GST Rates & Classification
Finding the right rate, and being able to defend it
Finding the right rate, and defending it.
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From 22 September 2025 most of GST runs on two slabs: 5% for merit goods and services, 18% as the standard rate. The old 12% and 28% brackets were largely folded into these two, though a higher demerit rate survives for luxury and sin goods, and a few special rates – 3% on gold, 0.25% on rough diamonds – were never part of the slab structure at all.
Knowing the slab is easy. Knowing which slab your specific product sits in is the hard part, and it turns on classification: the HSN code for goods, the SAC for services. Classification is a legal question decided by the description in the tariff, not by what the product is called in the market.
Two rules cause most rate disputes. A composite supply – things naturally bundled, like a fridge with delivery – takes the rate of the principal item. A mixed supply – unrelated things sold for one price, like a gift hamper – takes the highest rate in the box.
Worked example
Why the same meal carries two different rates
| Dhaba on the highway | 5% GST, no input tax credit | Standalone restaurant |
| Restaurant inside a ₹9,000-a-night hotel | 18% GST, with input tax credit | ‘Specified premises’ |
| The plate of food | Identical in both | Rate follows the premises, not the food |
Nothing about the meal decides the rate. The hotel’s room tariff in the previous financial year does. Classification questions are almost always like this – the answer sits somewhere you weren’t looking.
The mistakes that cost people money
Not theoretical risks — the ones we actually see land on clients’ desks.
Charging the old rate on old stock. The rate is fixed by when you supply, not by what you paid when you bought – stock bought at 28% is sold at today’s rate.
Treating a bundle as one rate without checking whether it is composite or mixed. A mixed supply takes the highest rate in the bundle, on the whole value.
Relying on a competitor’s invoice as proof. If they have classified it wrongly, copying them just means two businesses with the same exposure.
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GST Rates & Classification — the complete guide
10 pages covering all 23 provisions, with the plain-language explanation and practice notes for each. Print it, keep it, share it with your accountant.
Common questions on this
Straight answers to what people actually ask us.
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Every provision on gst rates & classification
All 23 of them, each with a plain-language explanation and the full legal text.
CGST Rules, 2017 · 14
CGST Act, 2017 · 9
Reading is free. Getting it wrong isn’t.
Stuck on gst rates & classification for your own business?
You now know more about this than most people who will advise you on it. If the numbers are big enough that being wrong matters, send us the facts – we will tell you where you stand before you commit to anything.
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