GST Rates and Classification Guide 2025: All You Need to Know

Understanding GST rates and how they apply to different goods and services is crucial for accurate pricing, invoicing, and tax compliance. This comprehensive guide covers all GST rate slabs in India for 2025.

Overview of GST Rate Structure

India has a multi-tier GST rate structure designed to keep essential items affordable while taxing luxury goods at higher rates. The rates are:

• 0% (Nil Rated) - Essential items
• 5% - Basic necessities
• 12% - Standard goods
• 18% - Most goods and services (standard rate)
• 28% - Luxury and sin goods

Additionally, some items are exempted from GST entirely.

Detailed Breakdown by Rate Slab

0% GST (Nil Rated Items)

Items that attract 0% GST but are still part of the GST regime:

Food Items:

• Fresh fruits and vegetables
• Milk (unprocessed)
• Fresh meat and fish
• Eggs
• Bread (without brand)
• Jaggery
• Salt

Other Goods:

• Books, newspapers, journals
• Children's colouring and drawing books
• Human blood and organs
• Bangles (non-precious metal)

Services:

• Transportation of goods by road
• Services by educational institutions
• Healthcare services

5% GST

Essential goods and services:

Food & Beverages:

• Sugar
• Tea, coffee (not instant)
• Edible oils
• Coal, natural gas
• Domestic LPG
• Kerosene for PDS

Household Items:

• Coir mats and matting
• Cashew nuts
• Raisins
• Life-saving drugs
• Cream, skimmed milk powder

Transport & Services:

• Transport services (railways, air economy class)
• Small restaurants (turnover < ₹50 lakhs, no AC)
• Leasing residential apartments

Healthcare:

• Stent
• Life-saving drugs
• Medical equipment

12% GST

Processed foods and standard goods:

Electronics & Appliances:

• Smartphones
• Cell phones
• LED lights
• Electric fans

Food Processing:

• Butter, cheese, ghee
• Fruit juices
• Namkeen and sweets
• Ayurvedic medicines
• Diagnostic kits
• Spices in unit containers

Services:

• Business class air travel (economy)
• Non-AC restaurants
• State-run lotteries

Other Goods:

• Computers and accessories
• Bicycles
• Spectacles
• Playing cards
• Exercise books

18% GST (Standard Rate)

Most goods and services fall under this category:

Electronics:

• Televisions
• Cameras
• Printers and scanners
• Refrigerators

Services:

• IT services and software
• Telecommunications
• Banking and financial services
• Restaurants with AC/liquor license
• Restaurant services (not in hotel)
• Hotels (tariff ₹1,000-₹7,500)

Industrial:

• Iron and steel
• Aluminum products
• Optical fiber
• Industrial alcohol

Others:

• Branded garments
• Footwear above ₹1,000
• Soaps, hair oil
• Toothpaste
• Pasta

28% GST (Highest Rate)

Luxury items, sin goods, and demerit goods:

Automobiles:

• Cars and motorcycles
• SUVs (with additional cess)
• ATVs and racing cars

Luxury Goods:

• Air conditioners
• Dishwashers
• Cinema equipment
• Large-screen TVs
• Yachts and private jets

Sin Goods:

• Tobacco products (with cess)
• Pan masala
• Aerated drinks (with cess)

Other Items:

• Deodorants and perfumes
• Shaving creams
• After-shave
• Hair dyes
• Washing machines
• Vacuum cleaners

Entertainment:

• Cinema tickets
• Five-star hotel accommodation
• Racing events

HSN/SAC Codes

What are HSN Codes?

HSN (Harmonized System of Nomenclature) is an internationally accepted system for classifying goods. In India, HSN codes help determine GST rates.

Structure:

• 2 digits: Chapter (general category)
• 4 digits: Heading (sub-category)
• 6 digits: Sub-heading (specific item)
• 8 digits: Tariff item (most specific)

Example:

• HSN 0901: Coffee
• HSN 090111: Coffee, not roasted, not decaffeinated
• HSN 09011110: Robusta coffee beans

What are SAC Codes?

SAC (Services Accounting Code) is used to classify services under GST.

Common SAC Codes:

• 998314: IT consulting services
• 996791: Restaurant services
• 996511: Passenger transport by air
• 997212: Education services

HSN/SAC Code Requirements

Mandatory HSN/SAC codes on invoices:

• Turnover > ₹5 crores: 6-digit code required
• Turnover ₹1-5 crores: 4-digit code required
• Turnover < ₹1 crore: 2-digit code (optional from April 2021)

Special GST Categories

Composition Scheme

Simplified GST for small businesses:

Eligibility:

• Turnover < ₹1.5 crores
• No inter-state supplies
• Not selling exempt goods
• Not an e-commerce operator

Rates:

• Manufacturers: 1% CGST + 1% SGST
• Restaurants: 5% (no input tax credit)
• Other suppliers: 0.5% CGST + 0.5% SGST

Benefits:

• Simpler compliance
• Quarterly filing instead of monthly
• Lower tax rates

Reverse Charge Mechanism (RCM)

In certain cases, the recipient (buyer) pays GST instead of the supplier:

Common RCM Cases:

• Services from unregistered persons
• GTA (Goods Transport Agency) services
• Legal services
• Director services
• Imports

E-commerce Operators

Special provisions for online platforms:

• Must register regardless of turnover
• Collect Tax Collected at Source (TCS) at 1%
• File GSTR-8 monthly
• Provide TCS certificate to sellers

How to Find Applicable GST Rate

Step-by-Step Process:

1. Identify the product/service - Get exact description
2. Find HSN/SAC code - Use GST portal's search feature
3. Check GST rate schedule - Verify current rate for that code
4. Consider exemptions - Check if any special exemptions apply
5. Calculate CGST/SGST or IGST - Based on transaction type

Tools to Help:

• GST Portal Search: gst.gov.in has HSN/SAC lookup
• GST Rate Finder Apps: Mobile apps with rate databases
• Our GST Calculator: Calculate GST quickly

Recent GST Rate Changes (2024-2025)

Notable Updates:

• Textiles: GST on certain fabrics adjusted
• Renewable Energy: Concessional rates for solar equipment
• Healthcare: Rate rationalization for medical devices
• E-commerce: Updated TCS provisions

Note: GST rates can change. Always verify current rates on the official GST portal.

Common GST Rate Mistakes

Mistake #1: Wrong HSN Code

Using incorrect HSN can lead to wrong rate application and notices.

Solution: Verify HSN codes on GST portal before invoicing.

Mistake #2: Mixing Rates

Applying single rate for mixed supply of different items.

Solution: Separate invoicing or use composite/mixed supply rules.

Mistake #3: Ignoring Exemptions

Not claiming available exemptions for specific categories.

Solution: Review exemption lists regularly.

Mistake #4: Inter-state vs Intra-state Confusion

Applying CGST+SGST instead of IGST for inter-state sales.

Solution: Check delivery location before invoicing.

Tips for Managing GST Rates

1. Maintain HSN Master List: Keep updated list of products with HSN codes
2. Use Accounting Software: Auto-populate GST rates from HSN codes
3. Regular Updates: Subscribe to GST notifications for rate changes
4. Consult Professionals: For complex classifications, seek expert help
5. Document Decisions: Keep records of why specific rates were applied

GST Rate Examples

Example 1: Restaurant Bill

Bill Amount: ₹1,000 (AC restaurant with liquor license)

• GST Rate: 18%
• CGST: ₹90 (9%)
• SGST: ₹90 (9%)
• Total: ₹1,180

Example 2: Smartphone Purchase

Phone Price: ₹20,000

• GST Rate: 12%
• CGST: ₹1,200 (6%)
• SGST: ₹1,200 (6%)
• Total: ₹22,400

Example 3: Car Purchase

Car Price: ₹5,00,000

• GST Rate: 28%
• GST Amount: ₹1,40,000
• Cess: Variable (₹15,000-25,000)
• Total: ~₹6,55,000

Resources

Official Sources:

• GST Portal - Official GST website
• CBIC Circulars - For rate notifications
• GST Council Meeting Minutes - For rate decisions

Tools:

• My GST Calculator - Free GST calculations
• GST Rate Finder - Mobile apps
• HSN/SAC Search - GST portal feature

Conclusion

Understanding GST rates and proper classification is essential for:

• Accurate invoicing
• Competitive pricing
• Legal compliance
• Input tax credit claims
• Avoiding penalties

Keep this guide handy for quick reference, but always verify current rates on the official GST portal before making business decisions.

For quick GST calculations at any rate, use our free GST Calculator anytime.

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Need to calculate GST? Our GST Calculator supports all rates from 5% to 28% with instant results!