Tax & Business
Goods & Services Tax
A simple guide to GST registration, rates, Input Tax Credit, returns and important compliance requirements in India.
GST
Indirect Tax
Standard
18%
Merit
5%
ITC
Input Tax Credit
Returns
GSTR-1 / 3B
Overview
What is GST?
GST is an indirect tax charged on the supply of goods and services in India. It replaced several earlier indirect taxes and created a more integrated tax framework.
CGST + SGST
Generally applies to eligible intra-State supplies.
IGST
Generally applies to inter-State supplies and imports.
ITC
Eligible businesses can claim Input Tax Credit.
Key Features
How GST Works
Destination-Based
GST generally follows the place where goods or services are consumed.
Input Tax Credit
Eligible input taxes can be set off against output GST liability.
Digital Compliance
Registration, returns, payments and refunds are handled digitally.
Unified Framework
GST integrates several earlier indirect taxes into one system.
Registration
GST Registration
GST registration requirements depend on turnover, the nature of supplies, location and compulsory-registration provisions.
Goods
The threshold may be up to ₹40 lakh in eligible States, subject to applicable conditions.
Services
The general threshold may be ₹20 lakh, subject to applicable exceptions and State-specific provisions.
Some persons may require compulsory registration even when turnover is below the normal threshold.
Small Businesses
Composition Scheme
The Composition Scheme provides simplified GST compliance for eligible small taxpayers.
₹1.5 Crore
Broad turnover limit for eligible suppliers of goods.
₹50 Lakh
Separate simplified framework for eligible service suppliers.
Simplified Filing
Quarterly CMP-08 and annual GSTR-4, subject to applicable rules.
Important restrictions
Simplified Compliance
QRMP Scheme
Quarterly Return Monthly Payment
Eligible regular taxpayers with aggregate turnover up to ₹5 crore may opt for QRMP, subject to applicable conditions. GSTR-1 and GSTR-3B may generally be filed quarterly while tax payments are made monthly.
Rates
GST Rate Structure
Following the 2025 GST rate rationalisation, the general structure includes the following categories.
0%
Exempt / Nil
5%
Merit Rate
18%
Standard Rate
40%
Special Rate
The exact GST rate depends on the HSN or SAC classification and the latest applicable notification. Do not assume a rate based only on the product category.
Supply Types
Exempt, Zero-Rated & Non-GST
Exempt
Specified goods and services may be exempt or Nil-rated.
Zero-Rated
Exports and specified SEZ supplies are generally zero-rated.
Non-GST
Certain products remain outside the regular GST levy.
Registration
GSTIN & Business Compliance
Registered taxpayers receive a GSTIN linked to their PAN and State or Union Territory registration.
Tax Invoices
Issue appropriate tax invoices or bills of supply.
Input Tax Credit
Reconcile eligible ITC and supporting records.
Returns
File applicable GST returns within prescribed timelines.
Compliance
Follow e-invoice, e-way bill and record requirements where applicable.
GST Returns
Important GST Forms
GSTR-1
Details of outward supplies or sales.
GSTR-3B
Summary return for tax liability and payment.
GSTR-9
Annual return applicable to eligible regular taxpayers.
CMP-08
Quarterly statement and tax payment for eligible composition taxpayers.
GSTR-4
Annual return for eligible composition taxpayers.
Benefits
Why GST Matters
Unified Framework
Brings multiple indirect taxes into a more integrated system.
Input Tax Credit
Helps reduce cascading taxation for eligible businesses.
Digital Compliance
Registration, returns and payments are largely online.
Inter-State Trade
Provides a common framework for taxation across India.
Checklist
GST Compliance Checklist
Check whether GST registration is required.
Use the correct HSN or SAC classification.
Apply the correct GST rate.
Issue proper tax invoices.
Reconcile eligible Input Tax Credit.
File GST returns on time.
Check e-invoice and e-way bill requirements.
Pay GST and other liabilities within the prescribed timeline.
FAQs
GST Questions
What is GST?+
GST is an indirect tax charged on the supply of goods and services in India.
What is Input Tax Credit?+
ITC allows eligible registered businesses to set off eligible GST paid on purchases against their output GST liability, subject to applicable conditions.
When is GST registration required?+
Registration depends on turnover, nature of supply, location and compulsory-registration provisions.
What is the Composition Scheme?+
It is a simplified GST compliance option for eligible small taxpayers, subject to specific conditions and restrictions.
What is the standard GST rate?+
The general standard rate in the revised structure is 18%, but the actual rate depends on the HSN or SAC classification and applicable notification.
Conclusion
Stay GST Compliant
GST affects businesses through registration, invoicing, tax rates, Input Tax Credit and return filing. Businesses should maintain accurate records and verify the latest GST rules before making compliance decisions.
Always verify the applicable HSN/SAC classification, GST rate and latest Government notification.
Disclaimer
GST rates, exemptions, registration thresholds, return procedures and compliance requirements may change. The exact GST treatment of a product or service should be verified using its correct HSN or SAC classification and the latest applicable notification.
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