Indian GST Rate Slabs & Classifications
India follows a multi-tiered Goods and Services Tax structure determined by the GST Council. Depending on the nature of the product or service, different statutory rates apply:
| Rate Slab | CGST + SGST Split | IGST Rate | Typical Goods & Services |
|---|---|---|---|
| 0% (Nil) | 0% + 0% | 0% | Unpackaged food grains, fresh vegetables, milk, salt, basic healthcare |
| 5% | 2.5% + 2.5% | 5% | Packaged food, edible oil, tea, coffee, economy domestic flights, footwear < ₹1,000 |
| 12% | 6% + 6% | 12% | Butter, cheese, processed fruit, computers, medical diagnostic kits, business travel |
| 18% | 9% + 9% | 18% | Most IT services, telecom, software licensing, restaurants, consumer electronics |
| 28% | 14% + 14% | 28% | Automobiles, motorcycles, luxury items, tobacco products, real-money online gaming |
How GST is Calculated: Forward Addition vs. Reverse Extraction
Indian invoices require either calculating GST on a net base amount or extracting embedded GST from an inclusive retail price:
GST Amount = Net Base × (Rate ÷ 100)
Gross Total = Net Base + GST Amount = Net Base × (1 + Rate ÷ 100)
Net Base = Gross Total ÷ (1 + Rate ÷ 100)
GST Amount = Gross Total − Net Base = Gross Total × [Rate ÷ (100 + Rate)]
If your business provides software consulting services with an invoice total of ₹59,000 inclusive of 18% GST:
• Net Base Amount: ₹59,000 ÷ 1.18 = ₹50,000.00
• Total GST (18%): ₹59,000 − ₹50,000 = ₹9,000.00
• If Intra-State (Same State): CGST (9%) = ₹4,500.00 | SGST (9%) = ₹4,500.00
• If Inter-State (Cross-State): IGST (18%) = ₹9,000.00
Frequently Asked Questions
What is the GST Composition Scheme?
The Composition Scheme is a simplified tax regime for small businesses with an aggregate annual turnover of up to ₹1.5 crore (₹75 lakh for northeastern states). Eligible businesses pay a flat tax rate (1% for manufacturers/traders, 5% for restaurants) without claiming Input Tax Credit (ITC).
What is an HSN or SAC code?
HSN (Harmonized System of Nomenclature) codes classify goods, while SAC (Services Accounting Code) codes classify services. Indian tax invoices require 4, 6, or 8-digit HSN codes depending on the supplier's annual turnover.
How can businesses claim Input Tax Credit (ITC)?
Registered GST businesses can deduct the GST they paid on purchases (Input Tax) from the GST they collect on sales (Output Tax) when filing monthly or quarterly returns (GSTR-3B), provided the supplier has filed their corresponding GSTR-1.