GST in India: A Simple Guide to Rates, Registration, Filing, and Input Tax Credit

GST Made Simple

The Goods and Services Tax (GST) replaced a confusing web of state and central taxes in 2017. But even after 9 years, many small business owners find it confusing. This guide breaks it down in plain language.

The New GST Slab Structure (2026)

Effective September 2025, GST has been simplified to mostly 2 main slabs:

Rate	What It Covers
0% (Nil)	Essential items: fresh fruits, vegetables, milk, bread, unbranded grains
5%	Mass consumption items: packaged food, economy hotels, transport tickets, small restaurants
18%	Most goods and services: electronics, financial services, restaurants with AC, professional services, software
40%	Demerit goods: luxury cars, tobacco, aerated drinks, high-sugar beverages

The old 12% and 28% slabs have been largely merged into 5% and 18% respectively.

Who Needs to Register for GST?

• Service providers: Annual turnover above ₹20 lakh (₹10 lakh in special category states like NE states, Himachal, etc.)
• Goods sellers: Annual turnover above ₹40 lakh (₹20 lakh in special category states)
• E-commerce sellers: Mandatory registration regardless of turnover
• Interstate suppliers: Mandatory registration regardless of turnover

Input Tax Credit (ITC) — The Core Benefit of GST

ITC is what makes GST work for businesses. The concept is simple:

• You charge GST to your customers (output tax)
• You pay GST on your business purchases (input tax)
• You only pay the government the difference (output minus input)

Example: You sell a product for ₹1,000 + 18% GST (₹180). You bought raw materials for ₹600 + 18% GST (₹108). You pay the government: ₹180 - ₹108 = ₹72.

2026 rule: ITC claims are now validated against your supplier's GSTR-2B filing. If your supplier does not file their returns, you cannot claim that ITC.

GST Filing Calendar

Return	Frequency	Due Date	Who Files
GSTR-1	Monthly	11th of next month	All registered businesses
GSTR-3B	Monthly	20th of next month	All registered businesses
GSTR-9	Annual	31st December	All (turnover above ₹2 crore needs audit)

Composition Scheme: Small businesses with turnover under ₹1.5 crore can opt for the composition scheme — pay a flat 1-6% tax with quarterly filing. Simpler but no ITC benefit.

Common GST Mistakes to Avoid

• Not filing nil returns: Even if you had no sales, you must file GSTR-3B. Late fee: ₹50/day (₹20 for nil returns).
• Claiming ITC from non-compliant suppliers: Check your GSTR-2B regularly.
• Mismatch between GSTR-1 and GSTR-3B: Discrepancies trigger notices.
• Not reconciling with income tax: Your GST turnover and ITR income should match.

Related Reading

• Tax Planning for Freelancers — GST for service providers
• TDS Guide — how TDS and GST interact
• Tax Calculator

Disclaimer: GST rules change frequently via council notifications. Rates mentioned are as of March 2026. Consult a GST practitioner for business-specific advice. This article is for educational purposes only.