Applicability of GST in India Goods and Services Tax (GST) is a comprehensive indirect tax that applies to the supply of goods and services across India. It replaces multiple state and central taxes and follows a destination-based taxation system. 1. Who is Liable to Pay GST? GST applies to: Manufacturers, traders, and service providers supplying goods or services. Businesses with an annual turnover above ₹40 lakh (₹20 lakh for special category states). Service providers with a turnover exceeding ₹20 lakh (₹10 lakh for special category states). E-commerce operators (e.g., Amazon, Flipkart). Interstate suppliers, regardless of turnover. Businesses under the Reverse Charge Mechanism (RCM) where the recipient pays GST instead of the supplier. 2. Taxable Events Under GST GST is applicable when there is a supply of goods or services, including: Sale of goods or services Transfer, barter, or exchange Import of goods or services Leasing or renting of goods and properties E-commerce transactions GST is not applicable on: Alcohol for human consumption (taxed by states). Petroleum products (currently outside GST). Stamp duty and electricity charges. 3. Types of GST in India GST is divided into four categories based on the nature of the transaction: CGST (Central GST) – Collected by the Central Government on intra-state sales. SGST (State GST) – Collected by the State Government on intra-state sales. IGST (Integrated GST) – Collected by the Central Government on interstate and international transactions. UTGST (Union Territory GST) – Applied in Union Territories like Delhi, Chandigarh, and Puducherry. 4. GST Registration Requirements Businesses must register under GST if they meet any of the following criteria: Turnover exceeds ₹40 lakh (₹20 lakh for services and ₹10 lakh for special category states). Engaged in interstate supply (even if turnover is low). E-commerce sellers (mandatory, regardless of turnover). Casual taxable persons (temporary businesses at fairs or exhibitions). Failure to register can lead to penalties and legal action. 5. GST Rates in India GST rates vary based on the type of goods or services: 5% – Essential goods like food grains, life-saving drugs. 12% – Processed food, mobile phones. 18% – Most services, consumer electronics. 28% – Luxury goods, automobiles, tobacco. Some items are exempt from GST, such as fresh fruits, vegetables, and educational services. 6. GST Compliance & Filing Registered taxpayers must: File GST returns monthly or quarterly (GSTR-1, GSTR-3B, etc.). Maintain digital records of invoices. Pay GST online via the GST portal. Follow e-invoicing rules for businesses with turnover above ₹5 crore. Conclusion GST applies to most businesses involved in the supply of goods and services. It simplifies taxation by replacing multiple indirect taxes and follows a uniform structure across India. Businesses must register, file returns, and comply with GST rules to avoid penalties.

Dear client, Goods and Services Tax is governed by the Central Goods and Services Tax Act of 2017 i.e, CGST Act along with corresponding State GST i. e, SGST Acts and the Integrated GST Act of 2017 i.e, GST Act. The applicability of GST is as follows: Supply-Based Tax: GST applies to the supply of goods and services mentioned in Section 7 of the CGST Act such as sales, transfers, exchanges, leases, and imports. Threshold Limits: Businesses with an aggregate turnover exceeding ₹40 lakh (₹20 lakh for special category states) for goods and ₹20 lakh (₹10 lakh for special category states) for services must register under GST (Section 22). For inter-state supplies, GST registration is mandatory regardless of turnover. Types of GST: CGST & SGST/UTGST: Levied on intra-state supplies where revenue is shared between the Centre and the State or Union Territory. IGST: Levied on inter-state supplies includes imports and exports mentioned in Section 5 of the IGST Act. Reverse Charge Mechanism (RCM): In cases like services from unregistered persons, legal services and specified goods, the recipient of goods or services must pay GST instead of the supplier. Mentioned in Section 9(3) & 9(4) of the CGST Act. Exemptions & Zero-Rated Supplies: Essential goods and services like healthcare, education, and agricultural products may be exempt as per Section 11. Exports and supplies to SEZs are zero-rated which means no GST is charged but input tax credit i.e, ITC can be claimed as per Section 16 of the IGST Act. Composition Scheme: Small businesses with a turnover up to ₹1.5 crore ₹75 lakh for special category states can opt for a lower tax rate but cannot claim ITC as per Section 10. Input Tax Credit: Businesses can take credit for the GST paid on purchases to deduct their tax liability on output supplies according to Section 16 to18. Penalties & Compliance: Failure to comply with GST provisions result in penalties under Section 122 for tax evasion and Section 73 & 74 for wrongful ITC claims or underpayment. I hope this answer helps.