Complete Guide to GST in India
What is GST?
Goods and Services Tax (GST) is a unified indirect tax system implemented in India from July 1, 2017. It subsumes various central and state taxes and is designed to simplify the taxation structure by bringing all indirect taxes under one umbrella.
Structure of GST: CGST, SGST, IGST
- CGST (Central Goods and Services Tax): Levied by the Central Government on intra-state supplies.
- SGST (State Goods and Services Tax): Levied by the State Governments on the same intra-state supplies as CGST.
- IGST (Integrated Goods and Services Tax): Levied by the Central Government on inter-state and international supplies of goods and services.
- UTGST (Union Territory GST): Levied in Union Territories instead of SGST.
| Type | Applicable Tax | Collecetd By |
|---|---|---|
| Within a state (e.g., Mumbai to Pune) | CGST + SGST | Centre + State |
| Between states (e.g., Delhi to UP) | IGST | Centre |
| Imports (e.g., China to India) | IGST | Centre |
Benefits of GST
- Eliminates cascading taxes (tax-on-tax).
- Creates a unified national market.
- Boosts transparency and accountability.
- Encourages tax compliance through an online system.
- Reduces logistics and tax compliance costs.
GST Rates and Their Applicability
GST is levied under four major slabs: 5%, 12%, 18%, and 28%, depending on the type of goods or services.
| GST Rate | Category | Goods/Services Examples |
|---|---|---|
| 0% | Exempetd goods | Milk, fresh fruits, vegetables, education services |
| 5% | Basic necessities | Railway tickets, essential medicines, footwear under ₹500 |
| 12% | Standard goods | Mobile phones, fertilizers, fruit juices |
| 18% | Common services/goods | Soap, toothpaste, ACs, restaurant services |
| 28% | Luxury goods | Luxury cars, tobacco, pan masala, aerated drinks |
GST Registration Process
Businesses with turnover exceeding the threshold limit (₹40 lakhs for goods, ₹20 lakhs for services in most states) must register for GST. The process is completely online and free of cost.
- Visit the GST Portal: https://www.gst.gov.in/
- Click on 'Register Now'.
- Fill Part A of the registration with basic details and validate with OTP.
- Receive a Temporary Reference Number (TRN).
- Fill Part B with business details, upload documents (PAN, address proof, bank details, photos).
- Receive ARN (Application Reference Number) after successful submission.
- Get GSTIN and certificate within 3-7 working days.
Filing GST Returns
Registered taxpayers must file regular GST returns. Returns summarize sales, purchases, and tax liability. Most common return forms include:
- GSTR-1: Monthly/quarterly sales return.
- GSTR-3B: Monthly summary return showing overall tax liability and credits.
- GSTR-9: Annual return.
- GSTR-4: For composition scheme taxpayers.
Returns are filed via the GST portal using either online forms or offline tools. Late filing attracts penalties and interest.
Understanding GSTIN
GSTIN (Goods and Services Tax Identification Number) is a 15-digit unique number assigned to every registered taxpayer. It is generated based on the taxpayer's PAN and state.
- First 2 digits: State code
- Next 10 digits: PAN of the business
- 13th digit: Entity code
- 14th digit: Blank by default (currently ‘Z’)
- 15th digit: Checksum digit
You can verify any GSTIN on the [GST Portal's Search Tool](https://www.gst.gov.in/). Just enter the GSTIN and confirm the business name, status, and registration type.
