GST basics for new businesses

GST touches almost every business in India. Getting the basics right from the start keeps your invoices clean, your input tax credit intact and your filings straightforward.

What GST is

GST is a tax on the supply of goods and services. A registered business collects GST on its sales (output tax), claims credit for the GST it pays on business purchases (input tax credit), and pays the difference to the government. Supplies within a state attract CGST and SGST in equal halves; supplies between states attract IGST.

When registration is required

Registration depends on aggregate turnover: the all-India turnover of all businesses under the same PAN, including taxable, exempt and export supplies.

• Businesses supplying only goods: registration is required once aggregate turnover crosses ₹40 lakh in Maharashtra and most other states (certain notified goods follow the lower limit).
• Businesses supplying services, or both goods and services: registration is required once aggregate turnover crosses ₹20 lakh.
• Special category states: a few specified states have lower limits.

Some businesses need registration from their first sale, whatever their turnover. These include businesses making inter-state supplies of goods, many sellers supplying through e-commerce platforms, casual taxable persons and those required to pay tax under reverse charge.

Businesses below the threshold can also register voluntarily. This lets them claim input tax credit and work with larger customers who prefer suppliers with a GSTIN.

The composition scheme

Smaller businesses can opt for the composition scheme, which allows them to pay tax at a fixed percentage of turnover and file simpler returns. It is available to eligible businesses with turnover up to ₹1.5 crore for goods (lower in specified special category states) and up to ₹50 lakh for services. In exchange for the simpler regime, composition businesses pay the tax from their own margin and work outside the input tax credit chain, so it suits businesses that sell mainly to consumers.

GST rates

From 22 September 2025, GST follows a simplified structure: most goods and services fall under 5% or 18%, a 40% rate applies to specified luxury and demerit goods, and some items are nil-rated or exempt. Confirm the rate for your goods (HSN code) or services (SAC) before you start invoicing. Our GST calculator helps with the arithmetic once you know the rate.

Returns you will file

• GSTR-1: details of your outward supplies (sales).
• GSTR-3B: a summary return through which you pay the tax due after credits.
• Quarterly option: eligible smaller taxpayers can file quarterly under the QRMP scheme, with monthly tax payments.
• GSTR-9: the annual return, with a reconciliation statement (GSTR-9C) for larger taxpayers.

The GST portal shows the current due dates for each return.

Input tax credit

You can claim credit for GST paid on business purchases when you hold a valid tax invoice, you have received the goods or services, the supplier has reported the invoice so that it appears in your GSTR-2B, and the supplier has paid the tax to the government. Reconciling your purchase register with GSTR-2B every month keeps your credits accurate and your cash flow healthy.

Good habits from day one

• Issue proper tax invoices showing your GSTIN, your customer's GSTIN where applicable, and the HSN or SAC code.
• Keep sales and purchase registers current, and reconcile them with the portal every month.
• File every return within its due date. This keeps you clear of interest and late fees.
• Keep your registration details current when your address, business activity or partners change.

How we help

We handle GST registration, monthly and quarterly returns, reconciliations, annual returns, GST audits, and replies to notices and assessments. See our GST services.

This article is general information, updated in October 2026. Laws, rates and due dates change, so confirm the position for your situation before acting.