What is GST?
Goods and Services Tax (GST) is a tax on the supply of goods and services. It is collected at each stage of the supply chain, and businesses get credit for the GST they paid on purchases, so the tax is effectively borne by the final consumer.
There are three main components:
- CGST and SGST apply to supplies within the same state, split equally between the Centre and the state.
- IGST applies to supplies from one state to another, and to imports.
Current GST rates
Since 22 September 2025 (often called GST 2.0), GST uses fewer rate slabs. The earlier 12% and 28% slabs were removed.
| Rate | Typically applies to |
|---|---|
| Nil / exempt | Many essential items, such as unprocessed food and certain services |
| 5% | Merit and essential goods and some services |
| 18% | The standard rate for most goods and services, including most professional services |
| 40% | A narrow set of luxury and demerit goods, such as tobacco products |
Who must register?
Registration is compulsory once your aggregate turnover in a financial year crosses the threshold:
| Type of supplier | Most states | Special category states |
|---|---|---|
| Goods only | ₹40 lakh | Lower limits (₹10–20 lakh) |
| Services, or goods and services | ₹20 lakh | ₹10 lakh |
Some businesses must register regardless of turnover, including those making inter-state supplies of goods, e-commerce sellers of goods, casual taxable persons and those required to pay tax under reverse charge.
Read more about our GST registration service.
Input tax credit (ITC)
Input tax credit lets you reduce the GST you pay on sales by the GST you paid on business purchases. To claim it, generally:
- You hold a valid tax invoice or debit note.
- You have received the goods or services.
- The invoice appears in your GSTR-2B (your supplier has reported it).
- The supplier has paid the tax to the government.
- You file your own returns.
ITC is not available on certain items, such as most food and beverages, personal expenses and some motor vehicles. Composition dealers cannot claim ITC at all.
GST returns and due dates
| Return | What it covers | Due date |
|---|---|---|
| GSTR-1 | Details of sales (outward supplies) | 11th of next month (monthly); 13th after the quarter (QRMP) |
| IFF | Optional monthly upload of B2B invoices under QRMP | 13th of next month |
| GSTR-3B | Summary return and tax payment | 20th of next month (monthly); 22nd or 24th after the quarter (QRMP, by state) |
| PMT-06 | Monthly tax payment under QRMP | 25th of the next month |
| GSTR-9 | Annual return (mandatory above ₹2 crore turnover) | 31 December after the financial year |
| GSTR-9C | Reconciliation statement (above ₹5 crore) | 31 December, with GSTR-9 |
The QRMP scheme (Quarterly Return Monthly Payment) is available to businesses with turnover up to ₹5 crore.
Composition scheme
The composition scheme lets small businesses pay GST at a fixed low rate on turnover with simpler filing. The general turnover limit is ₹1.5 crore for goods (lower in some special category states) and ₹50 lakh for eligible service providers.
The trade-offs: you cannot claim input tax credit, cannot collect GST from customers, and generally cannot make inter-state supplies. It suits businesses that sell mainly to consumers within one state.
Late fees and interest
Filing GSTR-1 or GSTR-3B late generally attracts a late fee of ₹50 per day (₹20 per day for nil returns), subject to a cap, plus 18% interest per year on tax paid late. Late annual returns also attract fees. See Penalties & late fees.
Last updated 29 September 2026. This page is general information based on the rules in force on that date, not professional advice. Tax rules, rates and due dates can change through budgets and government notifications. Contact us to confirm what applies to your situation.