GST (Goods and Services Tax) is an indirect tax charged on the supply of goods and services in India. It was introduced on 1 July 2017 and replaced several earlier indirect taxes.
GST means Goods and Services Tax.
It is a destination-based tax, which means tax is generally collected at the place where goods or services are consumed.
Simple Example:
A business sells goods for ₹10,000.
If GST applicable is 18%:
Product value = ₹10,000
GST = ₹1,800
Customer pays = ₹11,800
There are four major components:
CGST
Central GST
Intra-state sale
SGST
State GST
Intra-state sale
IGST
Integrated GST
Inter-state sale
UTGST
Union Territory GST
Certain Union Territory supplies
When the seller and place of supply are in the same state, CGST + SGST generally apply.
Example:
Tamil Nadu → Tamil Nadu
Taxable value = ₹10,000
GST rate = 18%
CGST 9% = ₹900
SGST 9% = ₹900
Total GST = ₹1,800
Invoice value = ₹11,800
When the supply is between different states, IGST generally applies.
Example:
Tamil Nadu → Karnataka
Taxable value = ₹10,000
IGST 18% = ₹1,800
Invoice value = ₹11,800
ITC means the eligible GST paid on business purchases can generally be used to reduce the GST payable on taxable outward supplies, subject to the applicable rules and conditions.
Example:
GST collected from customers: ₹18,000
Eligible ITC: ₹10,000
GST payable after ITC:
₹18,000 − ₹10,000 = ₹8,000
A business may need GST registration when it crosses the applicable turnover threshold or falls under circumstances where registration is required.
The applicable threshold and compulsory-registration rules can vary based on the nature of supply and the state, so they should be checked for the relevant period.
GSTIN
Taxable Value
Tax Invoice
HSN
SAC
CGST
SGST
IGST
Input Tax Credit
Output Tax
GSTR-1
GSTR-3B
E-Invoice
E-Way Bill
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