What is GST in India?

GST (Goods and Services Tax) is an indirect tax levied on the supply of goods and services in India. It replaced multiple cascading taxes with a single, unified tax system.

Understanding GST

Implemented on July 1, 2017, GST is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. It has simplified India's tax structure and eliminated the cascading effect of taxes.

Types of GST

CGST

Central GST

Collected by the Central Government on intra-state sales

SGST

State GST

Collected by the State Government on intra-state sales

IGST

Integrated GST

Collected by the Central Government on inter-state sales

GST Tax Slabs in India

GST is levied at different rates depending on the type of goods or services:

GST Rate Examples
0% Fresh vegetables, milk, bread, newspapers, educational services
5% Edible oils, sugar, tea, coffee, coal, domestic LPG
12% Computers, processed food, mobile phones (below ₹25,000)
18% Most goods and services, AC restaurants, telecom services
28% Luxury items, automobiles, tobacco, aerated drinks

How GST is Calculated

For Intra-State Transactions (Within Same State)

GST is split equally between CGST and SGST:

Example: Product price = ₹1,000, GST rate = 18%

CGST = 9% of ₹1,000 = ₹90

SGST = 9% of ₹1,000 = ₹90

Total GST = ₹180

Final Price = ₹1,180

For Inter-State Transactions (Between Different States)

IGST is levied instead of CGST and SGST:

Example: Product price = ₹1,000, GST rate = 18%

IGST = 18% of ₹1,000 = ₹180

Final Price = ₹1,180

Benefits of GST

  • Simplified Tax Structure: One tax instead of multiple indirect taxes
  • Reduced Tax Burden: Elimination of cascading effect
  • Increased Compliance: Digital processes and transparency
  • Uniform Taxation: Same tax rates across India
  • Boost to Economy: Easier interstate trade and commerce

GST Registration

Businesses must register for GST if:

  • Annual turnover exceeds ₹40 lakhs (₹20 lakhs for special category states)
  • Engaged in inter-state supply of goods or services
  • Operating as an e-commerce operator
  • Providing online information and database access or retrieval services

GST Returns

Registered taxpayers must file GST returns periodically (monthly, quarterly, or annually depending on turnover) through the GST portal. This includes details of sales, purchases, and tax paid.

Calculate GST Easily

Need to calculate GST for your business? Try our GST Calculator Tool for instant results!