What is GST?
GST (Goods and Services Tax) is India's comprehensive indirect tax, introduced on July 1, 2017. It unified a fragmented system of VAT, Service Tax, Excise Duty, and Central Sales Tax into a single, streamlined tax applied at every stage of the supply chain.
Operating on a destination-based principle, GST revenue flows to the state where goods or services are consumed — not where they originate. This transformed India into a genuine common market for the first time.
How GST is calculated
Adding GST (exclusive price)
Total Price = Original Price + GST Amount
Example: ₹10,000 product at 18% GST → GST = ₹1,800 → Total = ₹11,800.
Removing GST (inclusive price)
GST Amount = Inclusive Price − Original Price
Example: ₹11,800 inclusive of 18% → Original = ₹10,000 → GST = ₹1,800.
CGST, SGST, and IGST
- CGST (Central GST): Central Government's share on intra-state sales — always half the total rate.
- SGST (State GST): State Government's share — equals CGST, completing the other half.
- IGST (Integrated GST): Full rate charged on inter-state sales, later apportioned between states.
GST rate slabs 2026
| Rate | Category | Examples |
|---|---|---|
| 0% | Exempt | Fresh produce, milk, eggs, bread, healthcare, education |
| 5% | Essential | Packaged food, sugar, tea, coal, economy air travel |
| 12% | Standard | Butter, ghee, mobile phones, business class flights |
| 18% | Standard+ | Consumer goods, IT services, telecom, AC restaurants |
| 28% | Luxury | Cars, ACs, tobacco, aerated drinks, cement |
Who must register?
Mandatory for businesses exceeding ₹40 lakh turnover (goods) or ₹20 lakh (services). Special category states have lower thresholds: ₹20 lakh and ₹10 lakh respectively. Inter-state suppliers and e-commerce operators must register regardless of turnover.
Tips to save on GST
- Claim ITC aggressively: Offset GST paid on purchases against GST collected. This is the single biggest tax saver for businesses.
- Composition Scheme: Under ₹1.5 crore turnover? Pay flat 1% (manufacturing) or 5% (restaurants) instead of regular rates.
- Invoice discipline: Every purchase invoice must have GSTIN, HSN codes, and tax breakup — or you lose ITC claims.
- File on time: Late fees are ₹50/day + 18% annual interest on outstanding tax. Set calendar reminders.
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