GST Rates Explained – What You Need to Know

Ever wondered why the price tag sometimes says “+ GST” and you see different percentages? That’s the Goods and Services Tax, or GST, in action. It’s a single tax that replaces many old taxes, but the rates can still feel confusing. In this guide we’ll break down the main GST rates, show you where each applies, and give you a step‑by‑step way to work out the tax on anything you buy.

Common GST slabs in India

India uses a slab system for GST. The government set four main percentages – 5%, 12%, 18% and 28% – plus a nil rate for essentials that aren’t taxed at all. Here’s a quick look at what typically falls under each slab:

• 5%: Basic food items, medicines, and some agricultural products.
• 12%: Items like tea, coffee, processed foods, and certain appliances.
• 18%: The most common rate – it covers most services, electronics, and household goods.
• 28%: Luxury items such as high‑end cars, motorcycles, and tobacco.
• 0% (Nil): Fresh fruits, vegetables, and unprocessed grains.

States can add a small extra charge called State GST (SGST) or Union Territory GST (UTGST) on top of the central GST (CGST). The total you pay is the sum of CGST and SGST/UTGST, but the percentages stay the same – you just split them between the centre and the state.

How to calculate GST on your purchase

Calculating GST yourself is easy once you know the slab. Follow these three steps:

1. Identify the rate. Look at the product category or ask the seller which GST slab applies.
2. Find the GST amount. Multiply the base price by the GST rate (e.g., for a ₹1,000 item at 18%, GST = 1,000 × 0.18 = ₹180).
3. Add it to the price. The final cost is the base price plus the GST amount (₹1,000 + ₹180 = ₹1,180).

If you see a price that already includes GST, you can work backwards: divide the total price by (1 + GST rate). Using the same example, ₹1,180 ÷ 1.18 ≈ ₹1,000, confirming the base price.

Small business owners often wonder how to file GST. The rule of thumb is to register if your annual turnover exceeds the threshold (currently ₹40 lakhs for most states). Once registered, you’ll charge GST on sales, claim input tax credit on purchases, and file quarterly returns.

Remember, the government occasionally revises slabs, especially for new product categories. Staying updated helps you avoid surprise charges at checkout.

Bottom line: GST rates are just a set of percentages that tell you how much extra you pay on top of the base price. Knowing the slab, doing a quick multiplication, and adding the result gives you the exact amount. Whether you’re shopping online, buying a phone, or running a small shop, these steps keep you in control of the tax you owe.