GST (Goods and Services Tax) is an indirect tax that has replaced many Central and State taxes like excise duty, VAT and service tax. It is a single comprehensive tax levied on all goods and services produced in India as well as those imported from other countries. The new tax regime came into effect on July 1, 2017, after years of deliberation – with the Atal Bihari Vajpayee Government first suggesting it in the year 2000.
Goods and Services Tax (GST) is a unified indirect tax imposed on the supply of goods and services throughout India. Enforced from 1 July 2017, GST replaced a wide range of earlier taxes such as VAT, excise duty, and service tax, bringing them under one umbrella. This system is designed as a multi-stage, value-added, and destination-based tax. In simple terms, GST is collected at every point in the supply chain, but only on the value added at that stage, and the revenue is allocated to the state where the goods or services are consumed.
GST functions through three key principles that ensure fairness and efficiency in tax collection.
GST is applied at every step in the supply chain — from raw material procurement and manufacturing to warehousing, wholesale, and retail sales. Each of these stages is taxed, making GST a true multi-stage system.
Only the additional value created at each stage is taxed. For example - manufacturers add value by converting raw materials into a finished product, warehousing adds value through packaging and labelling, and retailers add value through branding and final sales. This ensures GST is levied fairly on the incremental worth at every step.
The tax is collected in the state where the goods or services are consumed, not where they are produced. For instance, if a product is manufactured in Gujarat but sold in Delhi, the GST revenue goes to Delhi. This model ensures states benefit from actual consumption within their boundaries.
Several nations across the world have already implemented GST. To name a few - Canada replaced the Manufacturer’s Sales Tax with GST in the year 1991, Australia replaced the Federal Wholesale Tax with GST in the year 2000 and New Zealand replaced their sales taxes for some goods and services with GST in the year 1986. India implemented its dual GST system (a Central Goods and Services Tax (CGST) and a State Goods and Services Tax (SGST)) in 2017 to cut red tape and increase tax revenues, which in turn would fuel economic growth.
The Vajpayee Government, in the year 2000, began talks on GST and set up a committee, headed by Asim Dasgupta, Finance Minister of the West Bengal Government. The committee was given the responsibility of designing the GST model and managing the IT back-end preparedness for its rollout. In Budget 2006-07, Union Finance Minister Shri P. Chidambaram proposed implementation of Goods and Services Tax (GST) by April 1, 2010. The committee of State Finance Ministers, however, only released its First Discussion Paper on the tax regime in November, 2009.
The new tax regime finally came into effect on July 1, 2017. Here is a look at the timeline of ‘one nation, one tax’ system:
The Goods and Services Tax (GST) was introduced with the vision of creating a unified and efficient taxation system in India. It aimed to simplify compliance, remove tax barriers, and boost the ease of doing business while ensuring fairness for both states and consumers. The following objectives highlight its core purpose:
GST replaced multiple indirect taxes such as excise duty, VAT, and service tax with a single unified system. This eliminated overlapping taxes and created a consistent structure across states, promoting a common national market.
Earlier, taxes were applied on top of other taxes (tax on tax), increasing the final cost to consumers. GST ensures input tax credit at every stage, so businesses pay tax only on the value they add, reducing the overall burden.
By introducing a digital filing and payment system, GST makes tax collection more transparent, reduces the chances of evasion, and streamlines compliance for businesses of all sizes.
GST follows a dual model — Central GST (CGST) and State GST (SGST)/ Union-territories GST (UGST) for intra-state transactions, and Integrated GST (IGST) for inter-state transactions. This ensures fair revenue sharing between the Centre and the states.
By reducing hidden costs and simplifying tax procedures, GST improves competitiveness, attracts investment, and strengthens India’s position as a unified economic market.
With the cascading effect removed and rates streamlined, GST reduces the overall tax load on goods and services, ensuring fairer pricing and benefiting end consumers.
India follows a dual GST model, meaning both the Centre and the States have the authority to levy and collect taxes. This structure ensures fair distribution of revenue while keeping taxation uniform across the country. The major components of GST are:
GST is structured so that tax is collected at every stage of the supply chain, but only on the value added. This is enabled through the Input Tax Credit (ITC) mechanism, which allows businesses to set off the GST they pay on purchases against the GST they collect on sales. Ultimately, the tax burden falls only on the final consumer. Lets see how GST works by taking an example of a toy worth ₹1,000.
Although GST aims for the betterment of the nation, it does have a few drawbacks as well – just like there are 2 sides to a coin. Here are the advantages and disadvantages of GST:
| Advantages of GST | Disadvantages of GST |
|---|---|
Simplifies Tax Structure – Replaces multiple indirect taxes (VAT, excise, service tax) with one unified system. |
Complex for Small Businesses– Compliance and digital filing may be difficult for smaller traders without technical knowledge. |
Eliminates Cascading Effect – Input Tax Credit ensures tax is levied only on value addition, avoiding “tax on tax.” |
Higher Compliance Burden – Requires monthly/quarterly returns, record keeping, and reconciliation, which can be time-consuming. |
Creates a Common National Market – Uniform tax rates make interstate trade seamless. |
Initial Impact on Prices – Certain goods and services became costlier initially due to uniform tax rates. |
Promotes Transparency – Online filing and tracking reduce the scope for tax evasion. |
Technical Glitches – Dependence on GSTN (portal) sometimes causes filing issues or delays. |
Boosts Ease of Doing Business – Streamlined tax regime encourages investment and growth. |
Multiple Tax Rates – Despite simplification, GST still has multiple slabs (0%, 5%, 18%, 40%), which can cause confusion. |
As per the 56th GST Council Meeting, India has simplified its GST structure under GST 2,0. The following slabs are currently applicable:
Note: The earlier 12% and 28% slabs have been removed. The new structure came into effect from 22 September 2025.
Before GST was introduced in 2017, India followed a complex system of multiple indirect taxes, which varied between the Centre and the States. This created overlapping taxes, cascading effects, and compliance difficulties for businesses and consumers alike.
GST was introduced with the goal of eliminating the cascading effect of multiple indirect taxes, which earlier made goods and services costlier. By taxing only the value addition at each stage, GST reduces hidden taxes and ensures fairer pricing for consumers.
There are certain factors that will help reduce the prices:
GST registration is mandatory for certain businesses and individuals to ensure tax compliance and smooth operations.
Voluntary registration is also allowed for smaller businesses to avail input tax credit and enhance credibility.
Below is a practical, up-to-date walk-through (what to do on the GST portal) followed by a clear documents checklist broken down by entity type. All steps reflect the current GST portal flow and the official document guidance.
(Normal / Composition / Casual Taxable Person / Non-resident / ISD / Tax-deductor / ODARS, etc.) so you know which form fields and documents apply.
Go to gst.gov.in → Services → Registration → New Registration (or click REGISTER NOW) and Choose “I am a” (e.g. Taxpayer) and enter state, district, legal name (as in PAN), PAN, email and mobile. Complete the CAPTCHA and OTP validations.
After Part A and OTP validation, you receive a TRN (Temporary Reference Number). TRN is valid for 15 days — you must complete Part B and upload documents within that period, or the TRN/data will be purged.
Log in with the TRN, fill in business details (principal place of business, additional places, promoters/partners/directors, bank details, goods/services, accounting period, registration type) and upload scanned documents. Follow the portal prompts carefully.
Authenticate the application using one of the permitted methods: Aadhaar e-KYC / e-sign / EVC (OTP) / DSC (PAN-based Class II or III). Companies and LLPs normally must use a DSC (Digital Signature Certificate) for signing; proprietors/individuals can use Aadhaar e-KYC or EVC where available.
On successful submission, you get an Application Reference Number (ARN) by SMS/e-mail. Track status at Services → Track Application Status on the portal.
With completed Aadhaar e-KYC and correct documents, registrations are typically processed quickly (commonly within about a week in straightforward cases). If Aadhaar e-KYC is not completed or the officer requires clarification, the tax officer may issue Form GST REG-03; the applicant must reply in FORM GST REG-04 (usually within 7 working days), and the officer then has a further period to act. Officers are instructed to rely on the indicative document list in FORM GST REG-01 and to streamline processing.
The CBIC / GST portal gives an indicative list in FORM GST REG-01; officers should generally ask only for documents in that list. In general, the following documents are required for registering for GST:
(Official indicative document list is in FORM GST REG-01).
MFA is now mandatory for accessing the E-Way Bill and E-Invoice systems. Implementation rolled out based on turnover:
E-Way bills can only be generated for source documents dated within the last 180 days, with the validity extension capped at 360 days. These changes took effect from 1 January 2025 to curb misuse and ensure timely logistics documentation.
Taxpayers with turnover over ₹10 crore must upload invoices to the IRP within 30 days of issuance. From 1 June 2025, Invoice Reference Numbers (IRNs) are treated case-insensitively to prevent duplicate entries based on letter casing.
From the July 2025 tax period (filed in August 2025), auto-populated outward liability fields in GSTR-3B will be non-editable. Corrections must be made via GSTR-1A before filing GSTR-3B.
With auto-population and locking mechanisms more prevalent, accurate HSN/SAC code usage in GSTR-1 is essential. Errors can trigger compliance issues, delayed ITC, or mismatches in auto-filled returns (deduced from systemic portability risks, not a specific new rule).
GST (Goods and Services Tax) is an indirect tax that has replaced many Central and State taxes like excise duty, VAT and service tax. It is a single comprehensive tax levied on all goods and services produced in India as well as those imported from other countries.
The new tax regime came into effect on July 1, 2017, after years of deliberation – with the Atal Bihari Vajpayee Government first suggesting it in the year 2000.
The GST Council is the key decision-making body for all matters related to GST. The council, headed by Finance Minister, consists of the members of both Centre and State. The GST Council makes recommendations concerning the tax slabs, tax issues, rebate in tax and other provisions therein.
The key advantages of GST implementation are as under:
The GST rate, which has been notified by the government for banking and financial services, is 18%.
The following taxes are replaced by GST:
An e-Way Bill is an electronic document/bill generated for transporting goods worth Rs. 50,000 or more (single Invoice/bill/delivery challan) in a vehicle. A registered person cannot transport of goods whose value is more than Rs. 50,000 in a vehicle unless he or she has an e-Way bill. This rule has been mandated under the current GST regime and came into effect on April 1, 2018.
Currently, GST has four main slabs – 0%, 5%, 18%, and 40% (for sin and luxury goods). The earlier 12% and 28% slabs have been removed as per the 56th GST Council meeting.
Operating without GST registration attracts a penalty of 10% of the tax due or ₹10,000 (whichever is higher). In case of fraud, the penalty is 100% of the tax due.
All official updates, circulars, and notifications are published on the GST Council website (gstcouncil.gov.in) and the GST portal.
