The introduction of GST, or Goods and Services Tax, marked one of the most significant reforms in India’s indirect taxation system. Introduced on July 1, 2017, GST replaced a complex web of multiple taxes with a unified structure aimed at simplifying the tax process for businesses and consumers alike.
But what is GST, why was it implemented, and how to obtain a GST number? We have also covered how individuals and businesses can check GST rates on different items. This comprehensive blog answers all these questions in simple, easy-to-understand language.
What Is GST?
GST stands for Goods and Services Tax, a single, unified tax levied on the supply of goods and services across India. It has subsumed various indirect taxes such as VAT, service tax, excise duty, and others. By introducing GST, the government aimed to create “One Nation, One Tax,” making the taxation system more transparent, efficient, and business-friendly.
There are three main types of GST in India:
- CGST (Central Goods and Services Tax) – Collected by the central government.
- SGST (State Goods and Services Tax) – Collected by the state governments.
- IGST (Integrated Goods and Services Tax) – Applicable on interstate transactions and imports.
GST applies at every stage of the supply chain, right from manufacturers to consumers, with seamless input tax credit benefits at each step.
What is the Purpose of GST?
The core purpose of GST goes beyond just tax collection. It was designed to streamline the entire taxation framework of India. Here’s a detailed look at its objectives:
- Elimination of Tax Cascading Effect: Before GST, taxes were levied on top of taxes, increasing costs for end consumers. GST has eliminated this cascading effect.
- Simplified Tax Structure: By consolidating multiple indirect taxes into one, GST has made tax compliance easier for businesses.
- Boost to Ease of Doing Business: With a unified tax regime, businesses can operate seamlessly across states without worrying about differing tax laws.
- Transparency and Accountability: GST is a technology-driven system, reducing the scope for tax evasion and promoting transparency.
- Uniform Market Across India: GST has created a common national market, enabling free movement of goods and services across state borders.
- Higher Revenue for Government: Improved compliance and reduced evasion help increase overall tax collections.
- Formalization of Economy: More businesses are now part of the formal economy, contributing to organized economic growth.
How to Apply for GST Number?
Obtaining a GST number, also known as GSTIN (Goods and Services Tax Identification Number), is mandatory for businesses meeting certain turnover thresholds or engaged in specific types of transactions. Here’s how to apply for GST:
Step 1: Visit the Official GST Portal
Go to www.gst.gov.in, the official portal for GST registration and related services.
Step 2: Select “New Registration”
Under the “Services” tab, select “Registration” and then click on “New Registration.”
Step 3: Fill in Required Details
Provide basic details such as:
- Legal name of the business (as per PAN)
- PAN number
- Mobile number and email ID
- State and district of operation
Step 4: Receive OTP Verification
Enter the OTP sent to your registered mobile number and email to proceed.
Step 5: Complete the Application (Part-B)
Log in using the Temporary Reference Number (TRN) provided. Submit required documents, including:
- PAN of the applicant/business
- Proof of business address
- Identity proof of the promoters/partners/directors
- Bank account details
- Photographs of authorized signatories
Step 6: ARN Generation & Verification
After successful submission, an Application Reference Number (ARN) is generated. Authorities verify the application, and if all documents are in order, your GSTIN is issued within 7 working days.
Step 7: Download GST Certificate
Once approved, you can download your GST registration certificate from the portal.
Who Needs to Apply for GST Number?
You must apply for GST if:
- Your aggregate turnover exceeds Rs. 40 lakh (Rs. 20 lakh for certain special category states).
- You engage in inter-state supply of goods/services.
- You are involved in e-commerce.
- You are a casual taxable person.
- You are an input service distributor.
- You deal in taxable goods/services and wish to claim input tax credits.
How to Check GST Rates on Different Items?
GST rates vary across products and services, divided into multiple tax slabs. The current standard slabs are 0%, 5%, 12%, 18%, and 28%. Essential items often attract lower rates, while luxury goods and certain services fall under higher slabs.
Steps to Check GST Rates:
- Visit the Official GST Rate Portal
- Head to the dedicated rate portal at https://cbic-gst.gov.in/gst-goods-services-rates.html.
- Search for the Item or Service
- Use the search option to find the applicable GST rates by entering the product name or service description.
- Check HSN/SAC Codes
- Goods are classified under HSN (Harmonized System of Nomenclature) codes, and services under SAC (Service Accounting Codes). GST rates are linked to these codes.
- Refer to Official Notifications
- The GST Council regularly updates rates. Always refer to the latest official notifications for accurate information.
Common Examples of GST Rates on Different Items:
- Essential items like milk, fresh fruits, and vegetables – 0%
- Household essentials like edible oil, tea, sugar – 5%
- Processed foods, cosmetics, and certain services – 12%
- Consumer durables, electronics – 18%
- Luxury items, automobiles, aerated drinks – 28%
latest announcements:- https://www.pib.gov.in/PressReleasePage.aspx?PRID=2163555
Benefits of Having a GST Number for Businesses
The major changes in the taxation policy comes with its own benefits for businesses as well. Below we have highlighted the major advantages of having a GST number for your business.
- Having a registered GST number ensures legal compliance with Indian tax regulations.
- Allows businesses to claim input tax credits on purchases, reducing overall tax liability.
- Enhances business credibility with customers, vendors, and government authorities.
- Enables interstate business expansion without facing multiple tax barriers.
- Mandatory for selling on e-commerce platforms or participating in government tenders.
- Facilitates growth and operational ease in a competitive market.
Conclusion
Understanding what is GST, how to apply for GST number, and knowing the GST rates on different items is essential for both businesses and consumers. GST has revolutionised the Indian tax structure, making it simpler, more transparent, and business-friendly. If you are starting a business or already operating one, obtaining a GSTIN is a legal necessity and also opens doors to benefits like input tax credit and nationwide market access.
To stay compliant and competitive, regularly check the latest GST rates through the official portal and ensure timely filing of returns. With GST, India moves closer to a unified, efficient taxation system that fosters growth and simplifies business operations.
Frequently Asked Questions
What is GST in simple terms?
GST or Goods and Services Tax is a unified indirect tax applicable on the supply of goods and services across India, replacing multiple taxes with one.
How can I apply for a GST number?
You can apply for a GST number by visiting www.gst.gov.in, filling out the registration form, submitting required documents, and completing verification.
Who is required to obtain a GST number?
Any business exceeding the prescribed turnover limit, those engaged in inter-state supply, e-commerce operators, and certain other categories must obtain a GST number.
Where can I check GST rates for different items?
You can check GST rates on the official portal https://cbic-gst.gov.in/gst-goods-services-rates.html by searching for your product or service.
What are the current GST tax slabs?
GST tax slabs are 0%, 5%, 12%, 18%, and 28%, 40% depending on the type of product or service.