GST in India: A Simple Guide to Rates, Registration, Filing, and Input Tax Credit
Jaspal Singh
Author
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.
Written by
Jaspal Singh
Founder & Editor
Personal finance writer helping Indians make smarter money decisions through clear, jargon-free guides on taxes, investments, and budgeting.
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