As of late 2025, GST in India impacts almost all goods and services, with revised rates aimed at reducing costs on daily items. Key changes include a 5% rate on packaged foods, apparel/footwear under ₹2,500, and personal care items, while electronics like TVs and ACs are taxed at 18%. Essential food items are largely 0%.
The GST reforms lower taxes on electronic goods like mobile phones, refrigerators, air conditioners, TVs, and washing machines. This makes them more affordable and encourages production. This blog explores how GST 2.0 impacts consumer durables and what it means for buyers.
GST-Free Items:
Fresh fruits, fresh milk, curd, bread, etc. Exports and supplies made to SEZ units or SEZ developers, of both goods and services. Grains, salt, jaggery, etc. Alcohol used for human consumption, natural gas, petrol and its products, etc.
You can claim a credit for any goods and services tax (GST) included in the price you pay for things you use in your business. This is called an input tax credit, or a GST credit.
Certain goods and services are exempt from GST due to their essential nature. This exemption applies based on the type of supply, not the supplier. Example: Healthcare services, educational services, and public utility services (e.g., water supply) are exempt from GST.
GST is a 10% tax added to most goods and services sold in Australia, but not everything in the food and beverage sector is treated equally. Some items are GST-free, while others are fully taxable, and understanding the difference can have a direct impact on your pricing, bookkeeping, and compliance.
Goods and services tax (GST) is added to the price of most products and services. If you're GST registered, you can claim back the GST you pay on goods or services you buy for your business. You can also charge GST (15%) on what you sell.
Using the wrong tax codes or accounting method
Many GST mistakes are the result of using incorrect tax codes or the wrong accounting method: Tax codes: If a GST-free sale is coded as taxable in your accounting system, you'll pay GST unnecessarily. If a taxable sale is coded GST-free, you'll underpay.
Office supplies, equipment, rental costs, and professional services are examples of expenses on which input tax can be claimed. Further, input tax cannot be claimed on the following expenses: private use, non-business entertainment, and motor vehicle expenses.
Zero-rated supplies
5% GST Slab: Common goods such as packaged food. 12% GST Slab: Processed food, fruit juices, frozen meat, butter, ghee, nuts, etc. 18% GST Slab: Most services like restaurants, telecom and banking, cosmetics, toiletries, hair oil, toothpaste, and capital goods.
Common BAS Excluded items include wages, super, bank transfers, owner drawings, income tax payments, fines, donations, and certain government charges. Use “BAS Excluded” in Xero for genuinely out-of-scope items, and use GST or GST-free codes for reportable sales and purchases.
You can claim a GST refund in the following situations, when additional tax is paid or deposited due to errors or omissions. When dealers and deemed export goods or services are subject to refund or refund. Refunds can also be made for purchases made by UN agencies or embassies.
The GST exemption essentially allows the earmarking of transfers, made during lifetime or at death, that either skip a generation or are made in trust for multiple generations.
Daily food items like UHT milk, roti, paratha, paneer, and packaged snacks brought under 5% or Nil GST, easing household expenses. Reforms promote affordability, healthier lifestyles, and improved ease of living for youth and households.
cooking ingredients, such as flour, sugar and baking mixes that don't contain any taxable ingredients. dry preparations marketed for the purpose of flavouring milk. fats and oils marketed for culinary purposes. unflavoured milk, cream, cheese and eggs.
Examples: Items or transactions that are not covered by GST, such as petroleum products (which are subject to separate state taxes), alcohol for human consumption, and some specified goods like stamps and currency, are considered non-GST supplies.
These include bank transfers between accounts, stamp duty, depreciation and salary/wages. These are purchases/sales that have a 0% GST rate. Examples include, purchasing items from overseas (exports); purchasing items from within Australia that are not subject to GST, eg. fresh food, some education.
Here are the 7 prime reasons behind most rejections: