Indian GST rates and GST compliance

Indian GST rates

India operates a Goods and Services Tax (GST) system, which is a comprehensive value-added tax on the supply of goods and services. GST was introduced on 1 July 2017 to replace multiple indirect taxes (including VAT, service tax, and excise) with a unified, destination-based tax. GST is governed by the Central Goods and Services Tax Act (CGST), State/Union Territory GST Acts (SGST/UTGST), and the Integrated GST Act (IGST), and is administered jointly by the Central Board of Indirect Taxes and Customs (CBIC) and state tax authorities.

Under GST, tax is charged at multiple rates depending on the type of goods or services. The four principal GST rates are:

Rate	Type	Typical goods or services
0%	Zero-rated	Exports of goods and services; certain supplies to SEZs (subject to conditions)
5%	Lower GST rate	Essential goods (e.g., household items), select services
12%	Mid GST rate	Standard goods and services
18%	Standard GST rate	Many goods and services, including electronics, finance, and professional services
28%	Higher GST rate	Luxury goods, automobiles, tobacco products

In addition to these, specific goods/services may attract special cases (e.g., luxury, sin goods) or be exempt entirely.

Businesses registered under GST must apply the correct GST rate on taxable supplies and remit the tax due to the government through periodic GST returns.

Indian GST exemptions

Certain supplies are exempt from GST or fall outside the GST regime. Common examples include:

Basic unprocessed agricultural products
Healthcare and medical services
Education services (educational institutions)
Certain financial services (specified transactions)

Exempt supplies do not attract output GST. Generally, input tax credit (ITC) for GST paid on related purchases cannot be claimed for those supplies.

Indian GST registration requirements

A GST registration is required for businesses carrying out taxable activities in India. Registration thresholds depend on the nature of the business:

Resident suppliers of goods: GST registration generally required when annual turnover exceeds ₹40 lakh (₹20 lakh in select special category states).
Service providers: GST registration generally required when annual turnover exceeds ₹20 lakh (₹10 lakh in special category states).
Nonresident taxable persons: GST registration is required from the first taxable supply in India (no turnover threshold).
Ecommerce operators, casual taxable persons, and input service distributors: Must register irrespective of turnover.

Foreign digital service providers selling digital services to Indian customers are generally required to register under GST and collect GST on their supplies, regardless of turnover, unless they opt for the nonresident GST scheme with a tax representative.

Registration applications are submitted online through the Goods and Services Tax portal. Late registration can result in interest and penalties.

Get more information on GST registration in India.

Indian GST returns requirements

GST-registered businesses must file periodic GST returns, which generally include:

Details of outward supplies (GSTR1)
Summary of inward supplies and tax liability (GSTR3B)
Other returns as applicable (such as GSTR9 annual return, GSTR4 for composition scheme)

Returns must be filed electronically through the Goods and Services Tax portal. In addition to GST returns, businesses may also need to maintain supporting documents such as invoices, delivery challans, and tax payment challans.

Get more information on GST returns in India.

Storage of goods and consignment arrangements

Foreign businesses storing goods in India (e.g., in warehouses) may have a taxable presence and need to register for GST. Holding inventory in India for sale or distribution generally triggers GST registration obligations.

Imported goods are subject to Integrated GST (IGST) at customs clearance. Import GST is generally paid at the time of importation and can be claimed as input tax credit if the importer is GST registered and the goods are used for taxable activities.

India does not have an EU-style call-off stock simplification; specific accounting and GST compliance apply depending on whether the goods are sold in India.

Indian import GST

GST is usually payable at the point of customs clearance on imports of goods. Importers of record (including foreign entities with a presence in India) must pay IGST, customs duty, and other applicable levies. Registered businesses may claim input tax credit for IGST paid on imports used for taxable transactions.

Indian GST on digital services

India applies GST to electronically supplied services, including digital services provided by foreign suppliers to Indian customers (e.g., streaming services, apps, SaaS, online advertising). Foreign digital service providers must register under the nonresident GST scheme or through a tax representative and charge GST at the applicable rate (typically 18%).

Indian GST recovery mechanisms

Registered businesses can generally recover GST paid on business expenses by claiming input tax credit (ITC) against output GST liabilities in their returns.

ITC is allowed when:

The tax is supported by valid tax invoices or specified documents
The goods/services are used in making taxable supplies
The ITC is claimed within the prescribed period

Excess ITC can generally be carried forward to future periods. Refunds of excess ITC may be available in specified cases such as zero-rated supplies (e.g., exports) or inverted duty structures, subject to documentation and verification by tax authorities.

Zero rating for exports in India

Exports of goods and services from India are typically zero-rated under GST, meaning the tax rate is 0% on exports if specified conditions are met. Zero-rating allows suppliers to claim refunds of input tax credits accumulated on related purchases.

Trade and customs reporting in India

India maintains customs reporting for imports and exports through standard customs declaration systems. There is no Intrastat-style system because GST replaced VAT and domestic movement tracking relies on GST returns rather than separate internal trade reports.

GST invoice and time-of-supply compliance

GST-compliant tax invoices must:

Be issued for all taxable supplies with GST details
Include the supplier’s Goods and Services Taxpayer Identification Number (GSTIN), recipient GSTIN (if applicable), invoice date, description, quantity, value, rate of tax, and tax amount
Comply with India’s GST invoicing rules

Time of supply rules determine when GST becomes liable:

Goods: GST is generally due at the earlier of delivery or invoice issuance.
Services: GST is due at the earlier of payment receipt or invoice issuance.
Imports: GST is due at the time of customs clearance.

GST records must generally be maintained for at least six years from the due date of filing the return to which they relate.

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