Goods and Services Tax (GST) Rates in India

By Registrationwala

4th April 2017


The GST tax will be implemented from the 1st of April onwards this year. This is touted as the single most effective taxation for businessmen to get them rid of paying several unnecessary taxes in the form of state and central taxation. In a way, introduction of GST is an attempt to simplify the complex Indian taxation system.

The Constitution Amendment Bill for Goods and Services Tax often referred to as the 101st amendment was approved by the president of India, Mr. Pranab Mukherjee last year. The GST act was approved by both houses of the parliament, Rajya Sabha and Loksabha, last August with overwhelming majority of over 50 % of state legislators too.

The government has conceptualised a single GST tax to be paid instead of paying several other indirect taxes to ease the entire taxation process.

GST will replace the following indirect taxes (Central);

  1. Central Excise Duty
  2. Service Tax
  3. Additional Customs Duty
  4. Central Sales Tax
  5. Central Surcharges and Cesses

GST will replace the following indirect taxes (State);

  1. VAT (Value Added Tax)
  2. Octroi and Entry tax
  3. Purchase tax
  4. Luxury Tax
  5. Entertainment Tax

Objectives of GST at a Glance

  1. Reducing taxation liability of traders.
  2. Removal of multiple taxes and the introduction of a single robust tax for effective implementation.
  3. Simplification of the complex taxation procedures in India.
  4. Synthesis of state and centre taxations for the benefit of the people.
  5. Automation of the taxation system and online payment of taxes to prevent errors and mistakes.

GST Rates in India: Salient Features

  1. It will be divided into four rates; 5, 12, 18 and 28 per cent respectively.
  2. Which rate would be applicable to your items depends upon whether your product is of luxury, de-merits goods and essential items.
  3. The lower rate of GST taxation is applicable to essential items while maximum tax will be levied upon items of luxury or demerit goods.
  4. The taxation rates for GST are set by GST council. It may be modified by them if so requires.
  5. GST tax for necessary food items will not be taxed.
  6. Highest GST taxation will be imposed on items such as luxury cars, liquor, tobacco and other non-essential items. Currently, these items are being taxed at 30% (VAT + Excise duty).
  7. The decision to levy 4% GST on gold was recently annulled.

Why GST to be implemented from 1st April 2017

The union Government is ready to relinquish all form of indirect taxes levied on goods and services by the Centre and States. GST is expected to be game changers as more and more people will be prompted towards business and self-employment as their mode of occupation.

From 1st April onwards, a trader will have to pay a single GST tax for supplying goods and services instead of several indirect taxes that were mandatory to be paid before GST.


Goods and Services Tax (GST) Rates in India