GST Basics – Complete & Detailed Guide
Applicable as per GST law in force from 22 September 2025 (GST 2.0)
GST (Goods and Services Tax) is India’s comprehensive indirect tax system, implemented from 1 July 2017. It replaced multiple indirect taxes such as VAT, Service Tax, Excise Duty, Entry Tax and CST, thereby creating a unified national market.
GST is levied on the supply of goods and services and is based on the concept of value addition. One of the most important features of GST is the availability of Input Tax Credit (ITC), which eliminates the cascading effect of taxes.
With effect from 22 September 2025, the Government rationalised GST rates under a simplified structure commonly referred to as GST 2.0, including the introduction of a 40% GST slab for specified luxury and sin goods.
Why GST Was Introduced?
- Multiple indirect taxes caused complexity and increased compliance cost
- Cascading effect of tax (tax on tax) increased prices
- Different state tax laws hindered inter-state trade
- Lack of transparency in indirect tax system
GST unified the indirect tax system under the principle of “One Nation, One Tax.”
Types of GST in India
CGST
Central Goods and Services Tax levied by the Central Government on intra-state supply of goods and services.
SGST
State Goods and Services Tax levied by the State Government on intra-state supply of goods and services.
IGST
Integrated GST levied on inter-state supply of goods and services and on imports.
UTGST
Union Territory GST applicable in Union Territories without legislature.
Who is Required to Register Under GST?
- Manufacturers, traders and service providers
- Freelancers and consultants
- E-commerce sellers and operators
- Online and digital service providers
- Persons required to deduct or collect tax under GST
GST Registration Threshold Limits
| Category | Threshold Limit |
|---|---|
| Goods – Normal Category States | ₹40 Lakh |
| Services – Normal Category States | ₹20 Lakh |
| Goods – Special Category States | ₹20 Lakh |
| Services – Special Category States | ₹10 Lakh |
Special Category States include Arunachal Pradesh, Manipur, Mizoram, Nagaland, Tripura, Meghalaya and other notified regions.
GST Rate Structure (GST 2.0)
- 0% – Essential and exempt goods
- 5% – Basic necessities
- 18% – Standard rate for most goods and services
- 40% – Luxury and sin goods
- Tobacco and tobacco products
- Pan masala and similar products
- Luxury automobiles
- High-end motorcycles
- Aerated beverages
- Online gaming, gambling and casinos
What is Input Tax Credit (ITC)?
Input Tax Credit allows a registered person to claim credit of GST paid on purchases against GST payable on outward supplies.
- GST paid on purchase: ₹1,000
- GST collected on sale: ₹1,500
- Net GST payable: ₹500
What is a GST Return? (All GST Returns)
A GST Return is a statement filed by a registered person containing details of sales, purchases, tax liability and tax paid.
Returns for Regular Taxpayers
- GSTR-1 – Outward supplies
- GSTR-3B – Monthly summary return
- GSTR-9 – Annual return
- GSTR-9C – Reconciliation statement (where applicable)
Returns for Composition Scheme
- CMP-08 – Quarterly statement-cum-challan
- GSTR-4 – Annual return
Other GST Returns
- GSTR-5 – Non-resident taxable person
- GSTR-5A – OIDAR services
- GSTR-6 – Input Service Distributor (ISD)
- GSTR-7 – TDS under GST
- GSTR-8 – TCS by e-commerce operators
- GSTR-10 – Final return after cancellation
- GSTR-11 – UIN holders (Embassies, UN bodies)