Tax Rates Under GST in 2025-2026: Detailed Explanation

Tax Rates Under GST in 2025-2026: Detailed Explanation - Find Your Answers Here

The Government of India has announced several changes and exemptions to the Goods and Services Tax (GST) rates, aiming to simplify the tax structure and promote certain goods. Here's a breakdown of the key changes:

Textiles and Plastics

Contrary to popular belief, technical textiles such as geotextiles and agro-textiles are classified as textiles, not plastics. This classification is significant as it may affect the taxation of these products in the future.

GST Rates on Consumer Goods

The GST on certain consumer goods has been revised to make them more affordable for the lower middle class and poorer sections of society. For instance, the GST on toilet soap bars has been reduced to 5%. Similarly, face powder and shampoos will now be taxed at a lower rate.

On the other hand, the GST on air conditioners and dishwashers has been reduced from 28% to 18%. This reduction may lead to a decrease in the cost of these appliances.

GST Exemptions on Services

Admission to sporting events, including recognized sporting events where the ticket price is not more than Rs. 500, continues to be exempt from GST. However, if the ticket price exceeds Rs. 500, it will be taxed at the standard rate of 18%.

Hotel accommodation services, where the value of supply is up to Rs. 7500 per unit per day, will be taxed at 18% GST.

GST Rates on Other Goods and Services

All batteries under heading 8507 will be uniformly taxed at 18% GST. The transportation of goods by GTA will continue to be taxed at the merit rate of 5% with no ITC.

The passenger transportation services will be taxed at a merit rate of 5% with no ITC. This includes the multimodal transportation of goods, provided no transportation of goods by air is involved.

GST Rates on Health and Insurance Services

The policies covered under the exemption recommended on health insurance are all individual health insurance policies including family floater plans and senior citizen policies. The reinsurance services thereof are also exempt.

Similarly, the policies covered under the exemption recommended on life insurance are all individual life insurance policies including term, ULIP, and endowment plans. The reinsurance services thereof are also exempt.

GST Rates on Services related to Oil and Gas Exploration

Works contract and associated services, in respect of offshore works contact relating to oil and gas exploration and production (E&P) in the offshore area, will be taxed at 18% GST.

GST Rates on Beauty and Wellness Services

Beauty and physical well-being services including services of health clubs, salons, barbers, fitness centers, yoga, etc. will attract GST rate of 5% without ITC.

GST Rates on Renewable Energy Equipment

GST rate on renewable energy equipment/devices has been reduced to 5% to promote these goods.

Changes in GST Rates and Exemptions

The aim of the rate rationalisation exercise is to correct inversion in the manmade value chain, in line with the fibre neutral policy. For example, earlier, marble and travertine blocks and granite blocks attracted GST rate of 12%. These are in the nature of intermediate goods, and GST rate on these goods has been reduced to 5%.

The decision to restrict ITC on the plastic/polyester film in imitation zari was taken in the 52nd Council meeting. The registration threshold for goods under the CGST Act of 2017 has also changed, but specific details on the new threshold or the list of items that became more expensive after the GST reform are not provided.

For all specified actionable claims including betting, casinos, gambling, horse racing, lottery, and online money gaming, GST rate of 40% will apply. Service of transportation of goods in container by CTO will be given the option of charging 5% rate with no ITC or 18% rate with full ITC.

The new GST rate on spectacles and goggles for correcting vision is 5%, reduced from 12% and 18% respectively. However, spectacles and other goggles other than for correcting vision continue to attract GST rate of 18%.

Admission to sporting events like IPL will attract 40% GST, however, this rate of 40% will not apply to admission to recognized sporting events.

These changes are intended to streamline the GST structure, promote certain goods, and reduce the tax burden on consumers. It is recommended to stay updated with the latest GST news to understand how these changes may affect your purchases and services.