GST Rates and Conceptual Foundations

GST Rates and Conceptual Foundations

GST Rates

GST in India is levied at multiple rates, depending on the nature of the goods or services. The GST Council has categorized goods and services into different slabs with varying tax rates. The main GST rate slabs are:

• 5%: Essential goods and services.
• 12%: Processed food items, non-AC restaurants, and some consumer durables.
• 18%: Most goods and services fall under this standard rate.
• 28%: Luxury goods, demerit goods, and sin goods (like tobacco and aerated drinks).

In addition to these standard rates, there are special rates for certain goods and services, such as:

• 0%: Exports, certain essential goods, and services.
• 0.25%: Rough precious and semi-precious stones.
• 3%: Gold, silver, and processed diamonds.

Concept of Supply

The concept of "supply" is fundamental to the GST regime. It is the taxable event that triggers the levy of GST.

• Definition: Supply refers to any provision of goods or services, or both, including activities specified in Schedule I of the CGST Act, 2017, made or agreed to be made for a consideration by a person in the course or furtherance of business.
• Scope: The definition of supply is very wide and includes sale, transfer, barter, exchange, license, rental, lease, or disposal of goods or services.
• Consideration: Supply must be made for a consideration, which can be in the form of money, goods, services, or any other valuable thing.

Goods and Services

Under GST, both goods and services are subject to tax.

• Goods: Defined as every kind of movable property other than money and securities but includes actionable claims, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply.
• Services: Defined as anything other than goods, money, and securities. It includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged.

Various Types of Supply

GST law categorizes supplies into different types based on their taxability:

• Taxable Supply: A supply that is subject to GST.
• Exempt Supply: A supply that is specifically exempted from GST by law.
• Zero-Rated Supply: A supply on which the GST rate is 0%. This includes exports and certain essential goods and services.
• Composite Supply: A supply that comprises two or more taxable supplies that are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply.
• Mixed Supply: A supply that comprises two or more individual supplies, one of which is a principal supply.