Everything you need to know about Goods and Services Tax — in plain language, no jargon.
GST is a single tax that replaced over 17 different taxes in India. It makes buying and selling goods and services simpler and more transparent.
GST stands for Goods and Services Tax. It is an indirect tax charged on almost every product and service sold in India — from your morning milk to the software your company uses.
Before GST (launched on July 1, 2017), India had a complicated maze of taxes like VAT, Service Tax, Excise Duty, and many others. Imagine paying 5 different tolls on the same highway. GST replaced all of them with one single, streamlined tax.
GST is charged at every stage of the supply chain — from manufacturing to the final sale to you. The key idea is called "Input Tax Credit".
Step 1: A cotton farmer sells cotton to a factory. Factory pays GST on cotton.
Step 2: The factory makes shirts, sells to a wholesaler. Wholesaler pays GST — but the factory gets back what it paid on cotton (Input Tax Credit).
Step 3: The wholesaler sells to a shop. Shop pays GST — but gets back what it paid to the wholesaler.
Step 4: You buy the shirt. You pay GST only once — on the final price.
🎯 Result: Tax is collected only on the value added at each stage. No double taxation!
India has a tiered GST structure. Not everything is taxed at the same rate:
| GST Rate | What Falls Here |
|---|---|
| 0% (Exempt) | Milk, fresh fruits, vegetables, basic foodgrains, healthcare services |
| 5% | Rice, wheat, edible oils, branded snacks, public transport |
| 12% | Smartphones, textiles, certain medicines, restaurant meals (non-AC) |
| 18% | AC restaurants, electronics, most services, business software |
| 28% | Cars, tobacco, luxury goods, casinos |
You might see these on your invoices. Here's the simple breakdown:
Buy a laptop in Maharashtra (same state) at 18% GST → You pay 9% CGST + 9% SGST
Buy a laptop shipped from Delhi to Maharashtra at 18% GST → You pay 18% IGST
Not everyone needs a GST number. You must register if:
Even if you are not a business owner, GST affects your daily life. It determines the price you pay for groceries, electricity, restaurants, and services. Understanding GST helps you know why prices are what they are, claim refunds if you're a business owner, avoid penalties, and make informed decisions when starting a business.
Use our free Risk Auditor to check your compliance level in under 60 seconds.
🛡️ Check My Risk Now →