GST in India has four main tax slabs: 5% (essential goods), 12% (standard goods), 18% (standard services), and 28% (luxury items). Some items like fresh food are exempt (0%), while precious metals attract 3%. Additionally, certain luxury goods have a compensation cess above 28%.

What is the difference between CGST, SGST, and IGST?

For intrastate transactions (within same state), GST is split equally between CGST (Central GST) and SGST (State GST). For interstate transactions, IGST (Integrated GST) applies at the full rate. For example, 18% GST = 9% CGST + 9% SGST for local sales, or 18% IGST for interstate sales.

How do I calculate GST-inclusive and GST-exclusive amounts?

GST-exclusive (add GST): Amount × (1 + GST rate). For example, ₹1000 + 18% GST = ₹1180. GST-inclusive (extract GST): Amount ÷ (1 + GST rate) × GST rate. For example, from ₹1180 total, GST = ₹180.

What is input tax credit (ITC)?

Input Tax Credit allows businesses to claim credit for GST paid on purchases against GST collected on sales. This prevents cascading taxation. ITC can be claimed on business purchases, raw materials, and services, but not on personal expenses or exempted supplies.

How is GST calculated on discounts?

GST is calculated on the transaction value after discounts if: the discount is given before or at the time of supply and is mentioned on the invoice. Post-supply discounts require credit notes and GST adjustment. Trade discounts reduce the taxable value, while cash discounts may not.

What is reverse charge mechanism (RCM)?

Under RCM, the recipient pays GST instead of the supplier. This applies to specific services like legal services, goods transport, and purchases from unregistered dealers above ₹5000/day. The recipient must self-invoice and pay GST directly to the government.