What is GST in India?
The Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based indirect tax that replaced over a dozen central and state taxes in India on 1 July 2017. It is governed by the GST Council and administered through the GSTN (GST Network) portal. GST applies to the supply of goods and services across India and is designed to eliminate the cascading "tax on tax" effect of the previous tax regime.
India operates a dual GST structure — the Centre and the States both levy GST simultaneously on the same transaction. This is unique globally and reflects India's federal structure.
India GST Rate Slabs (2026)
GST in India is levied in five rate slabs. The correct slab depends on the specific good or service as classified under the HSN (Harmonised System of Nomenclature) code for goods or the SAC (Services Accounting Code) for services.
| GST Rate | Category | Examples |
|---|---|---|
| 0% | Essential goods & exempt services | Fresh vegetables, milk, eggs, bread, salt, educational services, healthcare services, public transport |
| 5% | Mass consumption goods, basic services | Packaged food (sugar, edible oils), domestic LPG, economy class air travel, restaurant services (non-AC), medicines |
| 12% | Standard goods & services | Processed food, mobile phones, bicycles, business class air travel, hotel rooms (₹1,000–₹7,500/night) |
| 18% | Most goods & services | IT services, consulting, financial services, restaurant services (AC), hair salons, hotel rooms (above ₹7,500/night), electronics, most manufactured goods |
| 28% | Luxury & demerit goods | Cars, motorcycles above 350cc, tobacco products, aerated drinks, cement, casinos, online gaming |
CGST, SGST, IGST, and UTGST — What's the Difference?
India's dual GST structure means that for any transaction, two components of GST apply simultaneously. Which component depends on whether the transaction is within one state or across state lines:
Intra-State Supply (within the same state)
When a supplier and customer are in the same state, both CGST (Central GST) and SGST (State GST) are levied, each at half the applicable GST rate. For an 18% GST transaction: CGST = 9% + SGST = 9%. The CGST revenue goes to the Central Government and the SGST revenue goes to the State Government.
Inter-State Supply (across state lines)
When the supplier and customer are in different states — or when goods are exported — IGST (Integrated GST) is levied at the full GST rate. IGST revenue is collected by the Central Government and then shared with the destination state. This prevents the cascading effect that occurred under the previous CST (Central Sales Tax) regime.
UTGST (Union Territory GST)
For transactions within a Union Territory (Delhi, Chandigarh, Dadra & Nagar Haveli, etc.), UTGST replaces SGST. The mechanism and rates are identical to SGST.
| Transaction | Tax Applied | Example (18% item) |
|---|---|---|
| Supplier in Maharashtra → Customer in Maharashtra | CGST 9% + SGST 9% | CGST ₹90 + SGST ₹90 on ₹1,000 |
| Supplier in Maharashtra → Customer in Karnataka | IGST 18% | IGST ₹180 on ₹1,000 |
| Supplier in Delhi (UT) → Customer in Delhi | CGST 9% + UTGST 9% | CGST ₹90 + UTGST ₹90 on ₹1,000 |
| Export of goods/services | Zero-rated (0% IGST) | Eligible for input tax credit refund |
GST Registration — Who Needs It?
GST registration is mandatory for businesses and individuals whose aggregate annual turnover exceeds the prescribed threshold. As of 2026:
- Goods suppliers: Turnover above ₹40 lakh per year (₹20 lakh for special category states)
- Service providers: Turnover above ₹20 lakh per year (₹10 lakh for special category states)
- E-commerce operators and sellers on platforms like Amazon/Flipkart: Mandatory regardless of turnover
- Inter-state suppliers: Mandatory regardless of turnover
- Casual taxable persons and non-resident taxable persons: Mandatory regardless of turnover
Voluntary registration is available for businesses below the threshold and is often advisable to claim Input Tax Credit (ITC).
Input Tax Credit (ITC) — How GST Avoids Cascading Tax
One of GST's key features is the Input Tax Credit mechanism, which prevents the "tax on tax" problem that plagued the previous regime. A registered business can claim credit for the GST paid on its purchases and offset it against the GST it collects on sales. Only the net difference is remitted to the government.
GST Filing — Returns and Deadlines
Registered GST taxpayers must file periodic returns through the GSTN portal. The main return types are:
| Return | Who Files | Frequency | Due Date |
|---|---|---|---|
| GSTR-1 | Regular taxpayers (outward supplies) | Monthly / Quarterly | 11th of following month (monthly); 13th of month after quarter (quarterly) |
| GSTR-3B | Regular taxpayers (summary return) | Monthly | 20th of following month |
| GSTR-4 | Composition scheme dealers | Annually | 30 April |
| GSTR-9 | Regular taxpayers (annual return) | Annually | 31 December |
| GSTR-9C | Taxpayers with turnover above ₹5 crore (reconciliation statement) | Annually | 31 December |
Composition Scheme — Simplified GST for Small Businesses
Small taxpayers with annual aggregate turnover up to ₹1.5 crore (₹75 lakh for services) can opt for the Composition Scheme, which allows them to pay GST at a fixed flat rate on turnover instead of the regular slab rates, without maintaining detailed invoice-level records. The flat rates are:
- Manufacturers: 1% of turnover (CGST 0.5% + SGST 0.5%)
- Traders: 1% of turnover
- Restaurants (non-alcoholic): 5% of turnover
- Other service providers: 6% of turnover
Composition scheme taxpayers cannot collect GST from customers, cannot claim ITC, and cannot make inter-state supplies. They file GSTR-4 annually instead of monthly GSTR-3B returns.
GST on Real Estate
GST on real estate applies only to under-construction properties. Completed ready-to-move properties are exempt from GST. The current rates for residential properties are:
- Affordable housing (below ₹45 lakh, up to 60 sq m in metros / 90 sq m in non-metros): 1% GST
- Other residential properties: 5% GST
- Commercial properties: 12% GST
Stamp duty and registration charges are separate and not covered under GST — they remain state levies applied at the time of property registration.