GST Guide (India, FY 2026-27)

1. What GST actually is

GST stands for Goods and Services Tax — the single indirect tax that applies to almost everything you buy or sell in India.

Goods and Services Tax (GST) is a single, destination-based, multi-stage tax on the supply of goods and services in India, introduced on 1 July 2017. Before GST, India ran a patchwork of VAT, Service Tax, Excise, Octroi, Entry Tax, CST, Luxury Tax and a dozen smaller levies. GST replaced most of them with one tax structure — though three different components depending on where the buyer and seller are.

The three flavours of GST

• CGST + SGST when the buyer and seller are in the same state (intrastate supply). The total tax is shared 50:50 between the Centre and the State.
• IGSTwhen the buyer and seller are in different states (interstate supply). The whole amount is collected by the Centre, which later settles the State's share.
• UTGST (analogous to SGST) for the eight Union Territories — paired with CGST for intra-UT supply.

This matters because every invoice you raise must correctly classify the place of supply. Get it wrong and your buyer cannot claim Input Tax Credit until you correct via a credit note and reissue (covered in §6 and §8).

What GST does not cover

Five items remain outside GST and continue under the old regime: petroleum crude, high-speed diesel, motor spirit (petrol), natural gas, and aviation turbine fuel. Alcohol for human consumption is constitutionally outside GST. Electricity is also outside GST. The GST Council reviews petroleum inclusion periodically; verify against the latest Council press release before publishing internal training.

2. GST rate slabs

This is the part that changed the most recently. At its 56th meeting on 3 September 2025, the GST Council collapsed the old five-slab structure into a simpler one — often called GST 2.0 — with effect from 22 September 2025. The old 12% and 28% slabs are gone. What remains is two main rates plus a high rate for sin and luxury goods. The slab still depends on the HSN classification of the goods or the SAC classification of the service.

As a rule of thumb from the transition: roughly 99% of items that used to be taxed at 12% moved down to 5%, and roughly 90% of items that used to be at 28% moved down to 18% — with only a short list of sin and luxury goods landing at the new 40% rate.

The GST Compensation Cesshas been scrapped on virtually all goods as part of the reform. It survives only on tobacco and pan masala for now — and only until the Centre's compensation-cess loan and interest obligations are discharged, after which those items move fully to the 40% GST rate.

The GST Council reviews rates periodically. Always confirm the rate against the latest CBIC notification before invoicing — particularly for borderline items where the 5% vs 18% classification is contested.

3. Registration thresholds — who must register for GST?

You must register for GST if any of the following is true:

• Your aggregate annual turnover crosses ₹40 lakh for goods or ₹20 lakh for services. In four lower-threshold states (Manipur, Mizoram, Nagaland, Tripura) the limits drop to ₹20 lakh and ₹10 lakh respectively.
• You make inter-state taxable supplies — registration is mandatory from the first rupee, regardless of turnover.
• You sell through an e-commerce operator (Flipkart, Amazon, Meesho, Myntra) — they require GST.
• You are an agent supplying goods or services on behalf of others.
• You are required to pay under the reverse charge mechanism (RCM).
• You are a non-resident taxable person, a casual taxable person, or an Input Service Distributor (ISD).
• You supply OIDAR services (online information and database access) to unregistered persons in India.

What counts as “aggregate turnover”

Aggregate turnover is computed PAN-India across all GSTINs under the same PAN. It includes taxable supplies, exempt supplies, exports, and inter-state supplies — but excludes inward supplies and taxes. For a goods supplier with three branches across three states at ₹15 lakh each, aggregate turnover is ₹45 lakh — over the ₹40 lakh trigger, so all three must register. For services, the trigger is ₹20 lakh, so a single branch over ₹20 lakh pulls all branches in.

Voluntary registration

Even if not mandatory, voluntary registration is often a good idea if your customers are GST-registered businesses — they can claim ITC on the GST you charge, which makes your invoices more attractive. Once you register voluntarily, you are bound by full compliance from day one.

4. Composition scheme & QRMP

Composition scheme

If your turnover is below ₹1.5 crore (₹75 lakh in the special- category states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand) and you supply within one state, you can opt for the Composition Scheme — a simplified scheme with a flat-rate tax and quarterly returns.

• Manufacturers: 1% (0.5% CGST + 0.5% SGST) on turnover of state
• Traders: 1% on taxable turnover of state (excluding exempt)
• Restaurants (not serving alcohol): 5% (2.5% + 2.5%) on turnover
• Other service providers (Notification 02/2019-CTR): 6% (3% + 3%) on first ₹50 lakh of turnover

The catch: you cannot collect GST from customers, cannot claim ITC, cannot make inter-state supplies, and cannot supply through e-commerce operators (with limited exceptions for restaurants). You file CMP-08 (quarterly payment) and GSTR-4 (annual return).

QRMP — Quarterly Return Monthly Payment

Available to regular taxpayers with turnover up to ₹5 crore in the previous FY. You file GSTR-1 and 3B quarterly but pay tax monthly. Two payment methods:

• Fixed sum method: 35% of the tax paid in the previous quarter (or 100% of the previous month for months 1 and 2).
• Self-assessment method: Calculate actual liability for the month and pay.

The Invoice Furnishing Facility (IFF) lets QRMP filers upload B2B invoices monthly so their buyers can see ITC in their 2B without waiting for the quarter to end. Upload cap: ₹50 lakh of invoice value per month.

5. Returns & the filing calendar — which GST returns to file and when?

Regular GST-registered businesses file these returns:

The sequential filing rule

Section 39(10) prohibits filing GSTR-3B for a period unless the GSTR-1 for the same period has been filed. Skipping GSTR-1 is no longer possible; the portal blocks 3B until 1 is closed.

GSTR-1A — amendments before 3B

Introduced from FY 2024-25, GSTR-1A is an optional return filed between GSTR-1 and GSTR-3B of the same period. If you missed an invoice or need to correct one, GSTR-1A lets the fix flow into 3B liability immediately instead of waiting for next month's amendment table.

In practice, GSTR-1 and 3B are the two returns that consume time every month. GSTR-9/9C are an end-of-year reconciliation exercise that rewards clean monthly books and punishes shortcuts taken during the year.

TatvaBooks prepares both GSTR-1 and 3B from your books each month and reconciles them against your 2B. You review the figures, then file on the GST portal.

6. Input Tax Credit (ITC) — what it is and how to claim it

ITC is the single most valuable concept in GST. The GST you pay on purchases can be set off against the GST you collect on sales — you only remit the difference. This prevents the tax-on-tax cascading of the old regime.

The four conditions for claiming ITC

Section 16 of the CGST Act sets four conditions, all of which must be met:

1. You hold a valid tax invoice (or debit note).
2. You have received the goods or services.
3. The supplier has filed their GSTR-1 and the invoice appears in your GSTR-2B for the period.
4. The supplier has actually paid the tax to the Government (Section 16(2)(c) — the “buyer beware” clause).

Two further timing rules sit alongside these:

• 180-day payment rule (Rule 37): If you have not paid the supplier within 180 days, the ITC must be reversed with interest at 18% p.a. Re-claim once payment is made; the re-claim is not capped by the Section 16(4) outer deadline.
• Section 16(4) outer deadline: ITC for an FY must be claimed by the earlier of 30th November of the following FY or the date of the annual return.

GSTR-2A vs GSTR-2B

GSTR-2A is a dynamic, real-time statement that keeps updating as suppliers file or amend their GSTR-1. GSTR-2B is a static, monthly statement generated on the 14th of every month, capturing invoices filed up to the 11th. Your ITC claim in 3B is based on 2B, not 2A.

The Invoice Management System (IMS)

Since 14 October 2024, the GST portal carries an Invoice Management System (IMS) — a dashboard where every inward invoice your suppliers file lands for you to accept, reject, or keep pending. Your action now drives what flows into GSTR-2B:

• Accept — the invoice moves into the “ITC available” part of your 2B and auto-populates 3B as eligible credit.
• Reject — the credit is kept out of your 2B and does not flow into 3B.
• Pending — the invoice is parked and carried forward; it stays off your 2B until you act on it.

If you do nothing, an invoice is deemed accepted and flows into 2B — so silence is not neutral. The practical shift is that 2B is no longer purely a passive auto-statement; it is the output of the choices you make in IMS, and clean, timely action there is now part of monthly ITC hygiene.

Blocked credits (Section 17(5))

ITC is not allowed on:

• Motor vehicles for personal transport (with exceptions for transport businesses, driving schools, dealers)
• Food and beverages, outdoor catering, beauty, health services (unless used to make outward taxable supply of the same category)
• Club membership, fitness, life and health insurance for staff (with some statutory exceptions)
• Travel benefits to employees on leave
• Goods or services used for personal consumption
• Construction of immovable property on own account
• Goods lost, stolen, destroyed, written off, or disposed by gift / free samples
• Tax paid under Section 74 (fraud), confiscation, or detention

Rule 86A and Rule 86B

Rule 86A allows the Commissioner to block ITC in the electronic credit ledger if there is reason to believe the credit was fraudulently availed. The block can last up to one year and severely disrupts cash flow.

Rule 86B requires taxpayers with monthly taxable supply above ₹50 lakh to pay at least 1% of output tax liability in cash, not via ITC. Several exemptions apply — Government suppliers, exporters with refund history, and taxpayers (or their proprietor / partners / Karta / MD / WTD) who paid income tax above ₹1 lakh in each of the last two financial years.

7. e-Invoice and e-Way bill

e-Invoice

If your aggregate turnover in any FY since 2017-18 has crossed ₹5 crore, you must generate an Invoice Reference Number (IRN) and QR code for every B2B invoice, debit note and credit note. The invoice is registered with NIC's Invoice Registration Portal (IRP) at the time of issue.

Without an IRN, your buyer cannot claim ITC. So this is not optional — it is how the invoice becomes a valid tax invoice in the first place. For the full mechanics — schema, IRPs, cancellation windows, exemptions — read our full e-Invoice guide.

The 30-day reporting rule (AATO ≥ ₹10 crore)

With effect from 1 April 2025, taxpayers with aggregate annual turnover (AATO) of ₹10 crore or more must report invoices to the IRP within 30 days of the invoice date. The IRP rejects submissions filed after the 30-day window. Back-dated invoicing is therefore no longer possible at this band — the issue date and the IRN generation date must be within the same one-month window.

Cancellation and credit notes

An IRN can be cancelled on the IRP within 24 hours of generation. After 24 hours, the only remedy is a credit note (which itself needs its own IRN). The original IRN cannot be edited.

e-Way bill

An e-Way bill is required for the movement of goods worth over ₹50,000 (₹1 lakh in some states for intra-state movements). It tracks the consignment from origin to destination and is verified at toll plazas and check-posts.

• Validity: 1 day per 200 km (1 day per 20 km for over-dimensional cargo)
• Generated by consignor, consignee, or transporter
• Auto-generated from IRN if you are on e-Invoice
• Can be extended within 8 hours before or after expiry

For state-wise thresholds, Part-A vs Part-B mechanics, Section 129 penalties and the RFID-tracking layer, see our full e-Way Bill guide.

8. Place of supply — the rule that decides CGST vs IGST

Place of supply (POS) is the deemed location where the supply is consumed. POS + supplier's location together decide whether the transaction is intrastate (CGST + SGST) or interstate (IGST).

Goods

• Movement of goods: POS is where the movement terminates for delivery to the recipient.
• No movement: POS is the location of the goods at the time of delivery.
• Installed goods: POS is the place of installation.
• Bill-to / Ship-to: POS is the bill-to state (third-party doctrine clarified post 53rd Council).

Services

• General rule (B2B): POS is the location of the registered recipient.
• General rule (B2C): POS is the location of recipient if address is on record, else location of the supplier.
• Immovable property: POS is the location of the property.
• Restaurant / catering / personal grooming: POS is where the service is performed.
• Training / performance: POS is where the event is held.
• Transportation of passengers: POS is the place of embarkation.
• Telecom / DTH / broadcasting: POS is the location of the recipient on record.
• OIDAR cross-border: POS is the location of the recipient in India.

9. Time of supply — when does GST liability arise?

Time of supply decides which tax period an invoice belongs to. The rules differ for goods and services.

Goods (Section 12)

The earlier of: (a) the date of issue of invoice or the last date by which invoice must be issued, or (b) the date of receipt of payment.

Services (Section 13)

The earlier of: (a) the date of issue of invoice (if issued within 30 days of supply), or (b) the date of receipt of payment. If the invoice is not issued within 30 days, the date of provision of service is the time of supply.

Reverse charge

For goods under RCM: the earliest of (a) date of receipt of goods, (b) date of payment, or (c) 30 daysfrom the supplier's invoice date. For services under RCM: the earlier of (a) date of payment, or (b) 60 daysfrom the supplier's invoice date.

10. Invoice rules — what every tax invoice must contain

A valid tax invoice under Rule 46 must contain:

• Name, address and GSTIN of the supplier
• Consecutive invoice number (max 16 characters, unique per FY per series)
• Date of issue
• Name, address and GSTIN of the recipient (if registered)
• If recipient is unregistered and invoice value above ₹50,000: name, address, place of supply, state code
• HSN or SAC code
• Description, quantity, unit, total value
• Taxable value after discount
• Rate of tax — CGST, SGST, IGST, UTGST, Cess separately
• Amount of tax separately
• Place of supply with state name (for interstate supplies)
• Address of delivery if different from place of supply
• Reverse charge indicator (yes/no)
• Signature or digital signature of the supplier
• QR code (for e-Invoice mandate taxpayers)
• IRN (for e-Invoice mandate taxpayers)

Time limits for issuing invoice

• Goods: before or at the time of removal / delivery
• Continuous supply of goods: before or at the time of issue of statement of accounts
• Services: within 30 days of supply (45 days for banking, insurance, NBFC)

Bill of Supply, Receipt Voucher, Refund Voucher

Composition dealers and dealers in exempt goods issue a Bill of Supply, not a tax invoice. Advance receipts are documented via a Receipt Voucher; refunds of advance via a Refund Voucher.

11. HSN and SAC codes

HSN (Harmonized System of Nomenclature) is a worldwide product classification system administered by the WCO. India uses it for goods. SAC (Services Accounting Code) is the parallel system for services.

Table 12 Phase III — drop-down enforcement

From May 2025, GSTR-1 Table 12 (HSN summary) no longer accepts free-text HSN entry. You must select from a master list maintained by the GSTN — separately for B2B and B2C. The split is mandatory; a mismatch between selected HSN and tax rate raises a portal warning.

Wrong HSN can mean wrong tax rate, which is the deepest hole to climb out of.

12. Reverse charge mechanism (RCM) — when does the buyer pay GST?

Under RCM, the buyer (not the seller) pays GST. RCM applies in three buckets:

Section 9(3) — specified categories

• Goods Transport Agency (GTA) services (where the GTA hasn't opted for forward charge)
• Legal services from advocates or firms of advocates
• Services from arbitral tribunals
• Sponsorship services to a body corporate
• Services by Government (with exceptions)
• Services from director to company (sitting fees, commissions)
• Security services to a registered body corporate
• Renting of a residential dwelling to a registered person (RCM on the tenant, per Notification 05/2022-CT(R))
• Renting of commercial / non-residential property by an unregistered landlord to a registered tenant — added w.e.f. 10 October 2024 (Notification 09/2024-CTR). 18% RCM payable by the tenant.

Section 9(4) — purchases from unregistered persons

Currently notified for the real estate sector (promoters buying from unregistered suppliers must pay RCM on at least 80% of input value) and a handful of other specific categories.

Section 5(3) of IGST — import of services

Any service imported from outside India (AWS, Google Workspace, GitHub, Zoom, Stripe, freelancers abroad) attracts IGST under RCM at the applicable rate (usually 18%).

How RCM works in practice

1. You receive an invoice without GST (or from abroad with no Indian GST).
2. You self-compute GST at the applicable rate.
3. You pay the GST in cash via GSTR-3B (cannot be paid via ITC).
4. You claim the same amount as ITC in the same GSTR-3B (subject to ITC conditions).
5. You raise a self-invoice if the supplier is unregistered, dated by the time-of-supply rule (§9).

13. TDS and TCS under GST

Two distinct deduction regimes operate inside GST. Both are separate from income-tax TDS / TCS — keep the two systems mentally separated. For the income-tax version, see our TDS guide and the broader Income Tax guide.

TDS — Section 51

Notified Government departments, PSUs, local authorities, and certain notified entities must deduct GST TDS at 2% (1% CGST + 1% SGST, or 2% IGST) on payments to suppliers where the contract value exceeds ₹2.5 lakh. Deductors register separately, deduct on payment, and file GSTR-7 by the 10th of the next month. The deductee claims the credit in their electronic cash ledger.

TCS — Section 52

E-commerce operators (Amazon, Flipkart, Meesho, Swiggy, Zomato, etc.) must collect 0.5% TCS on the net value of taxable supplies made through their platform by third-party sellers. Operators register separately under GST, collect at source, and file GSTR-8 by the 10th of the next month. The seller can claim the TCS in their electronic cash ledger and offset future liability.

Restaurants supplying through cloud-kitchen or food-delivery apps fall under a separate regime — the operator pays GST on the full supply, not the restaurant.

14. GST refunds

Refunds arise mainly in five situations:

• Export of goods or services under LUT (refund of accumulated ITC) or with payment of IGST (refund of IGST paid)
• Supplies to SEZ — zero-rated, same two routes as exports
• Inverted duty structure — input GST higher than output GST (e.g., textiles, fertilisers)
• Excess tax paid by mistake — wrong head, double payment
• Deemed exports — supplies to EOU, advance authorisation holders, etc.

Refund process

1. File RFD-01 on the GST portal with supporting documents.
2. Acknowledgement (RFD-02) is issued within 15 days if the application is complete.
3. Provisional refund of 90% within 7 days for export-related claims.
4. Final order (RFD-06) within 60 days; interest at 6% p.a. payable by the Government if delayed beyond 60 days.

Inverted duty refund — formula caveat

Refund under Rule 89(5) is computed by formula. A 2022 CBIC amendment restricted the formula to exclude input services — i.e., only ITC on inputs (not input services or capital goods) flows through the inverted-duty refund calculation. The Supreme Court upheld the restriction in the VKC Footsteps judgment. Build your refund file accordingly.

In practice, export refunds run smoothly when the GSTR-1, 3B, ICEGATE shipping bill data and bank realisation certificate (BRC) all match. Mismatches stall refunds — and for export businesses, that is working capital sitting with the Government.

15. Penalties, late fees & interest

Late fee for returns

Interest on unpaid tax

• 18% per annum on net tax liability not paid by due date
• 24% per annum on wrong / excess ITC claimed and utilised

General penalty (Section 122)

• Issuing invoice without supply, or supply without invoice: ₹10,000 or tax amount, whichever is higher
• Collecting tax but not depositing within 3 months: ₹10,000 or tax amount, whichever is higher
• Suppressing turnover to evade tax: 10% of tax due (minimum ₹10,000), or 100% in fraud cases
• Failure to register when liable: 10% of tax due or ₹10,000, whichever is higher

Section 73 vs Section 74 — penalty tiers

Section 73 covers short-payment without fraud or wilful misstatement. Standard penalty is 10% of tax (or ₹10,000, whichever is higher). The penalty is reduced to:

• Nil — if tax + interest is paid before issuance of the show cause notice (SCN).
• Nil (penalty waived) — if paid within 30 days of SCN.
• 10% — if paid within 30 days of order.

Section 74 covers fraud, wilful misstatement or suppression. Standard penalty is 100% of tax. The penalty is reduced to:

• 15% — if tax + interest is paid before SCN.
• 25% — if paid within 30 days of SCN.
• 50% — if paid within 30 days of order.

16. Notices and how to respond

The common notices and what triggers them:

• ASMT-10 — Scrutiny of return. Triggered by GSTR-1 vs 3B mismatch, ITC mismatch with 2B, or other automated rules. Respond with ASMT-11 (acceptance or explanation) within 30 days.
• DRC-01A — Pre-show-cause intimation under Section 73 / 74. You can pay and close, or contest.
• DRC-01 — Show cause notice. Respond within 30 days with DRC-06.
• DRC-01B — Auto-generated for difference between GSTR-1 sales and 3B sales beyond tolerance. Pay the difference or explain within 7 days.
• DRC-01C — Auto-generated for ITC claimed in 3B above the 2B amount beyond tolerance. Pay or explain.
• DRC-03 — Voluntary payment form for settling demands or audit observations before formal order.
• DRC-03A — Introduced in 2024 to link a voluntary payment (already made via DRC-03) to a specific open demand, closing the matter cleanly in the ledger.
• REG-17 / REG-19 — Show cause for cancellation of registration. Common after continuous default for six months (regular taxpayers) or three tax periods (composition).
• RFD-08 — Show cause for rejection of refund. Respond with RFD-09 within 15 days.

How to respond to any GST notice

1. Read the notice carefully — note the section, period, and amount.
2. Pull the underlying data — GSTR-1, 3B, 2B, books — for the period.
3. Reconcile and identify whether the demand is correct, partly correct, or wrong.
4. If correct: pay with interest via DRC-03 (and tag to the demand via DRC-03A) and close.
5. If contestable: file a written reply with supporting documents within the deadline.
6. If quantum is large or fraud is alleged: engage a CA or GST counsel before replying.

17. Appeals & dispute resolution

If an order goes against you, the law provides a structured appeal route. Three levels sit inside the GST architecture before constitutional courts come into play.

First Appeal — Appellate Authority

File Form APL-01 within 3 months of the order (extendable by 1 month for sufficient cause). Pre-deposit: 10% of the disputed tax (capped at ₹25 crore CGST + ₹25 crore SGST). The Appellate Authority is a JC / AC depending on quantum. Order is passed within 1 year (extendable).

Second Appeal — GST Appellate Tribunal (GSTAT)

The GSTAT is now operational with benches notified across states. File Form APL-05 within 3 monthsof the Appellate Authority's order. Pre-deposit: a further 10% of disputed tax beyond what was paid at first appeal (capped at ₹50 crore CGST + ₹50 crore SGST). The Tribunal's order is final on questions of fact.

High Court and Supreme Court

From the Tribunal, the next route is the High Court — but only on substantial questions of law. The Supreme Court follows for final adjudication. Many taxpayers also invoke writ jurisdiction directly when the dispute involves a constitutional or jurisdictional defect — without exhausting the appellate ladder.

Section 128A amnesty

The 53rd GST Council recommended (and the Government notified) Section 128A — a one-time amnesty waiving interest and penalty for non-fraud demands raised under Section 73 for FY 2017-18, 2018-19 and 2019-20, provided the tax was paid by 31 March 2025. The window has closed for most taxpayers; check eligibility if you have a pending Section 73 demand in those years that fell within transitional relief.

18. Sector-specific GST

A few sectors carry distinctive rules that don't fit neatly into the general framework. The most-searched ones, briefly.

Online gaming, casinos and horse racing

Online money gaming, casinos, betting, gambling, lotteries and horse racing now attract a flat 40% GST on the full face value of the bet / chips purchased / entry fee — not on the gross gaming revenue (GGR). This rate took effect on 22 September 2025 as part of GST 2.0; it was 28% from 1 October 2023 until then. Taxing the full face value (rather than 18% on the platform fee alone) ended a long debate over skill-based games. Offshore gaming operators serving Indian users must register under the simplified scheme.

Crypto and virtual digital assets (VDA)

Exchanges deduct 1% TDS on each trade under income-tax law. Under GST, the supply of services by crypto exchanges (brokerage, platform fee) attracts 18% GST on the fee component. The underlying VDA transfer itself remains in a grey area — most CAs treat it as outside GST pending specific notification.

Real estate

• Affordable residential housing: 1% (without ITC)
• Non-affordable residential: 5% (without ITC)
• Commercial real estate: 12% (with ITC)
• Ready-to-move-in flats with OC issued: Outside GST

These come from the special real-estate scheme (Notification 11/2017-CTR, as substituted by 03/2019-CTR), which sits outside the headline 5/18/40 slabs — the GST 2.0 slab merger did not touch it, so the 1% / 5% / 12% real-estate rates stand.

Joint development agreements (JDA), TDR / FSI rights, and long-term lease premiums carry their own RCM rules under Section 9(4). The 80% input-procurement-from-registered rule applies to promoters.

Goods Transport Agency (GTA)

A GTA can opt to pay GST under forward charge by filing a yearly declaration (Annexure V) — at 18% with ITC or 5% without ITC. The earlier 12%-with-ITC option was rationalised to 18% under GST 2.0. If no declaration is filed, the default is RCM at 5% paid by the recipient (the GTA itself taking no ITC on the underlying inputs).

Restaurants and food delivery

Standalone restaurants pay 5% without ITC. Restaurants inside hotels with room tariff above ₹7,500 pay 18% with ITC. Food delivery aggregators (Zomato, Swiggy) pay 5% GST on supplies made through them — the restaurant on the platform doesn't charge GST on the supply through the aggregator.

Exports of software and IT services

Zero-rated under LUT. Foreign exchange must be realised within 9 months (per FEMA) to qualify as export. Domestic invoice + foreign customer + payment in convertible foreign exchange = the three-pillar test.

19. What changed in FY 2026-27

The headline changes affecting how Indian SMBs run their GST this financial year:

1. GST 2.0 — the two-slab restructure (22 September 2025). The 56th GST Council (3 September 2025) collapsed the old five rates into 5% and 18%, plus a 40% rate for sin and luxury goods. The 12% and 28% slabs were abolished, and compensation cess was dropped on virtually all goods. This is the single biggest GST change in years — re-check the rate on every item you sell, because a large share of goods shifted slab.
2. Invoice Management System (IMS) drives your 2B. Live on the portal since 14 October 2024, IMS now lets you accept / reject / keep pending each inward invoice — and that choice (not just supplier filing) decides what lands in GSTR-2B. No action means deemed acceptance.
3. e-Invoice threshold stays at ₹5 crore. Industry expectation of a drop to ₹3 crore has not materialised at the Council. Assume a future drop and prepare ledgers and templates now.
4. 30-day IRP reporting rule for AATO ≥ ₹10 crore continues to be enforced (effective 1 April 2025).
5. ISD made mandatory for distributing ITC on common-input services — with effect from 1 April 2025 (Finance Act 2024 amendment + Rule notifications). The earlier cross-charge route for common input services is replaced.
6. RCM on commercial rent from unregistered landlord — effective 10 October 2024 (Notification 09/2024-CTR). Registered tenants now pay 18% GST under RCM if the landlord is unregistered.
7. GSTR-1A — amendment return continues available for in-period corrections before GSTR-3B.
8. HSN Table 12 Phase III — drop-down enforcement on GSTR-1 HSN summary from May 2025.
9. GSTR-9 continues to be optional below ₹2 crore (year-by-year exemption via notification). Mid-tier (₹2–5 crore) may use the simplified form.
10. Section 16(4) — relaxed for old years by Sections 16(5) and 16(6) (inserted by the Finance (No. 2) Act 2024, retrospective from 1 July 2017; see CBIC Circular 237/31/2024). For FY 2017-18 to 2020-21 the ITC deadline was effectively extended to 30 November 2021. For current years the November-of-next-FY deadline still applies — track ITC by vintage.
11. Section 128A amnesty for FY 17-18 to 19-20 — payment window closed 31 March 2025; eligibility checks continue for those who paid in time.

Read the detailed FY 2026-27 changes post →

20. Mistakes that get noticed

Patterns that most often trigger notices from the department:

• Mismatch between GSTR-1 and 3B. Sales difference beyond tolerance triggers automatic DRC-01B.
• Over-claiming ITC.Claiming credit for invoices that don't appear in 2B leads to disallowance and 24% interest.
• Wrong place of supply.Charging CGST+SGST when it should have been IGST (or vice versa) needs a credit note and replacement invoice — your buyer's ITC is blocked until you correct.
• Missing the e-Invoice threshold. Discovering mid-year that you have crossed ₹5 crore and haven't generated IRNs is painful. Track turnover continuously.
• Missing the 30-day IRP window. At ₹10 crore+, a delayed IRN submission is rejected — and you cannot raise a back-dated tax invoice without one.
• RCM forgotten on imports of services. Any foreign software subscription — AWS, GitHub, Zoom, Stripe, Google Workspace — attracts RCM. Most freelancers and early-stage startups miss this. (Income-tax side carries a parallel under 194-S for VDA and Section 195 for foreign payments — see our TDS guide.)
• RCM forgotten on commercial rent from unregistered landlord. Post-10 October 2024 — frequently missed because the rule is new.
• Wrong HSN code. Triggers wrong rate which triggers Section 73 demand for tax shortfall.
• Letting ITC lapse on Section 16(4). Late booking of FY-end invoices after the November deadline means permanent loss.
• Ignoring a vendor's late filing.If your supplier doesn't file GSTR-1, you can't claim ITC. Track supplier filing status as part of vendor management.

See our deep dive on the 7 root causes of 2B mismatch →

21. Frequently asked questions

22. GST glossary

GSTIN

15-character GST identification number. State code (2) + PAN (10) + entity number (1) + 'Z' by default (1) + check digit (1).

ARN

Application Reference Number — issued for any application or return acknowledgement.

IRN

Invoice Reference Number — 64-character SHA-256 hash issued by the IRP for every e-Invoice.

IRP

Invoice Registration Portal — NIC-operated portal that registers e-Invoices.

LUT

Letter of Undertaking (Form RFD-11) — lets exporters supply zero-rated without paying IGST. Renewed each FY.

RCM

Reverse Charge Mechanism — buyer pays GST instead of seller.

ISD

Input Service Distributor — HO that distributes common-input ITC to branches. Mandatory from 1 April 2025.

HSN

Harmonized System of Nomenclature — global goods classification.

SAC

Services Accounting Code — Indian classification for services.

QRMP

Quarterly Return Monthly Payment — scheme for taxpayers up to ₹5 crore.

IFF

Invoice Furnishing Facility — monthly B2B upload for QRMP filers.

OIDAR

Online Information & Database Access or Retrieval — cross-border digital services.

GTA

Goods Transport Agency — road transporter that issues consignment notes.

SEZ

Special Economic Zone — supplies to SEZ are zero-rated.

BRC

Bank Realisation Certificate — proof of export proceeds inwarding.

E-Way Bill

Electronic document accompanying movement of goods above ₹50,000.

Cess

Compensation cess levied over and above GST on demerit goods. Scrapped on virtually all goods under GST 2.0; survives only on tobacco and pan masala until the cess-loan obligations clear.

DRC

Demand and Recovery — forms used for tax demand notices and responses.

AATO

Aggregate Annual Turnover — used for thresholds (e-Invoice ₹5 cr, 30-day rule ₹10 cr, etc.)

GSTAT

GST Appellate Tribunal — the second-level appellate body; benches notified across states.

TDS (GST)

Tax Deducted at Source under Section 51 — 2% on Government / PSU payments above ₹2.5 lakh.

TCS (GST)

Tax Collected at Source under Section 52 — 0.5% by e-commerce operators on third-party seller supplies.

VDA

Virtual Digital Asset — crypto, NFT and similar tokens under Indian tax law.

JDA

Joint Development Agreement — landowner + builder structure with its own GST rules.

23. Tools that help

You can do GST manually on the GSTN portal. Most businesses reach a size where that isn't practical. Tools fall into three buckets:

• Full accounting software with GST built in. TatvaBooks, Zoho Books, Tally (with the GST add-on), QuickBooks Online India. Books and returns flow together.
• Standalone GST filing tools. Cleartax, Quicko, GSTHero. You upload invoices, they file. Cheaper but you re-key data and lose the books integration.
• GSP-based ERP integrations. For larger businesses with SAP, Oracle, Microsoft Dynamics. Custom integration routes invoices to GSTN via a GST Suvidha Provider.

If you are reading this on the TatvaBooks website, you already know what we would suggest. But it is genuinely true: the right tool depends on your size, your CA, and your existing stack. We've built TatvaBooks for businesses who want their books and returns to live in one product — with a Chartered Accountant's opinion baked into the posting layer.