Objective of GST
GST definition states that it is a tax that has replaced multiple indirect taxes, like VAT, service taxes, excise, etc., in India. Notably, gaining an insight into the objectives of this tax regime helps to understand GST meaning better.
For instance, the primary objectives of the GST service tax include:
- Elimination of the cascading tax effect: Under the GST bill, taxes are levied only on the net value-added portion, which eliminates the tax-on-tax regime and, in turn, lowers the cost of goods.
- The subsumption of all indirect taxes: Except for a few, indirect taxes under the state and central government are subsumed into Goods and Services Tax.
- Increase the tax to GDP ratio and revenue surplus: A high tax to GDP ratio indicates higher tax collections, a sign of a strong economic system. A wider tax base and increased tax compliance are more likely to result in higher revenue for the government through GST services.
- Decrease corruption level and tax evasion: The GST bill aims to bring transparency in the tax system resulting in fewer instances of a false input tax credit.
- Increase tax compliance: GST online aims to increase tax compliance, especially in small and unorganised businesses, by simplifying the GST platforms registration and returns filing process.
- Increase in overall productivity and efficiency: The Goods and Services Tax in India aims to remove constraints regarding logistics and the lengthy claim process of an input tax credit. Also, by subsuming the entry tax, the overall productivity of enterprises is expected to increase.
Additional Read: Taxes replaced by GST
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Types of GST
There are four different types of GST, which are as follows:
- State Goods and Services Tax (SGST): The state government charges SGST on intra-state goods and services transactions. Later, the revenue is collected by the state where the transactions in question were carried out.
- Central Goods and Services Tax (CGST): The central government charges CGST on the intra-state transaction of goods and services. The concerned body is also responsible for collecting the revenue generated through this tax.
- Integrated Goods and Services Tax (IGST): This GST tax is charged on inter-state transactions of goods and services and applied on imports and exports. Note that both centre and State share the revenue collected through IGST as per the GST bill.
The state goods and service tax portion of this tax is collected by the state where the goods and services in question were consumed.
- Union Territory Goods and Services Tax (UGST): This GST tax is levied by Union Territories and charged on all transactions carried out in any UT in India. It is similar in terms of payment rules on the GST platform and distribution.
Transaction
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Old regime
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New regime
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Revenue
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Sale within a particular state (for example sale within Maharashtra)
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VAT + Excise/ service tax+central excise
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Central GST & State GST
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Shared between the state and centre
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Sale between states or more (for example Sales from Delhi to Maharashtra) Integrated GST centre
|
Excise/ service tax+ central sales
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Integrated GST
|
The centre shares the revenue as per goods’ destination
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GST registration procedure
As per the GST regime, all businesses liable to pay service tax, VAT, or central excise have to register under goods and service taxes. An applicant can initiate the GST registration process on the GST portal. Once the application is submitted, the online portal will generate ARN status instantly.
With the help of the ARN, an applicant can check his/ her application status. Applicants can also post queries if needed. Usually, taxpayers will receive their GST registration certificate and GSTIN within a week of their ARN generation.
ARN stands for Application Reference Number and is used to track GST registration application status. GSTIN is a 15-digit code allotted to every taxpayer registered with GST. Note that GSTIN is mandatory for businesses with an annual turnover of more than Rs. 20 lakh.
Documents required for GST registration
Below are the GST registration documents required by different eligible users to complete the process:
Sole proprietor or individual
- PAN
- Address proof
- Aadhaar card (owner)
- Bank account details
- Photograph (Owner)
Partnership firms inclusive of LLP
- PAN
- Address proof (partners and place of business)
- Bank account details
- Copy of partnership deed
- Registration certificate or board resolution (for LLP)
- Photographs of authorised signatories and partners
- Proof of appointing an authorised signatory
Hindu Undivided Family (HUF)
- PAN (HUF)
- Address proof
- Bank account details
- Photograph of the owner
- Aadhaar card and PAN card (Karta)
Company (both Indian and foreign, public and private)
- PAN (company)
- Bank details
- Address proof (principal place of business)
- PAN and Aadhaar card (authorised signatories)
- PAN and address proof (directors of the company)
- Article of association or Memorandum of association
- Proof of appointment of an authorised signatory
- Photographs (directors and the authorised signatory)
- Certificate of incorporation provided by the Ministry of Corporate Affairs
Advantages of GST
The introduction of GST is touted as one of the biggest tax reforms in India. To know more about the impacts of GST, it is imperative to learn more about its advantages and disadvantages.
In this regard, the most prominent advantages of GST include:
- Removal of the cascading effect of tax: The implementation of GST has brought indirect taxes under one umbrella, successfully eliminating the cascading tax effect and lowering the amount of compliance one must consider. For example, previously, service tax and VAT had their respective returns and compliance, but with the introduction of GST, entities only have to file one return. This, in turn, simplifies the process of inputting tax credit claims.
- A uniform tax structure: GST has brought the entire country under one tax regime; it facilitates uniformity in processes, laws, and tax rates across India.
- Simplified GST online process: All Goods and Services Tax processes can be initiated online, including registration and Goods and Services Tax return (GSTR) filing. This has simplified the process significantly and made it possible for start-ups to get registered with GST services without hassle in one place.
- Regulation of the unorganised sector: The GST bill effectively streamlines the processes related to online compliance, payments, and claim processes. Further, it helps the unorganised sector, bringing them directly under the regulation of goods and service tax norms.
- GST extends the composition scheme for all small businesses: Small businesses with an annual turnover up to Rs 1.5 crore (Rs 75 lakh for special category States) can become beneficiaries of GST’s composition scheme. The said scheme allows businesses to reduce their taxes.
Besides these, the GST bill has replaced 17 indirect taxes with one uniform tax. It has lowered the cost of goods and boosted demand for them, bringing in more revenue for both the centre and state governments.
GST registration fees
It is important to note that the government does not levy GST registration fees if an individual decides to register through the online GST service tax portal. However, suppose that an individual wants to seek professional help from an authorised chartered accountant or GST practitioner for GST services. In that case, they will have to pay a fee to avail of the professional service.
GST login for existing users
Existing users can access GST service details by simply logging into the GST portal. Notably, the GST bill and its online portal have simplified the GST registration and payment process. The portal has also made accessing details such as allotted GSTIN, orders, and notices easier. You will require the credentials for GST login, such as username and password, and follow a few steps to access such details from the GST portal.
The below steps explain the GST portal login process.
Step 1: Visit the official Goods and Services Tax portal
Step 2: Navigate to the right-hand corner of the homepage
Step 3: Click on the ‘Login’ button
Step 4: Enter your username, password, and CAPTCHA code and click on the ‘login’ button
Step 5: After completing GST login, you will be redirected to the dashboard, where you will find the summary of GST credit, ‘pay tax’ tab, ‘file returns’ tab,
Annual aggregate turnover or AATO, saved forms, notices received, etc.
If you do not have your credentials, you can easily retrieve them through the GST services portal. All you need to do is click on the ‘forgot password’ button on the login page and follow the subsequent steps.
GST rates slabs
Broadly, India now follows three main GST tax slabs. The GST rates are structured to ensure that essential goods and services fall under lower tax brackets, while luxury items are placed in the highest bracket. As of September 22, 2025, the applicable GST slabs are 5%, 18%, and 40%. The special rates for GST on gold and semi-precious stones remain unchanged, at 3% and 0.25%, respectively.
GST rates in India
The GST rates in India can be summarised as follows:
Under the 5% slab
The GST Reform 2.0 has widened the scope of the 5% slab, bringing in several items that were earlier taxed at 12%.
Goods: This slab now covers essential and commonly used consumer goods. It includes all categories of footwear and apparel, packaged foods, sugar, edible oils, spices, tea, coffee, agarbatti, domestic LPG, baby milk food, medicines, fertilisers, and Braille items.
Services: The 5% slab applies to services such as rail transport, economy-class air travel, and tour operator services.
New additions under services: Certain services have been shifted to the 5% slab, but without Input Tax Credit (ITC) for providers. These include hotel accommodation with tariffs below ₹7,500 per night, as well as services from salons, gyms, and yoga centres.
Under the 12% slab (This slab is now removed)
As part of GST Reform 2.0, the 12% tax slab has been removed to simplify the overall structure. Goods and services previously taxed at 12% have been shifted either to the 5% or 18% slabs.
Goods: Several daily-use items like almonds, butter, namkeen, and fruit juices have been shifted to the 5% slab. Items such as ayurvedic medicines, mobile phones, and work contracts are now placed in the 18% slab.
Services: Offerings such as hotels and guest houses with tariffs between ₹1,000 and ₹2,500 per night are now taxed at 18%. Business-class air tickets have been moved to the 40% slab, aligning with the higher tax category.
Under the 18% slab
The GST Reform 2.0 has widened the 18% slab, absorbing many goods and services that were earlier taxed at 28%.
Goods: This slab now includes a broad range of items that are neither essentials nor luxury goods. Examples are aluminium foil, furniture, CCTV, cameras, corn, envelopes, hair oil, instant food mixes, monitors, printers, preserved vegetables, steel products, and various electronic and weighing machines. To simplify the structure, some items earlier taxed at 18%, such as biscuits and soaps, have been moved to the lower 5% slab.
Services: A wide set of services fall under this category, such as telecom, IT services, and hotel stays priced up to ₹7,500 per night.
Under the 28% slab (This slab is now removed)
The 28% slab, once a major feature of the GST system, was abolished with the GST Reform 2.0, effective September 22, 2025. Items and services from this category have been shifted either to the 18% or the new 40% slab.
Goods: Products such as aerated water, ceramic tiles, dishwashers, deodorants, shampoos, and washing machines have been reclassified under the 18% slab. High-end goods like motorcycles and personal aircraft are now taxed at 40%.
Services: Earlier, services such as five-star hotel stays, gambling, and betting attracted 28% GST. These are now placed in the 40% slab. Hotel tariffs of ₹7,500 and above also fall into this category. Taxes on cinema and entertainment have been streamlined and moved to a lower slab, though without input tax credit (ITC).
As per the GST law, Zero-rated supplies in GST remain unchanged. These cover goods and services exempt from GST, mainly exports.
Under the New 40% slab
Introduced through GST Reform 2.0 on September 22, 2025, the 40% slab has replaced the older 28% rate and its associated compensation cess. It creates a clear, consolidated, and transparent system for luxury goods and services.
GST calculation
How to calculate GST
In India, GST (Goods and Services Tax) is calculated as the total of GST payable on reverse charge, inward supplies, and output supplies. This amount is computed separately for each month and must be paid when filing GST returns.
As a taxpayer, you need to account for all components - reverse charge, exempt supplies, inter-state sales, along with eligible and non-eligible Input Tax Credit (ITC), to arrive at the correct GST liability. Accurate calculation helps avoid interest charges that may apply if payments fall short of the actual obligation.
To simplify the process, you can use the GST calculator available on the Government of India’s GST portal by entering the relevant amounts to determine your total tax liability.
GST calculation formula
The formula to calculate the GST amount is:
Example: Suppose you sell a product from Mumbai to Kolkata worth ₹10,000. Under GST Reform 2.0, an 18% GST applies, charged as IGST since it is an inter-state transaction.
The GST amount applicable will be: (10,000 × 18)/100 = ₹1,800
The net price will be: ₹10,000 + ₹1,800 = ₹11,800
GST return filing
When to file GST returns?
Fundamentally, a GST return or GSTR is a document that has to be filed by taxpayers with the concerned tax administrative authority. This document comprises income/ sales or/ and purchase/ expense and proves useful in computing an entity’s tax liability.
Under the GST tax regime, registered dealers have to file GSTR, which includes:
- Sales
- Purchase
- Output GST
- Bank account details
- Input tax credit
As per goods and service tax norms, regular businesses that have an annual aggregate turnover of more than Rs. 5 crore must file one annual return and two monthly returns, i.e., a total of 25 returns in one year at the online GST platform.
However, under the QRMP scheme, the number of Goods and Services Tax returns varies for those who file quarterly GSTR-1 filers. In that case, they have to complete a total of nine GST service tax returns in a year, inclusive of the annual return and GSTR-3B. Likewise, the number varies for special cases such as composite dealers, who must file GSTR five times a year.
Return form
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Frequency
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Due date
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GSTR-1
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Monthly
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11th* of the next month with effect from October 2018
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GSTR-3B
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Monthly
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20th of the next month
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GSTR-4
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Quarterly
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18th of the month subsequent quarter
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GSTR-5
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Monthly
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20th of the next month
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GSTR-6
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Monthly
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13th of the next month
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GSTR-7
|
Monthly
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10th of the next month
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GSTR-8
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Monthly
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10th of the next month
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GSTR-9
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Annually
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31st December of next financial year
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New compliances under GST
In addition to filing goods and service tax returns online, the tax regime has also introduced multiple new systems.
- E-way bills: This centralised e-way bills system was launched for inter-state movement of goods on 1 April 2018 and intra-state movement of goods on 15 April 2018. With the help of this system, traders, manufacturers, and transporters can easily generate e-way bills for transported goods.
It is also beneficial for tax authorities and has helped decrease time at check-posts. Further, it has even been effective in reducing tax evasions.
- E-invoicing: The GST bill system applies to businesses with an annual turnover of over Rs. 100 crore in the preceding fiscal year. Such businesses must obtain a unique invoice reference number for all B2B invoices by uploading them on GSTN’s online invoice registration portal.
The said portal verifies the accuracy and authenticity of the invoice and subsequently authorises the businesses with a digital signature and QR code.
The biggest advantages of e-invoicing include reduction of data entry error and a boost in inter-operability of invoices. The system helps transfer invoice information from IRP to the GST platform and e-way bill portal instantly. Plus, it eliminates the need to file GSTR-1 manually.
- HSN code requirements: Businesses must mention their SAC/ HSN code on all supplies of goods or services on tax invoices from 1 April 2021. For example, B2B supplies for a registered entity with an aggregated turnover of up to Rs. 5 crore in the preceding year must mention their 4-digit HSN code on the invoice.
Similarly, B2B or B2C supplies for registered entities with a turnover exceeding Rs. 5 crore in the preceding year have to mention their 6-digit HSN code on the invoice. Notably, any changes in mentioning 4/ 6-digit HSN or SAC code must be detailed under Table 12 of the GSTR-1 form.
