How GST Works for a Small Business in India

What GST actually is

GST — Goods and Services Tax — is India's unified indirect tax that replaced a patchwork of older taxes like VAT, service tax and excise. It is administered under the Central Board of Indirect Taxes and Customs (CBIC), with the technology run by the Goods and Services Tax Network (GSTN).

GST is charged at each stage of the supply chain, but businesses claim credit for the GST they paid on their purchases (input tax credit). So the tax effectively falls on the final consumer, not on you as a business — provided you keep clean records and file on time.

For most transactions within a single state you charge CGST + SGST; for sales across state lines you charge IGST instead. This is general information — confirm current rules with CBIC or a qualified local tax professional.

GST rates you'll come across

GST uses a slab system rather than one flat rate. The exact slab depends on what you sell, so it's worth confirming the correct rate for your specific goods or services.

• 0% — many essential and unbranded food items and certain services are exempt or nil-rated.
• 5% — common household goods, some packaged foods and transport services.
• 12% and 18% — the two most common slabs for a wide range of goods and services (18% covers a large share of typical small-business supplies).
• 28% — luxury and 'sin' goods, sometimes with an additional cess.
• Rates and slabs change from time to time — always verify the current rate for your product with CBIC or your accountant.

Who has to register

Registration becomes mandatory once your aggregate turnover crosses the threshold in a financial year. The general limits are ₹40 lakh for a business supplying goods and ₹20 lakh for services. Some special-category states use lower limits, so check what applies to you.

Certain businesses must register regardless of turnover — for example, those making inter-state supplies, e-commerce operators and sellers, and businesses liable under reverse charge. If in doubt, register early rather than risk penalties.

This is general information — confirm the current thresholds and mandatory-registration categories with CBIC or a qualified local tax professional.

Your GSTIN — what it is

When you register, you receive a 15-digit GST Identification Number (GSTIN). It encodes your state code, your PAN and a check character. This number must appear on your tax invoices and is how the system matches your sales with your customers' purchases.

Print your GSTIN clearly on every invoice, quote your customer's GSTIN on B2B invoices, and keep it up to date if you change your registered address or add a place of business.

The returns: GSTR-1 and GSTR-3B

Most regular taxpayers file two main returns. GSTR-1 reports the details of your outward supplies (your sales invoices). GSTR-3B is a summary return where you declare total sales, claim input tax credit, and pay the net GST due.

Filing frequency depends on your turnover and whether you're on the QRMP (Quarterly Return, Monthly Payment) scheme. Missing due dates attracts late fees and interest, and can also block your customers from claiming credit — so a reliable filing routine matters.

1. 1

   Record every sale correctly

   Capture the correct GST rate, HSN/SAC code and customer GSTIN on each invoice throughout the period.

2. 2

   Reconcile purchases

   Match your purchase invoices against your suppliers' filings so your input tax credit is accurate.

3. 3

   File GSTR-1

   Upload your outward supply details by the due date for your filing frequency.

4. 4

   File GSTR-3B and pay

   Declare the summary, offset your input credit against output tax, and pay the net amount due.

E-invoicing via the IRP

E-invoicing doesn't mean emailing a PDF. It means uploading your B2B invoice data to the government's Invoice Registration Portal (IRP), which validates it and returns an Invoice Reference Number (IRN) and a signed QR code. Only after that is the invoice legally valid for the businesses required to use it.

E-invoicing applies to businesses above a specified turnover limit, which has been lowered in stages over time. If you're near the boundary, check the current limit — because once you're in scope, issuing a non-registered B2B invoice can create problems for both you and your customer.

This is general information — confirm the current e-invoicing turnover limit and rules with CBIC or a qualified local tax professional.

How Tallium helps you stay compliant

Tallium is an all-in-one accounting, POS, inventory and e-commerce platform. It applies the correct GST rate per item, prints your GSTIN and the customer's on every invoice, and keeps sales and purchase records tidy so preparing GSTR-1 and GSTR-3B is far less painful.

Receipt scanning captures your input costs, reports show your net GST position at a glance, and AI insights flag unusual entries before filing day. Tallium is billed per unit per month in US dollars: a shop/store is $79, an online store $159, a warehouse $99 and a factory $269 — each per month, paid from signup, cancel anytime. Questions? Email support@tallium.online.