One of the first things every business owner asks is: "What GST rate do I charge?" The answer depends on your product or service, because India uses a multi-slab GST system. Charging the wrong rate causes problems on both sides — undercharge and you owe the difference; overcharge and you lose customers.
The GST rate slabs
Most goods and services fall into one of these slabs:
| Slab | Typically applies to |
|---|---|
| 0% (exempt / nil) | Essential items like fresh produce, unbranded staples |
| 5% | Household necessities and many packaged foods |
| 12% | Processed goods, some electronics and apparel |
| 18% | The most common slab — a wide range of goods and services |
| 28% | Luxury and "sin" goods, sometimes with an extra cess |
Important: GST rates are revised from time to time, and rate rationalisation is an ongoing process. Treat the table above as a framework, and always confirm the current rate for your exact product on the official portal before printing it on invoices.
How to find the correct rate for your product
Every product has an HSN code (services use an SAC code), and the GST rate is tied to that code. To find yours:
- Identify the HSN code for your product.
- Use the rate finder on the official GST portal to look up the current rate for that code.
- Save the item with its HSN and rate in your billing app so you never have to look it up again.
Once an item is saved correctly, your GST invoices apply the right rate automatically.
The composition scheme: simpler, lower rates
Small businesses with turnover under the prescribed limit can opt for the composition scheme. Instead of charging GST at standard slabs, you pay a small flat percentage of turnover (for example, a low rate for traders and manufacturers and a slightly higher one for restaurants). The trade-offs: you cannot collect GST from customers on the invoice, you cannot claim input tax credit, and you issue a bill of supply instead of a tax invoice. It suits very small B2C businesses that value simplicity over credit.
Why getting the rate right matters
- Wrong rate on a B2B invoice → your buyer's input credit is disturbed
- Undercharging → you pay the shortfall out of pocket, plus interest
- Overcharging → customers notice and trust drops
The safest system is to set each item's rate once, correctly, and let software apply it every time.
Set your GST rates once, bill correctly forever
Save each item with its HSN and rate in DAM, and every invoice is correct automatically — free Gold plan until 31 March 2027.
Download DAM FreeFrequently asked questions
What are the GST rate slabs in India?
The main GST slabs are 0% (exempt), 5%, 12%, 18% and 28%, with an additional cess on some luxury and sin goods. The exact rate depends on the product’s HSN code and is revised from time to time.
How do I find the GST rate for my product?
Identify your product’s HSN code and use the rate finder on the official GST portal to look up the current rate. Then save the item with its HSN and rate in your billing app.
What is the GST composition scheme?
It lets small businesses under a turnover limit pay a low flat percentage of turnover instead of standard slab rates. In return they cannot collect GST on invoices or claim input tax credit, and they issue a bill of supply.