex rates, exemption, limits, returns etc..)
 goods are supplied in India on the basis of HNS- harmonized
system of nomenclature.
Services are classified as per SAC- Services Accounting Codes.
 under GST, goods and services are taxed at the following rates,
0%, 5%, 12% ,18% and 28%. Two special slabs for rough diamond
@0.25% and gold @3%. In addition, a cess of 15% or other rates
on top of 28% GST applies on few items like aerated drinks,
luxury cars and tobacco products.
HNS- harmonized system of SAC- Services Accounting Codes
nomenclature.

Developed by WCO ( world customs For all services

organization.
Vision: classifying goods from allover the Code are issued by CBEC
world. ( systematic and logical) ( Uniformly classification)
Six digits uniform code. Each service has a unique code

To analyze the movement of goods across Are used in invoices'

world.
It is combination of different section 1st two digits 99 always

Defined rules used identifying goods for Next two digits 54 represent nature
the purpose of taxation
Provision: Next two digits 11 represents detailed
•Relief to small taxpayer up to cores. nature
• Exceeds Rs 1.50 corer up to 5.00 corer
will required mention two digits HNS
• Exceeds 5.corer mention four digit code
Concept of Zero Rating: Section 2(47) of CGST Act, 2017 defines ‘exempt’
supplies as that supply which includes •Nil Rated Supply •Zero Rated Supply
and •Exempt Supplies as notified.

1) Nil Rated : which GST rate is 0% is applicable

• these listed in Schedule 1
• example: Goods: Milk, unbranded atta, unbranded Maida, jaggery, eggs, kajal,
curd, lassi, child drawing and colouring book, unpacked food grains, unpacked
paneer, besan, prasad, unbranded natural honey, fresh vegetable, salt, brooms
(natural raw material) etc.
• Services: Education services, Health care services, Sanitary Services by
Municipality etc
• No ITC
2) What is Zero Rated Supply; Section 16(1) of IGST Act, 2017 defines, “zero rated
supply” means any of the following supplies of goods or services or both, namely –
A) export of goods or services or both; or
B) supply of goods or services or both to a Special Economic Zone (SEZ) developer
or a Special Economic Zone (SEZ)unit.
• Are executed under section 16 of IGST act.
• Example: export to USA oe SEZ
• ITC available
3) Exempt Supply : It does not attract GST
• This supply includes items which are used for everyday purposes. Since
they are basic essentials, they do not attract any GST at all.
• it includes Nill rate, non-taxable supply and specific supplies declared as
exempt by notification.
• No ITC
Difference between Zero rated and Exempt supplies
Zero rated supply Exempt supply
Supply made to any country or SEZ other Which attracts nill rate of tax or which
then India. may be wholly exempt from tax and also
non-exempt
no outward tax and input supplies also no outward tax and input supplies used
to be free for making exempt supplies to be taxed
Shall liable to register Shall not liable to register
ITC is available ITC is NOT available
A person shall issue normal tax invoice Shall issue, instead of invoice a bill of
supply
 Abatement
Abatement means reduction or deduction in taxes to be paid by assesses as
notified by government. This is calculated on tax rate only. Example: Construction
of a building costs Rs. 1,00,000; Tax Rate 18%. Abatement notified by government
is 40% for Construction business. Calculate value of supply in both cases: with
abatement and without abatement.

Without Abatement Without Abatement

value of Service 1,00,000 Value of Service 1,00,000
Tax Rate @18% 18,000 Less: Abatement @40%
Total Value of Supply 1,18,000 on Value (1,00,000) 40,000
Abated Value of Supply 60,000
Tax Rate @18%
(on abated value) 10,800
Total Value of Supply 1,10,800
 GST Structure Rates for Goods/ Services:
Goods Services
0% Rate or Nil Rate GST: Goods: Milk, Services: Education services, Healthcare
unbranded atta, unbranded Maida, jaggery, services, Sanitary Services by Municipality
eggs, kajal, curd, lassi, child drawing and etc.
colouring book, unpacked food grains,
unpacked paneer, besan, prasad, unbranded
natural honey, fresh vegetable, salt, brooms
(natural raw material) etc.
5% Rate: Edible oil, sugar, tea, spices,
coffee, packed paneer, coal, raisin,
domestic LPG, roasted coffee beans, PDS
kerosene, skimmed milk powder, cashew
nuts, footwear up to 500, milk food for
babies, apparel up to 1000, fabric, matting
and floor covering, incense stick, Indian
sweets and Life-saving drugs etc.
12% Rate: Goods:Computers, processed
food items, Butter, ghee, almonds, Mobile,
fruit juice, Packed coconut water, umbrella,
preparation of vegetables,fruits, nuts
andother parts of plants including pickle,
chutney, jam etc
5% Rate Railways-Transportation of goods,
passengers, Transportation of goods in a
vessel from outside India,rentinga motor
cab (without fuel cost)Transport services in
AC contract or stage or radio taxi, Transport
by air (scheduled) or air travel for the
purpose of pilgrimage via chartered flights,
Tour operator services, Leasing of aircrafts,
Print media ad space, work of printing of
newspapersetc.
services: Transportation of goods in
containers through rail from a third party
other than Indian Railways, Air travel
excluding economy, Food /drinks at
restaurants without AC or heating or liquor
license, Renting of accommodation for
more than Rs.1000 but less than Rs.2500
per day, Chit fund services by foremen,
Construction of building for the purpose of
sale, IP rights on a temporary basis, Movie
Tickets less than or equal to Rs. 100etc.
18% Rate:Goods:Personal Care items like
hair oil, toothpaste, soaps, toiletries,
Capital goods and industrial
intermediaries, Ice creams, pasta,
cornflakes, soups, all electronic handy
items like mobile, smart watches, games
etc.
28% Rate:Goods:Small cars, consumer
durables like ACs and refrigerators. Luxury
cars like BMWs, cigarettes and aerated
drinks (+15% cess) (beedies are not
included here) High-end motorcycles
(+15% cess) etc
Services: Food or drinks at restaurants
with liquor license, Food or drinks at
restaurants with AC/heating, Outdoor
catering, renting for accommodation for
more than Rs.2500 and less than Rs.5000
per day, Supply of food, shamiyana, and
party arrangement, Circus, Indian
classical, folk, theatre, drama, Supply of
works contract, Movie Tickets which
exceeds Rs. 100etc
Services: Entertainment events such as
amusement facility, water parks, theme
parks, joy rides, merry-go-round, race
course, go-karting, casinos, ballet,
sporting events like IPL, Race club
services, Gambling, Food/drinks at AC 5-
star hotels, 5-star hotels or above
accommodation etc.
 • Presented by
Mr. Ravi S. Kumbar
Assistant professor
Dept of studies in Commerce.
Kls Gogte College Of Commerce Belagavi