GST Basics
GST, explained from zero
Start here if GST is new to you.
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GST replaced a tangle of older taxes – VAT, service tax, excise and a dozen cesses – with a single tax on ‘supply’. That one word does most of the work: if you supply goods or services in the course of business, GST is in play. If you don’t, it isn’t.
The tax is collected in stages. Every business in a chain charges GST on what it sells, claims credit for the GST it paid on what it bought, and pays the government only the difference. That credit mechanism is what stops tax piling on tax – and it’s why so much of GST law is really about protecting the credit chain.
Three taxes share the same base. A sale inside one state attracts CGST (central) plus SGST (state), split roughly half and half. A sale across state lines attracts IGST instead, at the combined rate. Same total, different pockets.
Worked example
Following one shirt through the chain
| Mill sells fabric to a tailor | ₹1,000 + 5% GST = ₹1,050 | Mill pays ₹50 to government |
| Tailor sells shirt to a shop | ₹2,000 + 5% GST = ₹2,100 | Tailor owes ₹100, claims ₹50 credit, pays ₹50 |
| Shop sells shirt to you | ₹3,000 + 5% GST = ₹3,150 | Shop owes ₹150, claims ₹100 credit, pays ₹50 |
The government collected ₹150 in total – exactly 5% of the final ₹3,000 price. Nobody paid tax on tax. That is the entire design of GST in one line.
The mistakes that cost people money
Not theoretical risks — the ones we actually see land on clients’ desks.
Thinking GST only applies to sales. Free samples, stock moved between your own branches in different states, and goods taken for personal use can all be treated as supplies.
Assuming your accountant’s software knows the right rate. Classification is a legal question, and the business – not the software – carries the liability if it is wrong.
Ignoring the credit chain when choosing suppliers. An unregistered or non-filing supplier can quietly cost you the credit on every invoice they raise.
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GST Basics — the complete guide
7 pages covering all 11 provisions, with the plain-language explanation and practice notes for each. Print it, keep it, share it with your accountant.
Common questions on this
Straight answers to what people actually ask us.
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Every provision on gst basics
All 11 of them, each with a plain-language explanation and the full legal text.
CGST Act, 2017 · 9
CGST Rules, 2017 · 2
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