This page provides a brief overview of the Goods and Services Tax (GST) in India. Please note that our calculator is an income tax calculator, not a GST calculator. For official details, always refer to the official GST portal.
What is GST?
Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based indirect tax that has replaced many indirect taxes in India. It is levied on the supply of goods and services. The GST journey of a product or service from the manufacturer to the consumer involves multiple stages, and tax is paid at each stage, with the ability to claim credit for tax paid at the previous stage. This is known as the Input Tax Credit (ITC) mechanism.
Types of GST
India has a dual GST structure, meaning that tax is administered by both the Central and State Governments.
- CGST (Central GST): Levied by the Central Government on the intra-state (within the same state) supply of goods and services.
- SGST (State GST): Levied by the State Government on the intra-state supply of goods and services.
- IGST (Integrated GST): Levied by the Central Government on all inter-state (between different states) supplies of goods and services. The tax collected is then shared between the Central and State governments.
- UTGST (Union Territory GST): Levied on the supply of goods and services in the Union Territories of India.
Advantages of GST
For Business Owners (New and Existing)
- Unified Market & Simpler Compliance: GST replaces multiple indirect taxes (VAT, Service Tax, Excise Duty). This creates a common national market and simplifies tax compliance, which is a major benefit for both new businesses starting out and existing businesses transitioning from complex legacy systems.
- Input Tax Credit (ITC): Businesses can claim credit for tax paid on inputs (raw materials, services). This prevents the "tax on tax" effect, reduces production costs, and improves cash flow.
- Ease of Doing Business: With a centralized online portal for registration, filing returns, and payments, starting and operating a business anywhere in India has become more straightforward.
- Improved Logistics & Efficiency: The removal of interstate checkpoints and the introduction of the e-way bill system have made the transportation of goods faster and more efficient, reducing transit times and costs.
For Consumers & Vehicle Buyers
- Transparent and Lower Prices: Hidden taxes are eliminated, and the benefits of ITC are often passed on to consumers, leading to more transparent and often lower final prices for many goods and services.
- Benefit for New Vehicle Buyers: GST has subsumed various taxes like excise duty, VAT, and cesses on automobiles. This has led to a more uniform on-road price across states and, in many cases, has reduced the overall tax burden, making cars and two-wheelers more affordable.
- Uniformity Across States: As a "One Nation, One Tax" system, GST ensures that the price of a product is largely the same across the country, eliminating wide price variations between states.
GST Slabs and Rates
Goods and services are categorized under different tax slabs. While the list is extensive, here are some common examples for each slab. For a complete and updated list, always refer to the official CBIC website.
0% GST (Exempt)
- Milk, eggs, curd, fresh vegetables
- Newspapers, books, educational services
5% GST
- Sugar, tea, coffee, edible oils
- Apparel & footwear below ₹1000
12% GST
- Butter, cheese, ghee, processed foods
- Mobile phones
18% GST
- Hair oil, toothpaste, soaps
- Capital goods, industrial intermediaries
28% GST
- Luxury items, cars, cement
- Air conditioners, refrigerators
Who needs to register for GST?
GST registration is mandatory for businesses and individuals whose aggregate turnover exceeds a certain threshold. The threshold varies for goods and services and also depends on the state. Generally, it is required for:
- Businesses with an annual turnover above ₹40 lakh for goods (₹20 lakh for special category states).
- Service providers with an annual turnover above ₹20 lakh (₹10 lakh for special category states).
- Individuals making inter-state supplies of goods.
- E-commerce operators and sellers on e-commerce platforms.
- Casual taxable persons and non-resident taxable persons.
This is not an exhaustive list. It is crucial to check the official guidelines for specific registration requirements.
Official GST Resources
- Official GST Portal - For registration, filing, and payments.
- CBIC GST Rates - Official rates for goods and services.
- CBIC-GST Portal - For acts, rules, and notifications.
- GST FAQs - Official frequently asked questions.