GST Tax Rates in India

GST Tax Rates in India – Rates on Services, Classification & Reverse Charge

Table of Contents:-

Goods and Services Tax (GST) is levied on taxable supplies of goods and services in India at rates prescribed through GST notifications.

The GST rate applicable to a transaction depends upon several factors, including:

nature of goods or services;
applicable HSN or SAC classification;
specific rate notification;
exemption notification;
identity or category of supplier/recipient;
availability of input tax credit;
whether reverse charge applies; and
conditions attached to a concessional rate.

GST rates have been revised several times since GST was introduced in July 2017. Accordingly, businesses should not rely on old GST rate charts when invoicing customers or determining their tax liability.

For comprehensive assistance relating to GST rates, classification, input tax credit, registration, returns, refunds, assessments and litigation, visit our GST & Indirect Tax Advisory Services in India.

The latest statutory notifications can also be checked through the CBIC Central Tax (Rate) Notifications and the GST Council.

GST Rate Structure in India

The GST rate structure has undergone substantial rationalisation.

Following the recommendations of the 56th GST Council Meeting, the general GST structure was rationalised primarily around:

Nil / Exempt supplies
5% – Merit Rate
18% – Standard Rate
40% – Special De-merit Rate for specified goods and services

The rate changes for most goods and services recommended at the 56th GST Council Meeting became effective from 22 September 2025, subject to the relevant notifications and specified exceptions.

For the official announcement and sector-wise changes, refer to the 56th GST Council Meeting Recommendations.

The rate applicable to a particular supply should nevertheless be verified from the relevant notification rather than determined solely by the broad rate structure.

Why GST Rate Classification Is Important

GST classification directly determines the amount of tax charged to customers.

An incorrect GST rate can result in:

short payment of GST;
excess payment of tax;
interest liability;
penalty exposure;
incorrect input tax credit for customers;
GST return mismatches;
contractual disputes;
refund complications; and
departmental litigation.

Businesses should therefore determine the correct classification and rate before commencing invoicing.

For classification-specific advice, businesses can refer to our GST & Indirect Tax Advisory Services in India.

GST Rates on Goods vs Services

Goods and services are classified differently under GST.

Goods are generally classified through HSN – Harmonised System of Nomenclature.

Services are classified through SAC – Services Accounting Code.

The tax rate is determined by identifying the correct classification and then referring to the relevant GST rate notification.

A business should therefore not select a GST rate merely because another business offering a similar product or service uses that rate.

GST Rate on Services in India

The standard GST rate applicable to a large number of taxable services is 18%, unless the service is specifically:

exempt;
taxable at 5%;
covered by another specified rate;
subject to the special de-merit rate;
covered by a concessional scheme; or
subject to particular conditions.

The principal notification governing rates of services is Notification No. 11/2017 – Central Tax (Rate), as amended from time to time.

The notification and subsequent amendments can be accessed through the CBIC Central Tax Rate Notifications.

GST Rate of 5%

The 5% rate generally operates as a merit or concessional rate for specified goods and services.

The applicability of the 5% rate depends on the relevant entry in the rate notification.

In certain service categories, the concessional rate may be linked with restrictions on availability of Input Tax Credit.

Accordingly, taxpayers should verify both:

GST Rate + Conditions attached to the rate

before issuing an invoice.

Charging 5% merely because a broadly similar service appears to be taxed at that rate can result in incorrect tax treatment.

GST Rate of 18%

The 18% rate is the principal standard GST rate and applies to a broad range of taxable services and goods that are not specifically covered by a lower, exempt or special rate.

Many professional and business services ordinarily fall within the 18% framework, subject to the precise SAC classification and applicable notification.

Examples of categories that commonly need to be examined under the standard-rate framework include:

accounting and bookkeeping;
consultancy;
management services;
professional services;
technology services;
software-related services;
business support services;
market research;
advisory services;
legal and professional services subject to specific RCM provisions;
commercial leasing or renting, subject to applicable provisions; and
various other business-to-business services.

The classification of the actual service should always be examined rather than relying only on the commercial description used on an invoice.

GST Special De-Merit Rate of 40%

The GST rate rationalisation approved in 2025 introduced a special 40% de-merit rate for specified goods and services.

This rate does not apply generally to ordinary business services.

It is intended for specifically notified categories.

Businesses dealing in products or services that potentially fall within the de-merit category should verify the applicable notification before invoicing.

The official 56th GST Council Recommendations provide the framework for the revised rate structure.

Nil-Rated and Exempt Supplies

Not every supply attracts GST.

Certain supplies may be:

wholly exempt;
nil-rated;
non-taxable; or
outside the scope of GST.

These concepts should not automatically be treated as identical because their legal and input tax credit implications may differ.

Exemption of services is principally governed through Notification No. 12/2017 – Central Tax (Rate), as amended from time to time.

The latest amendments can be reviewed through the CBIC Central Tax Rate Notifications.

GST Rate and SAC Code for Services

Businesses supplying services should identify the applicable SAC code.

A proper SAC classification helps determine:

GST rate;
exemption eligibility;
place of supply implications;
reverse charge applicability;
invoice disclosure;
return reporting; and
departmental interpretation.

A business supplying multiple services may need different SAC codes for different revenue streams.

For example, a company may simultaneously provide:

consultancy services;
software services;
management support;
manpower services; and
leasing services.

Each stream should be evaluated independently.

GST Rate and HSN Code for Goods

Manufacturers and traders should determine the correct HSN classification of goods.

HSN classification may depend upon:

composition;
technical characteristics;
functionality;
use;
manufacturing process;
chapter notes;
section notes; and
specific description appearing in GST schedules.

Incorrect HSN classification may lead to an incorrect GST rate even where the commercial name of the product appears straightforward.

Manufacturing companies may also refer to our Impact of GST on Manufacturing Sector.

CGST, SGST and IGST – Does the GST Rate Change?

The total GST rate normally remains the same irrespective of whether the supply is intra-State or inter-State.

However, the tax is charged differently.

For an intra-State supply, GST is generally divided into:

CGST + SGST/UTGST

For an inter-State supply, the applicable tax is generally:

IGST

For example, where the applicable GST rate is 18%:

intra-State supply may generally involve 9% CGST + 9% SGST; whereas
inter-State supply may generally involve 18% IGST.

Determining whether a transaction is intra-State or inter-State requires consideration of the location of supplier and place-of-supply provisions.

GST Rate on Professional Services

Many professional and consultancy services are generally taxable at the standard GST rate, subject to their exact classification and any specific exemption or reverse-charge provision.

Examples include services rendered by:

accountants;
tax consultants;
business consultants;
management consultants;
engineers;
technical consultants;
valuation professionals;
market research firms; and
other professional advisers.

However, the person responsible for payment of GST may change where a transaction falls under Reverse Charge Mechanism.

GST Rate on Accounting and Bookkeeping Services

Accounting, bookkeeping and similar business-support services generally need to be classified under the relevant SAC and examined under the applicable standard GST rate notification.

Businesses providing:

bookkeeping;
accounting;
MIS preparation;
financial reporting;
payroll accounting;
management accounts; or
outsourced finance services

should select the SAC and tax rate on the basis of their actual scope of service.

Businesses outsourcing these functions may also refer to our Managed Business Services in India.

GST Rate on Consultancy Services

Consultancy services generally fall within taxable professional or business services unless a specific exemption applies.

Consultancy can include:

business consulting;
management consulting;
tax consulting;
financial consulting;
technical consulting; and
strategic advisory.

The applicable SAC should correspond to the underlying nature of the service rather than simply using “consultancy charges” as a generic invoice description.

GST Rate on Software and IT Services

Software, information technology and technology-enabled services should be classified according to their actual nature.

Examples may include:

software development;
software implementation;
maintenance;
SaaS;
technical support;
IT consulting;
cloud services; and
other digital services.

Many such services fall within the standard GST rate framework, but place-of-supply and export-of-service provisions may materially affect the ultimate GST treatment.

Foreign-facing service companies should also examine whether a supply qualifies as an export of services.

GST Rate on Renting of Commercial Property

Renting or leasing of commercial immovable property can attract GST depending upon the supplier, recipient, registration status and applicable provisions.

Businesses should separately consider:

whether GST is applicable;
applicable rate;
forward charge versus reverse charge;
commercial versus residential property;
registration status of parties; and
place of supply.

The reverse-charge framework for renting transactions has also changed through amendments to Notification No. 13/2017 – Central Tax (Rate).

Current RCM notifications can be checked on the GST Council CGST Rate Notification page.

GST Rate on Restaurant and Hospitality Services

Restaurant and hospitality services have undergone several GST rate changes since the introduction of GST.

Accordingly, the original 2017 distinction based merely on air-conditioning or liquor licence should no longer be used.

The current GST treatment can depend upon:

nature of service;
type of establishment;
whether restaurant service is supplied at specified premises;
value of accommodation supplied by the hotel;
availability of ITC; and
conditions prescribed in the rate notification.

The 56th GST Council also clarified aspects of “specified premises” for restaurant services.

Businesses in hospitality should therefore check the current rate notification for the relevant financial year rather than rely on historic GST rate charts.

GST Rates and Input Tax Credit

A lower GST rate does not necessarily mean a lower overall tax cost.

Certain concessional rates are available subject to restrictions on Input Tax Credit.

Accordingly, businesses should consider:

Output GST Rate + ITC Availability + Cost Impact

For example, a 5% rate without ITC could result in embedded GST costs on:

purchases;
rent;
professional services;
equipment; and
other business expenses.

Businesses should therefore evaluate the entire GST position instead of only comparing headline rates.

What Is Reverse Charge Mechanism under GST?

Under the normal GST mechanism, the supplier collects and pays GST.

Under the Reverse Charge Mechanism (RCM), the responsibility to pay GST shifts to the recipient of the supply in specified situations.

Section 2(98) of the CGST Act defines reverse charge as liability to pay tax by the recipient instead of the supplier under the prescribed provisions.

CBIC also explains the reverse-charge concept in its GST Sectoral FAQs.

Legal Basis of Reverse Charge

Reverse charge primarily operates through:

Section 9(3) of the CGST Act;
Section 9(4), wherever applicable;
corresponding IGST provisions; and
notifications specifying categories of supplies.

For services, an important notification is:

Notification No. 13/2017 – Central Tax (Rate)

This notification has been amended multiple times.

Businesses should therefore use the current version and subsequent amendments rather than the original 2017 list.

The GST Council CGST Rate Notification database contains rate and RCM amendments.

Common Services Potentially Covered by Reverse Charge

Depending on the facts and applicable notification, RCM can arise in relation to specified services such as:

certain legal services;
arbitral tribunal services;
specified Goods Transport Agency services;
director services to a company or body corporate;
certain Government/local authority services;
specified renting transactions;
insurance-agent services;
recovery-agent services;
specified services received from overseas suppliers; and
other notified categories.

The exact supplier and recipient conditions are critical.

A business should therefore not assume that an entire profession or service category is automatically under RCM.

GST on Director Services

Services supplied by directors to companies can require careful analysis under the Reverse Charge Mechanism.

The tax treatment depends upon the nature of payment and the capacity in which the director provides the service.

For example, remuneration constituting salary under an employer-employee relationship requires different consideration from independent director or professional services.

Businesses should examine:

employment agreement;
Board documentation;
nature of remuneration;
TDS treatment;
accounting treatment; and
applicable GST circulars/notifications.

GST on Legal Services under Reverse Charge

Specified legal services supplied by individual advocates or firms of advocates to qualifying business entities may fall under reverse charge.

Accordingly, the recipient rather than the advocate may become responsible for payment of GST where the prescribed conditions apply.

The precise supplier, recipient and exemption conditions should be verified before determining liability.

GST on GTA Services

Goods Transport Agency services have specific GST provisions and have undergone multiple amendments.

The GST treatment may depend upon:

nature of transporter;
whether the supplier qualifies as a GTA;
option exercised by the GTA;
nature of recipient;
tax rate selected; and
forward-charge or reverse-charge mechanism.

Therefore, businesses should not automatically apply the original historic 5% GTA rate or assume all transportation is under reverse charge.

The latest rate and RCM notifications should be checked.

Import of Services and Reverse Charge

Indian businesses receiving taxable services from overseas suppliers should evaluate whether IGST is payable under reverse charge.

Examples can include:

consultancy;
management support;
technical services;
software subscriptions;
licence fees;
group-company services; and
professional services.

The analysis should consider:

location of supplier;
location of recipient;
place of supply;
related-party provisions;
consideration;
import-of-service definition; and
reverse-charge notification.

This is especially relevant for Indian subsidiaries of foreign companies.

For broader assistance involving overseas groups, refer to our India Market Entry Consulting Services.

GST Rate on Export of Services

A service exported from India may qualify as a zero-rated supply where the statutory conditions for export of services are satisfied.

Zero rating should not be confused with an ordinary nil GST rate.

The business must examine requirements relating to:

supplier located in India;
recipient located outside India;
place of supply;
receipt of consideration where applicable;
relationship between establishments; and
other conditions under the IGST Act.

Eligible exporters commonly make supplies under LUT without payment of IGST, subject to applicable requirements.

Where eligible ITC accumulates, a refund may be available.

For refund assistance, see our GST Refund Services in India.

GST Rate and Reverse Charge on Foreign-Owned Companies

Foreign-owned Indian subsidiaries often enter into transactions with overseas group entities.

Examples include:

management fees;
software charges;
licence fees;
technical support;
group IT costs;
consultancy;
shared services; and
reimbursement arrangements.

Each transaction should be examined for:

GST classification;
place of supply;
import of services;
RCM;
valuation;
related-party rules;
input tax credit; and
transfer-pricing consistency.

For complete tax and regulatory assistance, foreign groups may refer to our Tax and Regulatory Advisory Services in India.

GST Rate and Registration

Correct GST rate determination becomes relevant after assessing whether the supplier is required to obtain GST registration.

A registered taxpayer should configure its accounting and invoicing system with:

correct GSTIN;
correct HSN/SAC;
applicable GST rate;
CGST/SGST/IGST treatment;
reverse-charge flag;
ITC treatment; and
place-of-supply logic.

For the registration process, refer to our GST Registration Procedure in India.

GST Rate and Return Filing

GST rates used on invoices ultimately flow into GST return reporting.

Incorrect rates can create differences between:

books of account;
GSTR-1;
e-invoices;
GSTR-3B;
customer ITC records; and
financial statements.

Rate masters should therefore be reviewed before filing GST returns.

For detailed return compliance, refer to our GST Return Filing Process.

GST Rate and E-Invoicing

Businesses covered by e-invoicing should ensure that the correct:

HSN/SAC;
taxable value;
GST rate;
tax amount;
place of supply; and
recipient GSTIN

are reflected in invoice data sent to the Invoice Registration Portal.

A classification error can therefore flow directly into e-invoice and GST-return data.

GST Rate and E-Way Bill

For movement of goods, GST rate and HSN information may also form part of the related e-way bill data.

Businesses should reconcile:

Invoice → HSN → GST Rate → E-Invoice → E-Way Bill → GSTR-1

For movement-of-goods requirements, see our E-Way Bill under GST.

GST Rates for Manufacturing Companies

Manufacturing companies should maintain product-wise HSN and GST-rate masters.

The tax team should review rates when:

launching a new product;
changing composition;
modifying packaging;
changing product use;
entering a new industry;
importing products;
introducing bundled products; or
receiving a new classification opinion.

Incorrect rates across high-volume sales can create substantial cumulative exposure.

For manufacturing-specific GST guidance, refer to our Impact of GST on Manufacturing Sector.

GST Rate Changes – What Happens to Existing Contracts?

GST rates can change during the life of a commercial contract.

Businesses should review:

tax clause;
pricing clause;
effective date of rate change;
date of supply;
time-of-supply provisions;
advance payments;
invoice date;
credit notes; and
contractual right to recover additional tax.

Long-term agreements should ideally state whether consideration is:

inclusive of GST or exclusive of GST.

How to Check the Correct GST Rate

A business can follow this approach:

Identify whether the transaction is a supply of goods or services.
Determine the correct HSN or SAC.
Review the applicable rate notification.
Check subsequent amendments.
Check whether any exemption applies.
Check whether a concessional rate has conditions.
Examine ITC restrictions.
Check whether reverse charge applies.
Determine CGST/SGST or IGST.
Document the basis for the classification.

For high-value or ambiguous transactions, a written tax position should be maintained.

Do Not Rely Only on Online GST Rate Tables

GST rates change through notifications and may contain detailed conditions.

Generic online tables can become outdated.

A rate shown as “5%” may, for example:

apply only to a specified type of supplier;
prohibit ITC;
require satisfaction of particular conditions; or
have been subsequently amended.

Businesses should therefore use official sources such as:

CBIC Central Tax Rate Notifications

GST Council Rate Notifications

GST Council

Common GST Rate Mistakes

Businesses should avoid errors such as:

selecting GST rate only from product name;
using an outdated GST rate chart;
incorrect HSN;
incorrect SAC;
ignoring rate-notification conditions;
treating exempt and zero-rated supplies as identical;
overlooking ITC restrictions;
applying forward charge where RCM applies;
applying RCM where forward charge applies;
incorrect CGST/SGST instead of IGST;
not updating ERP rate masters after rate changes; and
continuing rates used before September 2025 without checking the revised framework.

GST Rate Review Checklist for Businesses

Businesses should periodically verify:

HSN/SAC;
product/service description;
current GST rate;
exemption notification;
rate-notification amendments;
input tax credit eligibility;
reverse-charge applicability;
place of supply;
invoicing;
e-invoice settings;
e-way bill settings;
GST return mapping; and
accounting master data.

A periodic GST classification review can prevent errors from multiplying across thousands of transactions.

Frequently Asked Questions on GST Tax Rates

What are the main GST rates in India?

Following the 2025 rate rationalisation, the general framework primarily comprises 5% and 18%, together with exempt/nil supplies and a special 40% de-merit rate for specified supplies.

The applicable rate for a particular product or service must still be checked from the relevant notification.

What is the standard GST rate?

The principal standard rate under the rationalised GST structure is 18%.

What is the GST merit rate?

The principal merit or concessional rate is 5%, subject to the classification and conditions applicable to the relevant supply.

Is there still a 12% or 28% GST rate?

The 56th GST Council approved rationalisation of the earlier four-tier structure into a general two-rate structure of 5% and 18%, along with a special 40% rate for selected de-merit supplies.

Businesses dealing with transactions spanning rate-change dates or specially notified categories should verify the relevant notification and effective date.

When did the revised GST rate structure become effective?

Most rate changes recommended at the 56th GST Council Meeting became effective from 22 September 2025, subject to the notified exceptions.

Is GST always 18% on services?

No.

While 18% is the standard rate for a broad range of services, some services may be:

exempt;
taxed at 5%;
covered by a special rate;
subject to conditions; or
covered by reverse charge.

What is SAC under GST?

SAC means Services Accounting Code and is used for classification of services under GST.

What is HSN under GST?

HSN means Harmonised System of Nomenclature and is used for classification of goods.

What is Reverse Charge Mechanism?

Under reverse charge, the liability to pay GST shifts from the supplier to the recipient for specified supplies.

Is GST under reverse charge an additional tax?

No. Reverse charge principally changes the person responsible for paying GST.

Input tax credit may subsequently be available to the recipient subject to the applicable ITC conditions.

Is GST payable on services received from abroad?

Certain imports of services may attract IGST under reverse charge. The transaction should be examined under the IGST Act and applicable notifications.

What is the GST rate on professional services?

Many professional and business services fall within the standard 18% rate framework, subject to exact SAC classification, applicable exemption and reverse-charge provisions.

Can the GST rate change?

Yes.

The Government can revise GST rates and exemptions through notifications following recommendations of the GST Council.

Businesses should therefore monitor rate changes.

Where can I check official GST rates?

GST rates and amendments can be verified through the CBIC Central Tax Rate Notifications and the GST Council.

How EzyBiz India Can Assist

EzyBiz India Consulting LLP assists Indian companies, multinational groups and foreign-owned businesses with GST classification and indirect-tax matters.

Our assistance may include:

GST rate determination;
HSN classification;
SAC classification;
reverse-charge analysis;
GST registration;
input tax credit review;
GST return filing;
GST reconciliation;
import-of-services analysis;
export-of-services analysis;
GST refunds;
GST audit support;
responses to GST notices;
GST assessments; and
GST appeals and litigation.

For comprehensive GST advisory, visit our GST & Indirect Tax Advisory Services in India.

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Prepared By

EzyBiz India Consulting LLP

Reviewed By: Anil Agrawal, Chartered Accountant
Last Updated: September 2026

Disclaimer

The information contained on this page is intended for general informational purposes only and should not be considered legal, tax, accounting or regulatory advice.

GST rates, exemptions, reverse-charge provisions, classification rules and input-tax-credit conditions may change through notifications, circulars and statutory amendments.

The GST rate applicable to a particular transaction depends upon its exact facts, HSN/SAC classification and conditions specified in the applicable notification. Businesses should verify the latest official notifications or obtain professional advice before charging or paying GST.

GST Tax Rates in India