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4 Tier GST Tax Structure

Sakshi Jain
Sakshi Jain at May 10, 2023

Let's Know 4 Tier GST Tax Structure

The GST was deliberately made to keep both the burden of the regular man and increased rates as a primary concern.

The Four Tier Structure of GST Tax contains four separate rates: a zero rate, a lower rate, a standard rate, and a higher rate. In this article, we will explain structure of GST and give a concise outline of such 4 tier GST tax structure, structure of GST in India, etc. 

Indian GST has how many Tier Rate Structure?

It is a fact that Indian GST has a tier rate structure. Let's see below the Indian gst model rate structure:

Zero Rate

The zero rate charge is a nil charge rate that is applied to products and services under Tiers of GST. This is proportionate to burden exclusion and doesn't have any impact on the cost of the item. Things that are qualified for zero rate taxes are chosen by the government.

The zero rate charge is applied on half of the things of the Consumer Price Index basket - a file that continually gauges costs of usually bought buyer products and services to quantify inflation. The zero rate tax structure of GST incorporates things, for example, food grains, milk, curd, and other food things like eggs, oat, and meat. Likewise, metro travel, education, and health care are exempt from GST.

The zero rates of the GST tier structure will keep the costs of essential things within proper limits, whether or not the government chooses to increase tax rates later on.

Lower Rate

A lower rate of 5% is applied to the remainder of the things in the CPI (Consumer Price Index) basket and different things of mass utilization. This incorporates food things like sugar, tea, espresso, oil, and different basics like PDS lamp oil and LPG. Since the tax assessment on coal has diminished from 11.69% to 5% under the GST system, electricity has supposed to be more affordable. The GST council had put transport services in the 5% division, which is applicable to Ola and Uber aggregators. AC train tickets are charged at a rate of 5%, while non-AC train tickets are excluded from GST. This, alongside the zero rate charge, keeps inflation from having an impact on zero-rated goods and lower rate goods and services, keeping the costs of every single basic goods and service under surveillance.


Standard Rate

There are two standard rates: 12% and 18%. Union Finance Minister Arun Jaitley, in the press conference, said that the Council had concluded two standard rates so as to keep a check on inflation.

Envision an item, which was previously charged at 13%, charged a rate of 18% GST. This would increase the cost of the item by 5%, prompting inflation. To maintain a strategic distance from this, the GST council chose to burden all goods and services that were charged at 9 to 15% at a standard rate of 12%. Processed foods are charged at 12%. The remainder of the products and ventures are burdened with the subsequent standard rate of 18%. Toiletries like hair oil, cleanser, and toothpaste are charged at 18%. Additionally, capital merchandise, industrial intermediaries, iron and steel, financial and telecom services are incorporated under this division.

Higher Rate

A higher rate of 28% is collected on white products, for example, clothes washers, climate control systems, fridges, cars, and so forth. Aerated beverages and concrete are also on the list.

Beforehand, the expense on white products was around 27% (counting an excise of 12.5% and VAT of 14.5%), however, the cascading effect raised the duty as high as 30-31%. This is limited by the new higher rate of 28%.

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GST Verification API
GST Verification API integrates with your application to validate GST taxpayer details.

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