GST in India — Rates, Registration & Returns

There are four components: CGST (Central GST) and SGST (State GST) on intra-state supplies, IGST (Integrated GST) on inter-state supplies and imports, and UTGST (Union Territory GST) in union territories without a legislature. On an intra-state sale, CGST and SGST apply equally; on an inter-state sale, IGST applies at the combined rate.

GST came into force on 1 July 2017, subsuming multiple central and state indirect taxes. The most significant change since then is GST 2.0, effective 22 September 2025, which rationalised the rate structure into two main slabs (5% and 18%) plus a 40% demerit rate.

After GST 2.0 (effective 22 September 2025), most goods and services fall into two main slabs — 5% (merit/essentials) and 18% (standard). A special 40% rate applies to demerit and sin goods such as pan masala, aerated drinks and luxury vehicles. Nil-rated and exempt supplies continue. The old 12% and 28% slabs were largely removed. Always confirm an item using its HSN/SAC on the GST portal.

The 40% slab introduced under GST 2.0 applies to demerit and luxury (sin) goods — for example pan masala, tobacco-adjacent products, aerated and caffeinated beverages, and high-end vehicles. It consolidates the earlier 28% GST plus compensation cess into a single higher rate for these categories.

GST rates are linked to the HSN code (goods) or SAC (services). Look up your item's HSN/SAC in the rate finder on gst.gov.in, or see our HSN code guide. Rates can differ within a broad category, so always match the specific HSN, especially after the GST 2.0 changes.

For suppliers of goods the threshold is Rs 40 lakh aggregate turnover (Rs 20 lakh in special-category states). For service providers it is Rs 20 lakh (Rs 10 lakh in special-category states). Some categories — inter-state suppliers, e-commerce sellers and persons under reverse charge — must register regardless of turnover. These thresholds were unchanged by Budget 2025.

Registration is compulsory irrespective of turnover for inter-state suppliers of goods, e-commerce operators and most sellers on e-commerce platforms, casual taxable persons, non-resident taxable persons, agents, input service distributors, and persons liable to pay tax under reverse charge. Voluntary registration is also allowed below the threshold.

GST registration is done online on the GST portal. Once the application (REG-01) with documents is submitted and any Aadhaar authentication or physical verification is completed, a GSTIN is typically allotted within about 7 working days (longer if verification is triggered). TaxClue can handle the full application and follow-up for you.

A regular taxpayer files GSTR-1 (outward supplies, monthly or quarterly under QRMP), GSTR-3B (summary return with tax payment, monthly or quarterly), and GSTR-9 (annual return). Composition taxpayers file CMP-08 quarterly and GSTR-4 annually. Due dates depend on whether you are on the monthly or QRMP scheme.

A late GST return attracts a per-day late fee (subject to a cap) plus interest at 18% per annum on any tax paid late. A pending return also blocks filing of the next period, and your buyers cannot claim input tax credit on your invoices until you file. Persistent non-filing can lead to cancellation of registration.

QRMP (Quarterly Return, Monthly Payment) lets taxpayers with aggregate turnover up to Rs 5 crore file GSTR-1 and GSTR-3B quarterly while paying tax monthly through a simple challan (PMT-06). It reduces the filing burden for small businesses while keeping tax payment current.

Input Tax Credit (ITC) is the GST you pay on business purchases that you can set off against the GST you collect on sales, so tax is charged only on value addition. To claim ITC you need a valid tax invoice, actual receipt of the goods or services, the supplier to have filed their return, and the invoice to appear in your GSTR-2B. Certain items are blocked under Section 17(5).

Under reverse charge, the recipient of a supply — not the supplier — is liable to pay GST directly to the government on certain notified goods and services (for example, legal services, goods transport agency services, or residential rent to a registered business). The recipient self-assesses and pays the tax in GSTR-3B, and may claim it as ITC where eligible.

No. ITC is available only on inputs, input services and capital goods used for business, and only when conditions are met. Section 17(5) blocks credit on specific items — such as motor cars (with exceptions), personal-use goods, club memberships, and goods lost, stolen or given as free samples. Credit is also denied if the supplier has not filed their return.

Yes. GST is an indirect tax on the supply of goods and services, collected at each stage of the chain and ultimately borne by the consumer. Income tax is a direct tax on a person or entity's income. They are separate laws with separate returns — see our income tax return filing guide for the direct-tax side.