Goods and Services Tax (GST) is a comprehensive, destination-based indirect tax levied on the supply of goods and services across India. Introduced on July 1, 2017, GST replaced multiple central and state taxes such as VAT, service tax, and excise duty, bringing them under one unified system.
Under GST, businesses are required to collect tax on the goods or services they sell and pass it on to the government. The tax collected is divided between the Central Government (CGST), the State Government (SGST), or levied as Integrated GST (IGST) in case of inter-state transactions. GST is structured into multiple rate slabs, typically 0%, 5%, 12%, 18%, and 28%, depending on the nature of the product or service.
For small business owners and startups, GST plays a crucial role in day-to-day operations. Registration under GST is mandatory for businesses whose turnover exceeds the prescribed threshold (currently ₹40 lakh for goods and ₹20 lakh for services, subject to state-specific limits). Once registered, businesses must issue GST-compliant invoices, file monthly or quarterly returns, and pay taxes on time.
GST compliance affects several areas such as input tax credit (ITC), where businesses can claim credit for the tax paid on purchases, effectively reducing their tax liability. It also simplifies logistics, allows better tracking of tax credits, and brings more transparency to the tax system.
For those managing their own filings or seeking support, platforms like Fintax24 offer end-to-end assistance with GST and income tax compliance, helping business owners save time and avoid penalties.
In summary, GST is a critical part of doing business in India, impacting pricing, accounting, and legal compliance. Understanding it ensures smooth operations and helps maintain good standing with tax authorities.