GST Breakdown
GST Slabs in India — Complete Guide
India follows a four-tier GST rate structure introduced on 1 July 2017. The four main slabs are 5%, 12%, 18%, and 28%. Additionally, some essential items like fresh vegetables, milk, eggs, and grains are exempt from GST (rated at 0%). Knowing which slab your product or service falls under is essential for correct invoicing and tax filing.
Which Items Fall Under Each GST Slab?
5% GST: Essential goods and services — packaged food items, medicines, life-saving drugs, passenger transport, economy class air travel, and small restaurant services (without liquor licence). 12% GST: Processed foods, computers, mobile phones, business class air travel, and some construction materials. 18% GST: The most common slab — covers most services (telecom, banking, insurance), electronics, restaurants with liquor licence, and most industrial goods. 28% GST: Luxury goods and sin goods — cars, motorcycles above 350cc, tobacco products, aerated drinks, and cement.
CGST vs SGST vs IGST — What is the Difference?
When a transaction happens within the same state (intra-state), the total GST is split equally between CGST (Central GST) and SGST (State GST). For an 18% GST transaction within Maharashtra: CGST = 9% goes to the central government, SGST = 9% goes to the Maharashtra state government. When a transaction happens across states (inter-state) or involves imports, IGST (Integrated GST) applies at the full rate — 18% in this example — and is collected entirely by the central government before being distributed.
How to Calculate GST — Exclusive vs Inclusive
GST Exclusive (Add GST to price): If your base price is ₹10,000 and GST rate is 18%, GST amount = 10,000 × 18/100 = ₹1,800. Total invoice value = ₹11,800. CGST = ₹900, SGST = ₹900. GST Inclusive (Extract GST from price): If the total price including GST is ₹11,800 at 18%, Pre-GST price = 11,800 ÷ 1.18 = ₹10,000. GST amount = ₹1,800. This reverse calculation is useful when you have an MRP and need to find the base price and tax component.
Who Needs to Register for GST?
GST registration is mandatory for businesses with annual turnover above ₹40 lakh for goods (₹20 lakh for services, ₹10 lakh for special category states like Himachal Pradesh, Uttarakhand, and North-Eastern states). E-commerce sellers, businesses making inter-state supply, and input service distributors must register regardless of turnover. Freelancers providing services above the threshold also need to register. Voluntary registration is available for smaller businesses who want to claim Input Tax Credit.
What is Input Tax Credit (ITC)?
ITC is one of the most significant features of the GST system. It allows registered businesses to offset the GST they paid on purchases against the GST they collect on sales — so you only pay the net difference to the government. For example, if you purchased raw materials and paid ₹2,700 in GST, and then collected ₹5,400 in GST on your sales, you only remit ₹2,700 net GST. ITC eliminates the "tax on tax" cascading effect that existed under the pre-GST regime of VAT, service tax, and excise duty.
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Frequently Asked Questions
India has four main GST slabs: 5% on essential goods and some services, 12% on standard goods, 18% on most services and goods (the most common slab), and 28% on luxury and sin goods. Some items like fresh vegetables, milk, and eggs are exempt (0% GST).
For intra-state transactions, total GST is split equally into CGST (central) and SGST (state) — each at half the total rate. For inter-state transactions, IGST applies at the full rate. Example: An 18% intra-state transaction has CGST = 9% + SGST = 9%. The same inter-state transaction has IGST = 18%.
Use the formula: Pre-GST price = Inclusive price ÷ (1 + GST rate/100). GST amount = Inclusive price − Pre-GST price. Example: ₹11,800 inclusive at 18% → Pre-GST = 11,800 ÷ 1.18 = ₹10,000. GST = ₹1,800. Select "Extract GST from amount (inclusive)" in the calculator above.
Businesses with annual turnover above ₹40 lakh (goods) or ₹20 lakh (services) must register. E-commerce sellers and inter-state suppliers must register regardless of turnover. Some special category states have a lower threshold of ₹10 lakh. Voluntary registration is also available.
ITC lets registered businesses deduct the GST paid on purchases from the GST collected on sales — you only pay the net difference to the government. Example: GST paid on purchases = ₹2,700; GST collected on sales = ₹5,400; Net GST payable = ₹2,700. ITC eliminates the cascading tax-on-tax effect from the pre-GST era.