The Goods and Services Tax (GST) is India’s unified indirect tax regime, designed to streamline the country’s complex tax structure by replacing multiple state and central taxes. Since its introduction on July 1, 2017, GST has transformed how businesses operate and how the government collects revenue. This article provides an authoritative, up-to-date overview of GST, including legal references, compliance requirements, and practical examples to help business owners, students, and individuals understand its fundamentals.

What is GST?

GST is a comprehensive, destination-based indirect tax levied on the supply of goods and services across India. It subsumes various central and state taxes, such as Value Added Tax (VAT), Central Excise Duty, Service Tax, and others, into a single tax system.

Legal Reference:
GST is governed by the Central Goods and Services Tax Act, 2017 (CGST Act), the Integrated Goods and Services Tax Act, 2017 (IGST Act), and corresponding state GST laws.

Key Features of GST

• One Nation, One Tax: GST unifies the tax structure across India, promoting ease of doing business.

• Destination-Based Tax: Tax is collected at the point of consumption, not origin.

• Input Tax Credit (ITC): Businesses can claim credit for taxes paid on inputs, reducing the cascading effect of taxes (Section 16, CGST Act).

• Multi-Tier Structure: GST comprises Central GST (CGST), State GST (SGST), and Integrated GST (IGST).

Registration Under GST (2025–26)

Who Must Register?
As per Section 22 of the CGST Act, GST registration is mandatory for:

• Businesses with aggregate turnover exceeding ₹40 lakh (goods) or ₹20 lakh (services) in normal category states.

• Lower thresholds apply in special category states: ₹20 lakh for goods and ₹10 lakh for services.

• Persons making inter-state taxable supplies (Section 24, CGST Act).

• E-commerce operators, agents, Input Service Distributors (ISDs), and those required to pay tax under the reverse charge mechanism.

• Voluntary registration is also permitted for businesses below the threshold, enabling them to avail input tax credit and enhance credibility3.

Example:
A digital marketing agency in Delhi with annual revenue of ₹25 lakh (services) must register for GST, as it exceeds the ₹20 lakh threshold for services in a normal category state.

GST Compliance and Returns

Return Filing:
Registered taxpayers must file periodic returns, including GSTR-1 (details of outward supplies) and GSTR-3B (summary return). Section 39 of the CGST Act governs the filing of returns, with recent amendments and notifications (e.g., Notification No. 01/2025 – Central Tax) updating procedures and deadlines2.

Input Tax Credit (ITC):
Section 16 of the CGST Act allows businesses to claim ITC on eligible purchases, provided they possess a valid tax invoice and the supplier has paid the tax to the government.

Recent Update (2025):
The government continues to refine GST compliance, with the latest notifications streamlining return filing for registered persons and updating deadlines to ensure smoother operations2.

GST Rates and Structure

GST rates are categorized into slabs: 0%, 5%, 12%, 18%, and 28%, depending on the nature of goods or services. Some items, such as petroleum products and alcohol, remain outside the GST ambit and are taxed separately.

GST Collections and Economic Impact (2025)

GST collections serve as a key indicator of economic activity. In May 2025, India’s GST collections reached ₹2.01 lakh crore, marking a 16.4% increase from the previous year. This growth was driven by a 25.2% rise in GST from imports and a 13.7% increase from domestic transactions1. The government projects an 11% annual increase in GST revenue for 2025, reflecting the tax’s growing role in national finances.

Legal References and Sections

• CGST Act, 2017

  • Section 16: Input Tax Credit

  • Section 22: Persons liable for registration

  • Section 24: Compulsory registration in certain cases

  • Section 37: Furnishing details of outward supplies

  • Section 39: Furnishing of returns

  • Section 168: Power to issue instructions or directions

• IGST Act, 2017

  • Section 5: Levy and collection of IGST

Practical Example: GST in Action

Scenario:
A manufacturer in Maharashtra sells goods worth ₹1 crore to a retailer in Gujarat.

• Tax Applied: IGST is levied as it is an inter-state supply.

• Input Tax Credit: The retailer can claim ITC on IGST paid while selling the goods further.

Conclusion

GST has significantly simplified India’s indirect tax landscape, promoting transparency, efficiency, and compliance. Staying updated with the latest legal provisions and compliance requirements is essential for businesses and individuals alike. For authoritative guidance, always refer to the Central Goods and Services Tax Act, 2017, and official government notifications.

Keywords: GST, Goods and Services Tax, GST registration, GST Act, Section 16, Section 22, Section 24, Indian tax, indirect tax, GST 2025, GST compliance, GST returns, input tax credit, GST rates, GST collection

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