GST rates for 66 items were revised and the Composition Scheme limit raised to INR 75 lakhs to align taxes and reduce burdens on essential goods.
India’s GST rates and composition scheme see periodic updates through GST Council decisions — affecting rate slabs, composition eligibility and turnover limits. Staying current helps small businesses pick the right scheme and price correctly.
Updates to India’s GST Rates and Composition Scheme
The Goods and Services Tax (GST) Council convened on June 11, 2017, and announced revisions to the tax rates for 66 different items. This decision followed numerous proposals from various states and industries advocating for reduced tax burdens on specific goods. According to Finance Minister Arun Jaitley, the primary goal of these GST revisions was to align the new tax rates more closely with pre-GST tax structures, an alignment that was previously inconsistent for certain categories.
Furthermore, some rate reductions were deemed necessary due to evolving economic conditions and shifts in consumer preferences. Many of these items, initially subjected to higher GST rates (18-28%), were subsequently reclassified. Upon review, it was determined that these products were essential necessities rather than luxury goods. Consequently, the GST Council lowered the tax rates on these critical items. For instance, common products such as spectacles, exercise books, and notebooks are integral to daily life and were deemed inappropriate for the highest tax bracket of 28%, typically reserved for luxury goods like cars and cigarettes.
Changes to the Composition Scheme
The eligibility threshold for the Composition Scheme was raised from INR 50 lakhs to INR 75 lakhs. This expansion allows a greater number of businesses to opt into the scheme, benefiting from simplified compliance and reduced tax liabilities. It is important to note, however, that the Composition Scheme remains unavailable for service providers. Further clarification is still awaited regarding the applicability of this increased turnover limit to businesses located in Special Category States.
Revised GST Rates for Specific Goods
The following table details the adjustments made to GST rates across various categories, highlighting the previous and new rates, along with their general implications.
| Item | Old GST Rate | New GST Rate | Impact |
|---|---|---|---|
| Food Items | |||
| Cashew nut | 12% | 5% | |
| Cashew nut in shell | 12% | 5% (Reverse charge) | |
| Preparations of vegetables and fruits (e.g., pickle, murabba, chutney, jam, jelly) | 18%/12% | 12% | These items, considered part of the staple diet, are no longer classified as luxuries. |
| Ketchup and sauces, including mustard sauces | 18% | 12% | Everyday condiments are now taxed at a lower rate, not as luxury goods. |
| Curry paste, mayonnaise, salad dressings, mixed condiments, and seasonings | 18% | 12% | |
| Ice and snow | 12% | 5% | |
| Salt (all types) | 5% | 0% | Common salt is exempt from GST, though the Salt Cess (14 paise per 40 kgs produced) is not subsumed by GST. |
| Fuel | |||
| Biogas | 12% | 5% | A vital alternative fuel source, particularly for rural areas, now has a reduced tax. |
| Children’s Items | |||
| Exercise books and notebooks | 18% | 12% | |
| Children’s picture, drawing, or coloring books | 12% | Nil | |
| Paper punchers, staplers, pencil sharpeners | 28% | 18% | |
| Kites | 12% | 5% | |
| Baby carriages | 28% | 18% | |
| Playing cards, board games (e.g., chess, carom, ludo), excluding video game consoles | 28% | 12% | These popular games for the general public are not considered luxury items. |
| Swimming pools and paddling pools | 28% | 18% | |
| Entertainment | |||
| Movie tickets priced below INR 100 | 28% | 18% with Full ITC | This adjustment is unlikely to impact urban multiplex moviegoers significantly. |
| Medical Items | |||
| Glasses for corrective spectacles and flint buttons | 18% | 12% | Spectacles and artificial lenses are essential for individuals with vision impairments. |
| Intraocular lenses (used in cataract surgery) | 28% | 12% | |
| Corrective spectacles | 18% | 12% | |
| Insulin | 12% | 5% | An essential medication for diabetic patients, now taxed at the same 5% rate as other life-saving drugs. |
| Dental wax | 28% | 18% | |
| All diagnostic kits and reagents | 18% | 12% | Rates were lowered due to their essential role in medical treatments. |
| House & Kitchen Items | |||
| Kajal (excluding pencil sticks) | 28% | Nil | Kajal now has a 0% rate, similar to kumkum and alta. |
| Kajal pencil sticks | 28% | 18% | |
| Agarbatti | 12% | 5% | Taxes were reduced to align them closely with puja samagri (0%). |
| Plastic beads | 28% | 12% | |
| Plastic Tarpaulin | 28% | 18% | |
| School satchels and bags (non-leather), toilet cases, handbags, shopping bags (excluding wicker/basket work), vanity bags | 28% | 18% | |
| Cutlery (spoons, forks, ladles) | 18% | 12% | |
| Aluminum foil | 28% | 18% | |
| Bamboo furniture | 28% | 18% | |
| Coir mats, matting, and floor coverings | 12% | 5% | |
| Muddhas made of sarkanda (stools), Phool bahari jhadoo (brooms) | 5% | 0% | |
| Computers and Electronics | |||
| Printers (excluding multifunction printers) | 28% | 18% | |
| Set-top boxes for TV | 28% | 18% | |
| Computer monitors not exceeding 17 inches | 28% | 18% | |
| CCTV | 28% | 18% | GST rates were reduced as CCTV systems are increasingly vital for public security. |
| Static Converters (UPS) | 28% | 18% | |
| Other Items | |||
| Postage or revenue stamps, stamp-post marks, first-day covers | 12% | 5% | |
| Headgear and its parts | 28% | 18% | Rates were lowered to reduce the cost of various headgear, particularly protective helmets. |
| Rough precious and semi-precious stones | 3% | 0.25% | Rates on these specific items have been significantly reduced. |
Industrial and Machine Item GST Rate Adjustments
The GST Council also implemented rate changes for various industrial and machine-related items, as detailed below:
| Item | Old GST Rate | New GST Rate | Impact |
|---|---|---|---|
| Job Work Services | |||
| Textile yarns & fabrics (excluding artificial fabrics), jewelry manufacturing (gold/precious metal, plain or with diamonds/stones), book printing (including braille), newspapers, magazines, leather processing | 18% with Full ITC | 5% with Full ITC | In response to industry requests, the GST Council lowered the tax on job work services for these sectors from 18% to 5%, thereby reducing the overall tax burden. However, the 5% GST rate for printing newspapers remains unchanged. |
| Industry Items and Machine Parts | |||
| Fly ash blocks | 28% | 12% | |
| Pre-cast concrete pipes | 28% | 18% | |
| Salt glazed stoneware pipes | 28% | 18% | |
| Fixed-speed diesel engines | 28% | 12% | |
| Weighing machinery (non-electric/electronic) | 28% | 18% | |
| Ball bearings, roller bearings, parts & related accessories | 28% | 18% | These are fundamental components for many machines and are not categorized as luxury items. |
| Industrial electronics & electrical transformers | 28% | 18% | |
| Two-way radios (walkie-talkies) used by defense, police, and paramilitary forces | 28% | 12% | These devices are primarily utilized by security agencies. |
| Tractor components | 28% | 18% | |
| Electrical filaments or discharge lamps | 28% | 18% | |
| Winding wires | 28% | 18% | |
| Coaxial cables | 28% | 18% | |
| Optical fiber | 28% | 18% | Primarily used for high-speed internet infrastructure. |
| Hand-held length measuring instruments (rods and tapes) | 28% | 18% | Measuring tapes are crucial tools in India’s significant textile and garment industries. |
For a comprehensive listing of all items with revised GST rates, refer to the official CBEC website. The Council was also scheduled to convene on June 18 to discuss topics such as lottery taxes and the e-way bill system. Additional information on GST rates analysis is available.
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Frequently Asked Questions
What is the GST composition scheme turnover limit?
Up to Rs 1.5 crore for goods (Rs 75 lakh in special-category states) and Rs 50 lakh for eligible service providers.
What are the composition tax rates?
1% for traders/manufacturers, 5% for restaurants, and 6% for eligible service providers under the composition scheme.
Who cannot opt for composition?
Inter-state suppliers, e-commerce sellers, and suppliers of non-taxable goods cannot opt for the composition scheme.
Where are GST rate updates announced?
GST rate and slab changes are announced through GST Council meetings and CBIC notifications.
