Rate of Tax in GST

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At what rate shall goods and services would be taxable under GST

While it has been suggested that the rate of GST should be uniform all across India, the same seems more unlikely looking into the local compulsions of various states.  Even otherwise, a single rate of GST has not been proposed and thus, there shall be different rates which have been suggested for GST.  Four slab rates have been proposed:

Proposed GST Rates
Lower Rate 5%
Standard Rate 1 12%
Standard Rate 2 18%
Higher Rate 28%
Luxury Goods 40%

It is proposed that 50% of the essential goods and services would be exempted from GST. Already 300 items in the Centre and nearly 80 items in the states enjoy exemption.

HSN Codes / SAC Codes

In order to check the rate of any good or services, one would need to refer to the schedule of rates.  While schedule of rates for goods shall be HSN based, schedule of rates for services shall be based on SAC.

HSN

HSN (Harmonised System of Nomenclature) is an internationally accepted product coding system formulated under General Agreement on Tariffs and Trade (GATT). In India, currently, adapted HSN coding is currently used under Excise and Customs for classification of products. Inline, it shall be used for GST also and rate of tax shall be provided in front of each HSN.

How to read HSN

HSN is divided into Sections, Chapters, Headings and Sub Headings.  Each Section is divided into Chapters. Each Chapter is divided into Headings. Each Heading is divided into Sub Headings.  HS Nomenclature beyond 6 digits is also allowed and some countries have extended Six Digit Code to Eight Digit Code and India is also one such country which use Eight Digit Code.  List of HSN classification upto four digit is attached as Annexure I to this Chapter.

SAC

All services shall be given a Service Accounting Code (”SAC”) which are hoped to be no different from the current regime ones.  List of SAC classification upto four digit is attached as Annexure I to this Chapter.

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