GST Slabs Explained

Last updated: January 30, 2026

Understanding GST Rate Structure in India

The Goods and Services Tax (GST) in India follows a multi-tier rate structure designed to ensure that essential goods remain affordable for the common person while luxury items and sin goods contribute proportionally more to the tax revenue. Unlike many countries that have adopted a single GST rate, India's diverse economic landscape necessitated a more nuanced approach with multiple rate categories.

The GST Council, which comprises the Union Finance Minister and Finance Ministers of all states, determines the rates for various goods and services. These rates are periodically reviewed and revised based on economic conditions, revenue requirements, and feedback from stakeholders. Understanding which slab your products or services fall under is essential for proper invoicing, compliance, and pricing strategies.

Overview of GST Rate Slabs

India's GST structure includes the following main rate categories:

Nil Rated GST (0%)

Nil-rated supplies are goods and services that attract 0% GST. Unlike exempt supplies, input tax credit can be claimed on inputs used for producing nil-rated goods. This category primarily includes essential commodities that form the basic consumption basket of the common person.

Items Under Nil GST Rate

• Fresh milk and pasteurized milk without added sugar
• Curd, lassi, and buttermilk (unpacked)
• Fresh fruits and vegetables (unprocessed)
• Unbranded natural honey
• Fresh meat, fish, and chicken (not frozen or processed)
• Unbranded atta, maida, and besan
• Unpacked foodgrains like rice, wheat, and pulses
• Unpacked paneer
• Common salt
• Bread (unbranded)
• Prasad sold by religious institutions
• Children's drawing and coloring books
• Newspapers and periodicals
• Raw silk and khadi
• Bangles (non-precious metal)
• Human blood and its components
• Contraceptives
• Services by way of agricultural operations
• Services by way of slaughtering of animals
• Services by an entity registered under Section 12AA of the Income Tax Act (charitable activities)

0.25% GST Rate

This is a special rate category with very limited applicability, created to address specific industry requirements:

Items Under 0.25% GST

• Rough diamonds (uncut and unpolished)
• Rough precious and semi-precious stones

This low rate was introduced to support the diamond cutting and polishing industry, which is a significant contributor to India's exports, particularly from Gujarat. The industry imports rough diamonds, processes them, and exports finished diamonds. The low GST rate on inputs helps maintain competitiveness in the global market.

3% GST Rate

The 3% rate applies specifically to precious metals and was reduced from 5% to support the jewelry industry and encourage formalization of the sector:

Items Under 3% GST

• Gold bars and coins
• Silver bars and coins
• Platinum
• Gold and silver jewelry including ornaments
• Articles of gold, silver, and precious metals
• Job work related to gold and silver jewelry

It's important to note that making charges on gold jewelry are also taxed at 3%. Additionally, if diamonds or precious stones are embedded in gold jewelry, the entire piece is taxed at 3% (not the higher rate applicable to finished diamonds).

5% GST Rate Explained

The 5% GST slab is designed for basic necessities and mass consumption items that should remain affordable while contributing to tax revenue. This is the lowest standard rate and covers items essential for daily life.

Goods Under 5% GST

• Food Items: Edible oil, sugar, tea and coffee (not instant), spices (masala), pizza bread, rusk, sabudana, fish fillet, cream, skimmed milk powder, milk food for babies, packed paneer, frozen vegetables, cashew nuts, raisins, ice and snow
• Energy: Coal, kerosene, LPG for domestic use, biogas, solar power-based devices
• Household Items: Kajal, incense sticks (agarbatti), matchsticks, candles, stamps, judicial papers, printed books, newspapers, magazines
• Health: Life-saving drugs like insulin, vaccines, oral rehydration salts, diagnostic kits for hepatitis, medicines for diabetes, malaria, tuberculosis
• Transportation: Economy class air travel, transport by rail (including local trains and metro), motor cab and radio taxi services, transport of goods by road (GST paid under reverse charge)
• Accommodation: Hotel accommodation with tariff below ₹1,000 per day
• Apparel: Job work for textiles and textile products, Gandhi topi and khadi
• Miscellaneous: Postage stamps, revenue stamps, first-day covers, natural cork, de-oiled rice bran, groundnut oil cake

Services Under 5% GST

• Transport services (economy class air travel, rail transport)
• Restaurant services in non-AC establishments without liquor license
• Services by way of renting of motor cabs
• Transport of passengers by motor cab (up to 6 passengers)
• Printing of newspapers, books, and journals
• Services by way of training in coaching institutes (if registered as educational institution)

12% GST Rate Explained

The 12% GST slab applies to processed foods, certain consumer durables, and services that are above basic necessities but not luxury items. This rate represents the lower-middle tier of the GST structure.

Goods Under 12% GST

• Dairy Products: Butter, ghee, cheese, butter oil
• Dry Fruits: Almonds, cashew nuts, pistachios, walnuts (packaged)
• Processed Foods: Fruit juices, vegetable juices, namkeen, bhujia, mixtures, chutney, pickles, murabba, sweetmeats
• Personal Care: Ayurvedic, Unani, Siddha, Homeopathic medicines, tooth powder
• Electronics: Mobile phones and their parts, chargers, batteries
• Household Items: Sewing machines, umbrella, walking sticks, wheelchairs
• Apparel: Apparel (knitted or crocheted) above ₹1,000, sarees fall under this category based on material
• Miscellaneous: Cutlery, utensils made of metal, bells, gongs, statuettes, ornaments of base metal

Services Under 12% GST

• Business class air travel
• Non-AC restaurants with liquor license
• Accommodation in hotels, inns, guest houses with room tariff between ₹1,000 and ₹7,500 per night
• Movie tickets priced up to ₹100
• Chit fund services by foremen
• Construction of buildings for sale (partially under composition scheme)
• Works contract services

18% GST Rate Explained

The 18% GST rate is the standard rate that applies to the majority of goods and services in India. Most industrial inputs, capital goods, and services fall under this category. This rate generates the bulk of GST revenue for the government.

Goods Under 18% GST

• Personal Care: Soap, toothpaste, hair oil, shampoo, shaving creams, deodorants, perfumes
• Processed Foods: Pasta, corn flakes, pastries, cakes, biscuits, jams, sauces, soups, ice cream
• Industrial Goods: Capital goods, industrial intermediaries, pumps, electrical machinery, transformers
• Building Materials: Steel products, aluminum products, ceramic tiles, pipes and tubes
• Electronics: Computers, laptops, printers, monitors, electrical cables and wires
• Apparel: Branded garments and made-up articles
• Stationery: Pens, pencils, notebooks (other than exercise books), files and folders
• Miscellaneous: Tractors, agricultural machinery (other than hand tools), furniture, mattresses, lamps and lighting fittings

Services Under 18% GST

Most services in India attract 18% GST. This includes:

• Financial Services: Banking services, stock broking, insurance, mutual fund services
• Telecommunication: Mobile and internet services, landline services
• Professional Services: Legal services, accounting, auditing, architectural services, engineering services
• IT and Technology: Software development, IT consulting, data processing, cloud services
• Advertising and Marketing: Advertising agency services, market research, event management
• Transport: Transport of goods by air and sea, courier services, freight forwarding
• Real Estate: Construction services (other than affordable housing), works contract
• Entertainment: Movie tickets above ₹100, gaming and amusement facilities
• Restaurants: AC restaurants, restaurants with liquor license, outdoor catering
• Accommodation: Hotels with room tariff ₹7,500 and above
• Education: Coaching centers and training institutions (not recognized as educational institutions)
• Healthcare: Clinical establishment services, health insurance
• Maintenance: Repair and maintenance services of all kinds

28% GST Rate Explained

The highest GST rate of 28% applies to luxury goods, sin goods (harmful to health), and certain demerit goods. This rate is designed to discourage consumption of these items while generating higher tax revenue from those who can afford them.

Goods Under 28% GST

• Automobiles: Luxury cars (above specified engine capacity or length), motorcycles with engine capacity above 350cc
• Tobacco Products: Cigarettes, cigars, chewing tobacco, gutka, pan masala, tobacco powder
• Beverages: Aerated drinks, caffeinated beverages
• Consumer Durables: Washing machines, refrigerators, air conditioners, dishwashers, water heaters
• Building Materials: Cement, paints and varnishes, ceramic tiles (luxury category)
• Personal Items: Watches and clocks (luxury), sunglasses, cosmetics and perfumes (luxury)
• Sports Equipment: Racing cars, firearms and ammunition
• Miscellaneous: Gambling and lottery tickets, aircraft for personal use, yachts

Services Under 28% GST

• 5-star hotel accommodation (room tariff ₹7,500 and above in 5-star hotels)
• Cinema tickets priced above ₹100
• Race club services including betting and gambling
• Amusement parks and theme parks

Compensation Cess: Additional Tax on Luxury Items

The GST Compensation Cess is an additional tax levied on certain luxury and sin goods over and above the highest GST rate of 28%. This cess was introduced to compensate states for revenue loss during the transition to GST and is collected in a separate fund.

Items Attracting Compensation Cess

How to Determine the Correct GST Rate

Determining the correct GST rate for a product or service can sometimes be challenging due to the complexity of classifications. Here are steps to help you find the correct rate:

Step 1: Identify the HSN Code

Every product is classified under the Harmonized System of Nomenclature (HSN) code. The HSN code is a 6-digit code that categorizes goods for taxation purposes. You can find the HSN code using the GST portal's search facility or by referring to the HSN code list published by the government.

Step 2: Check the GST Rate Schedule

Once you have the HSN code, refer to the GST rate schedule published by the CBIC (Central Board of Indirect Taxes and Customs). The schedule lists HSN codes along with their corresponding GST rates.

Step 3: Consider Special Conditions

Some items may have different rates based on conditions such as:

• Whether the product is branded or unbranded
• Whether it's sold in packaged form or loose
• Price thresholds (e.g., room tariffs for hotels)
• End use (e.g., for industrial use vs. personal use)

Step 4: Verify with a Tax Professional

If you're uncertain about the classification or rate, consult a chartered accountant or GST practitioner. Incorrect classification can lead to compliance issues and penalties.

Recent Changes in GST Rates

The GST Council regularly reviews and revises rates based on revenue considerations and industry feedback. Some notable recent changes include:

• Gold and Silver: Rate reduced from 5% to 3% to support the jewelry industry
• Restaurant Services: Multiple rate changes; currently AC restaurants charge 5% without ITC or 18% with ITC
• Real Estate: Rate reduced to 5% for non-affordable housing and 1% for affordable housing (without ITC)
• Lottery: Uniform rate of 28% implemented
• Electric Vehicles: Rate reduced to 5% to promote clean mobility
• COVID-19 Essentials: Temporary rate reductions on medicines, medical equipment during pandemic