GST Slabs Breakdown: Items Under the 5% and 18% GST Rates
GST slabs decide how much tax is added to the price of goods and services. For most businesses, the two slabs you meet every day are 5% and 18%. The 5% slab usually covers many essential or mass use categories, while 18% is the most common standard rate for a wide set of products and services.
One important note before we start. GST rates are decided by classification. That means the exact rate depends on the HSN for goods and the SAC for services, along with product description, packaging, usage, and conditions. So the lists below are practical and commonly seen examples, not a final legal list for every situation. Always confirm your exact HSN or SAC before fixing a rate in your billing software.
What Are GST Slabs?
GST slabs are the fixed tax rates under GST. In simple words, they are tax buckets. When you sell a product or provide a service, you apply the slab rate linked to its classification.
Why slabs exist
- To keep tax lower on essential items
- To apply a standard tax on most regular items and services
- To manage revenue while keeping pricing predictable
Key terms you should know
| Term | Meaning |
|---|---|
| GST slab | The tax rate applied on a product or service |
| HSN | Code used to classify goods |
| SAC | Code used to classify services |
| Output GST | GST you charge on sales |
| Input Tax Credit or ITC | Credit of GST paid on purchases, if eligible |
| Classification | Matching your item or service to the correct HSN or SAC and rate |
Breakdown of Items Under the 5% GST Slab
The 5% slab often includes many daily use categories and select services. It is also common for categories where the government wants to keep prices lower for the end customer.
Goods and Services Under the 5% GST Slab
Below are common examples you often see under 5%. Use these as a quick understanding guide, then confirm your exact HSN or SAC.
Common goods that are often seen at 5%
- Basic food and kitchen categories
These can include select packaged food products and staples in certain forms, depending on branding and packaging rules. - Agriculture and farming support items
Some farm related inputs or supply chain items can fall in lower slabs, depending on the exact product. - Low cost household essentials
Some everyday items used at home can be in 5% in many cases, though it varies by exact product type. - Printed books and learning material in many cases
A number of education linked print items can be in lower slabs or even nil in some cases, depending on exact classification. - Select medicines and health related products
Many health related goods can be in lower slabs, but rates vary widely based on medicine type and HSN.
Common services that are often seen at 5%
- Passenger transport in certain categories
Some transport services for passengers can be taxed at lower rates based on class, ticketing, and conditions. - Restaurant services in many regular cases
Many restaurant services are commonly taxed at 5% with conditions. The exact rule depends on the service type and eligibility conditions. - Small accommodation in certain slabs
Hotel or accommodation rates can be lower in specific conditions depending on room tariff and policy rules.
Practical 5% slab examples list for quick recall
| Category | Example items or services you may see at 5% |
|---|---|
| Food categories | Select packaged staples, select processed foods depending on classification |
| Transport | Select passenger transport services under specified conditions |
| Eating services | Many regular restaurant services under common conditions |
| Health categories | Many medicines and health related products depending on classification |
| Agriculture support | Some farming related inputs depending on product nature |
Breakdown of Items Under the 18% GST Slab
The 18% slab is often treated as the standard GST rate for a large part of India’s goods and services market. If a product or service is not clearly essential or not under a lower slab category, there is a good chance it is taxed at 18%, subject to classification.
Goods and Services Under the 18% GST Slab
Below are common examples that are often seen at 18%.
Common goods that are often seen at 18%
- Electronics and electrical items
Many electronic goods and accessories commonly fall under 18% depending on type and classification. - Household appliances
A wide range of appliances and home utility products can be 18%. - Industrial goods and components
Many machine parts, tools, and industrial consumables are often classified at 18%. - Packaging materials and supplies
Many packaging items, labels, and related goods can come under 18%, depending on material and use. - Furniture and fittings in many cases
Many furniture categories fall under 18%, though it varies by product type and material.
Common services that are often seen at 18%
- Professional services
Consulting, design, marketing, and many professional services are often taxed at 18%, subject to the service code. - IT and software services
Software development, software support, hosting, and similar services are commonly 18%. - Business support services
Outsourcing, back office services, and admin support services are often 18%. - Repair and maintenance services
Many repair and maintenance services for business and household items fall under 18%. - Renting of commercial property in many cases
Commercial leasing often falls under standard slabs with conditions.
Practical 18% slab examples list for quick recall
| Category | Example items or services you may see at 18% |
|---|---|
| Electronics | Many consumer electronics, accessories, and devices |
| Appliances | Many home appliances and utility products |
| Industrial supplies | Tools, parts, and manufacturing related inputs |
| IT services | Software and IT enabled services |
| Professional services | Consulting, marketing, design, business support |
| Repair services | Maintenance and repair work in many cases |
Quick Reference Table: 5% vs 18% GST Slabs
This table compares the types of goods and services that are commonly seen under 5% and 18%. It is meant for quick understanding and billing team training. Always verify the final rate using the exact HSN or SAC for your item.
| Area | 5% slab common examples | 18% slab common examples |
|---|---|---|
| Daily use categories | Select essential food categories based on packaging and rules | Many non essential household goods |
| Eating and hospitality | Many regular restaurant services under common conditions | Many event, catering, and premium services depending on category |
| Transport | Select passenger transport under specified conditions | Many logistics and support services depending on service type |
| Health | Many medicines and health products depending on classification | Many devices, equipment, and non essential health supplies |
| Business services | Limited categories where concessional rate applies | Consulting, IT services, marketing, support services |
| Repairs | Some limited cases under special conditions | Most repair and maintenance services |
How GST Slabs Affect Pricing and Business Costs
GST slabs affect both the final price and the business cost structure.
For consumers
- A 5% rate usually means a lower final price
- An 18% rate increases the final price more significantly
For businesses
- Higher slab does not always mean higher burden if ITC is available
- If you can claim ITC, GST becomes less of a cost and more of a pass through
- If ITC is blocked or restricted, GST becomes a real cost
Simple pricing impact example
| Base price | GST at 5% | Final price | GST at 18% | Final price |
|---|---|---|---|---|
| 1,000 | 50 | 1,050 | 180 | 1,180 |
| 10,000 | 500 | 10,500 | 1,800 | 11,800 |
Key Differences Between the 5% and 18% GST Rates
| Point | 5% GST | 18% GST |
|---|---|---|
| Typical use | Often essentials and mass use categories | Most standard goods and services |
| Pricing impact | Lower increase on final price | Higher increase on final price |
| Compliance risk | High risk if conditions apply and are ignored | High risk if classification is wrong |
| ITC impact | In some categories ITC may be restricted based on conditions | ITC generally available if normal rules are satisfied |
| Business planning | Focus on correct conditions and documentation | Focus on correct HSN or SAC and ITC reconciliation |
How to Include GST in Your Invoices
To bill correctly, you need two things:
- Correct classification code
- Correct GST rate based on that code and conditions
Step by step invoice method
Step 1: Identify what you are selling
Is it goods or services.
Step 2: Find the classification
- Goods use HSN
- Services use SAC
Step 3: Apply the correct GST rate
This is where you decide 5% or 18% based on classification.
Step 4: Decide IGST or CGST plus SGST
- Same state supply uses CGST plus SGST
- Different state supply uses IGST
Invoice calculation table
| Supply type | Tax split | Example if GST is 18% |
|---|---|---|
| Within same state | CGST 9% plus SGST 9% | 9% plus 9% |
| Inter state | IGST 18% | 18% |
Common invoicing mistakes to avoid
- Using a slab rate without confirming HSN or SAC
- Applying 5% while the category requires conditions you did not meet
- Wrong place of supply leading to wrong split
- Missing HSN or SAC on invoice where it is required
- Charging GST on exempt or nil rated supplies
Conclusion
The 5% and 18% GST slabs cover a huge part of daily business billing in India. The 5% slab is often linked to essential and mass use categories and some specified services. The 18% slab is the standard rate for many goods and services, especially electronics, appliances, professional services, and IT services.
The most important habit is this. Do not decide GST rate by guesswork or by product name alone. Decide it by gst classification of goods and services using the correct HSN or SAC, then apply the relevant rate and conditions. This one habit reduces billing errors, prevents notices, and improves ITC compliance.
I am a chartered accountant with over 14 years of experience. I understand income tax, GST, and balancing financial records. I analyze financial statements and tax codes effectively. However, I also have a passion for writing, which is different from working with numbers. Recently, I started writing articles and blog posts. My goal is to make finance easier for everyday people to understand.
Frequently Asked Questions
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What Goods and Services Fall Under the 5% GST Slab?
Many commonly seen examples include certain essential goods categories based on packaging rules, and specified service categories such as many regular restaurant services and certain passenger transport cases. The exact rate depends on HSN or SAC and conditions.
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What Goods and Services Fall Under the 18% GST Slab?
Many standard goods and services fall under 18%, such as a wide range of electronics, appliances, industrial supplies, professional services, and IT services, subject to classification.
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Can I Claim Input Tax Credit (ITC) for Items Under the 5% and 18% Slabs?
ITC depends on normal ITC eligibility rules and the nature of the supply. In many standard 18% categories, ITC is available if conditions are satisfied. In some 5% categories, ITC can be restricted based on specific conditions, so you should check the rules for that category.
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How Do the 5% and 18% GST Slabs Affect Pricing for Consumers?
A 5% slab adds a smaller tax amount to the base price compared to 18%. For the same base value, 18% increases the final price more, which can affect consumer buying decisions.
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How Do GST Slabs Affect Businesses in Different Sectors?
Retailers and traders focus on correct rate mapping and invoice accuracy. Service businesses focus on correct SAC and place of supply. Manufacturing businesses focus heavily on ITC and classification because wrong rates can affect pricing, margins, and working capital.