GST in India - Complete Guide
GST (Goods and Services Tax) replaced over a dozen central and state taxes from July 1, 2017. It is a single, unified indirect tax on most goods and services, collected at the point of consumption.
GST-Exclusive (Add GST to price):
GST Amount = Original Price × GST% / 100
Total Price = Original Price + GST Amount
GST-Inclusive (Extract GST from MRP):
Original Price = MRP ÷ (1 + GST%/100)
GST Amount = MRP − Original Price
OR: MRP × GST% ÷ (100 + GST%)
GST Rate Slabs - What Falls Where
0%: Fresh fruits & vegetables, milk, eggs, books, education, healthcare, electricity up to 250 units
5%: Household necessities - sugar, tea, coffee, edible oils, railways, domestic air travel
12%: Processed foods, medicines, mobile phones (earlier 18%), hotel rooms ₹1000–₹7499
18%: Most services (IT, telecom, banking), electronics, appliances, restaurant meals, hotel rooms ₹7500+, most industrial goods
28%: Luxury & sin goods - cars, motorcycles, cigarettes, tobacco, aerated drinks, casinos
Frequently Asked Questions
What is the difference between CGST, SGST, and IGST?
GST is a dual tax. For intra-state transactions (buyer and seller in same state), the total GST is split equally between CGST (Central GST, goes to Union government) and SGST (State GST, goes to state government). For inter-state transactions, IGST (Integrated GST = full rate) applies, collected by the Centre and later distributed to the destination state. Example: 18% GST intra-state = 9% CGST + 9% SGST. Inter-state = 18% IGST.
Who needs to register for GST in India?
Businesses with annual turnover exceeding ₹40 lakhs (goods) or ₹20 lakhs (services) must register for GST. For special category states (northeast, J&K, Himachal Pradesh, Uttarakhand), the threshold is ₹20L (goods) and ₹10L (services). E-commerce sellers, inter-state suppliers, and those under reverse charge mechanism must register regardless of turnover.
What is the GST Composition Scheme?
The Composition Scheme is a simplified GST option for small businesses with turnover below ₹1.5 crore (₹75 lakh for some services). Rates are: Manufacturers 1%, Traders 1%, Restaurants (non-AC) 5%. Composition taxpayers cannot collect GST from customers, cannot claim Input Tax Credit, and cannot make inter-state supplies. They file quarterly returns instead of monthly.
