GST

GST (Goods and Services Tax)

India's unified indirect tax on the supply of goods and services

Definition

GST stands for Goods and Services Tax, a comprehensive indirect tax levied on the manufacture, sale, and consumption of goods and services across India. Introduced on 1st July 2017, GST replaced multiple indirect taxes including VAT, excise duty, service tax, and octroi, creating a unified national market. GST operates on a destination-based taxation principle and follows a multi-stage collection mechanism with input tax credit. There are four main GST tax slabs: 5%, 12%, 18%, and 28%, plus a 0% rate for essential items. GST is classified into three types: CGST (Central GST) and SGST (State GST) for intra-state transactions, and IGST (Integrated GST) for inter-state transactions. Every business with annual turnover exceeding Rs. 40 lakh (Rs. 20 lakh for services) must register for GST. Registered businesses must file regular returns like GSTR-1 and GSTR-3B, maintain proper invoices with HSN/SAC codes, and keep accurate stock records for compliance.

How It Works

  1. 1When you sell goods or services, you collect GST from the buyer and add it to the invoice.
  2. 2You also pay GST on your purchases from suppliers.
  3. 3At the end of each month or quarter, you calculate the difference between GST collected on sales and GST paid on purchases (called Input Tax Credit).
  4. 4You pay only the net difference to the government by filing GSTR-3B.

Example

A furniture shop in Nagpur sells a wooden table for Rs. 10,000 to a local customer. Since it is an intra-state sale, the shop charges 12% GST split as 6% CGST (Rs. 600) and 6% SGST (Rs. 600), making the invoice total Rs. 11,200. If the same table is sold to a customer in Mumbai (inter-state), 12% IGST (Rs. 1,200) is charged instead. The shop owner can claim input tax credit on the GST paid when purchasing raw wood, reducing the net tax liability.

How Stock Register Handles This

  • Auto-calculates CGST, SGST, and IGST based on buyer location and HSN code on every invoice
  • Generates GST-ready sales and purchase reports mapped directly to GSTR-1 and GSTR-3B formats
  • Tracks Input Tax Credit from purchase invoices so you know your exact net GST liability before filing
Learn more about GST Invoicing →

Related Terms

HSN CodeGSTR-1GSTR-3BE-InvoiceSAC Code

Related Guides

GST Reports Guide

Frequently Asked Questions

What is the GST registration limit for small businesses in India?

Businesses with annual turnover exceeding Rs. 40 lakh (Rs. 20 lakh for service providers and Rs. 10 lakh for special category states) must register for GST. However, you can voluntarily register even below this threshold if you want to claim Input Tax Credit or sell on e-commerce platforms.

What happens if I charge the wrong GST rate on an invoice?

Charging the wrong GST rate can lead to a notice from the tax department. If you overcharge, the buyer pays more and may not get full ITC. If you undercharge, you may have to pay the shortfall with interest. Always verify the HSN code of each product to apply the correct rate.

Can I claim GST paid on all my business purchases?

You can claim Input Tax Credit on most business purchases, but there are exceptions. GST paid on items for personal use, food and beverages, motor vehicles (with some exceptions), and goods that are lost, stolen, or given as free samples cannot be claimed as ITC.

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