Indian GST: CGST, SGST, IGST & registration
Goods and Services Tax (GST) is India's destination-based, multi-stage indirect tax. Every invoice you raise needs a valid GSTIN, an HSN or SAC code, and the right split between Central GST, State GST, and Integrated GST — driven by where the supply lands, not where the customer is billed.
What is GST?
GST replaced 17 indirect taxes and 13 cesses on 1 July 2017 under the Constitution (101st Amendment) Act. It is levied at every value-add stage along the supply chain, with input tax credit flowing forward so the final consumer bears the tax. The structure is dual: the Centre and States levy GST simultaneously on the same transaction.
Three components make up the tax: CGST collected by the Centre, SGST (or UTGST) collected by the State or Union Territory, and IGST collected by the Centre on inter-state and import supplies and later apportioned between the Centre and the destination State.
Registration thresholds
The threshold below which registration is optional depends on what you sell and where:
| Supply | Normal states | Special-category states |
|---|---|---|
| Goods | ₹40 lakh | ₹20 lakh |
| Services | ₹20 lakh | ₹10 lakh |
| Mixed (goods + services) | ₹20 lakh | ₹10 lakh |
Registration is mandatory from the first rupee for inter-state suppliers, e-commerce operators and sellers on marketplaces (with limited exceptions for service-only suppliers covered by Notification 65/2017), casual taxable persons, non-resident taxable persons, persons paying tax under reverse charge, and Input Service Distributors.
The 15-character GSTIN, decoded
Every registered taxpayer is issued a Goods and Services Tax Identification Number — a 15-character alphanumeric:
- 1–2 · State code (e.g., 22 = Chhattisgarh, 27 = Maharashtra)
- 3–12 · PAN of the entity
- 13 · Entity number for that PAN within the state (1–9, then A–Z)
- 14 · Default 'Z' (reserved)
- 15 · Alphanumeric check digit
HelloBooks validates the structure, state code, and embedded PAN at the moment a customer or vendor record is saved, and warns if the GSTIN does not match the address state.
Place of supply: the rule that picks CGST+SGST or IGST
Place of supply is the location where the supply is deemed to have been made, governed by sections 10–13 of the IGST Act. It decides whether a transaction is intra-state or inter-state — and that decision picks the tax components, not the customer's billing address.
- Intra-state supply— supplier's state = place of supply. Charge CGST + SGST split equally (e.g., 18% GST = 9% CGST + 9% SGST).
- Inter-state supply— supplier's state ≠ place of supply. Charge full-rate IGST (e.g., 18% IGST).
- Exports and SEZ supplies — treated as zero-rated inter-state. Either pay IGST and claim refund, or supply under a Letter of Undertaking (LUT) without payment of IGST and claim refund of unutilised ITC.
- Imports — IGST is levied at the customs frontier alongside customs duty.
GST rate slabs
The current rate structure across goods and services:
- 0%Essentials, exports, exempt items
- 5%Mass-consumption goods
- 12%Standard merit rate
- 18%Most goods and services
- 28%Luxury / demerit goods
- Special0.25% diamonds, 3% gold, cess
The HSN/SAC code on a line item drives its rate. See the HSN & SAC page for the classification matrix.
How HelloBooks does this
HelloBooks is built for Indian GST first. Set up once, then every invoice gets the right split, code, and treatment automatically.
- 1
Set up your GST profile
Add your GSTIN, state, registration type, and tax periodicity in Settings → Taxes. HelloBooks validates the GSTIN structure and pulls the state code automatically.
- 2
Add customers and vendors with GSTIN
Save the counterparty's GSTIN, registration type (Registered, Composition, Unregistered, Consumer, Overseas, SEZ), and place of supply. The treatment drives every downstream tax calculation.
- 3
Tag items with HSN or SAC and a tax rate
Each item carries an HSN code (for goods) or SAC code (for services) and a default GST rate from the rate dropdown. The rate flows into invoices automatically.
- 4
Create the invoice — split is automatic
When the supplier state equals the place of supply, HelloBooks splits the GST 50/50 into CGST and SGST. When they differ, it charges full-rate IGST. The split appears at the bottom of the line items.
- 5
File GSTR-1 and GSTR-3B from the books
HelloBooks aggregates the period's invoices, credit notes, and amendments into the GSTR-1 sections (B2B, B2C, exports, etc.) and the GSTR-3B liability summary. Review, then file directly or export the JSON for the GST portal.
Frequently asked questions
When is GST registration mandatory in India?
Registration is mandatory once aggregate turnover crosses ₹40 lakh for goods (₹20 lakh for special-category states) or ₹20 lakh for services (₹10 lakh for special-category states). Inter-state suppliers, e-commerce sellers, casual taxable persons, persons liable under reverse charge, and non-resident taxable persons must register from the first rupee — there is no threshold.
What is the GSTIN format and how do I validate it?
A GSTIN is a 15-character alphanumeric: positions 1-2 are the state code, 3-12 are the entity's PAN, position 13 is the entity number for that PAN within the state, position 14 is the letter 'Z' by default, and position 15 is a check digit. HelloBooks validates the structure, the state code, and the PAN whenever you save a customer or vendor master.
When does an invoice attract IGST instead of CGST + SGST?
The split is decided by the place of supply, not the billing address. If the supplier's state and the place of supply are the same, the invoice is intra-state — charge CGST and SGST in equal halves of the GST rate. If they differ, the invoice is inter-state and a single IGST is charged at the full rate. Exports and supplies to/from SEZs are zero-rated inter-state supplies.
How are GST rates structured?
GST has five primary rate slabs — 0%, 5%, 12%, 18%, and 28% — plus special rates for specific goods (e.g., 0.25% on rough diamonds, 3% on gold, and a compensation cess on demerit and luxury goods). The HSN/SAC code determines the rate for each line item.
What is GST Composition Scheme and who can opt in?
Composition is a simplified scheme for small taxpayers with aggregate turnover up to ₹1.5 crore (₹75 lakh in special-category states) for goods, and ₹50 lakh for services. Composition dealers pay a flat rate (typically 1% for traders, 2% for manufacturers, 5% for restaurants, 6% for service providers), file CMP-08 quarterly, and cannot collect GST from customers or claim input tax credit.
What is reverse charge mechanism (RCM)?
Under reverse charge, the recipient pays GST instead of the supplier. RCM applies on specified categories (e.g., legal services from advocates, GTA freight, services from a director to the company) and on procurements from unregistered suppliers in some scenarios. The recipient pays GST in cash and can usually claim it as ITC in the same return.
How does GST treatment differ between Registered, Unregistered, Consumer, and SEZ customers?
Registered: full B2B invoice with the customer's GSTIN, eligible for ITC. Unregistered: B2B invoice without GSTIN if value > ₹2.5 lakh inter-state, otherwise B2C. Consumer (B2C): summary invoice, no GSTIN. Overseas: zero-rated export with LUT or with payment of IGST. SEZ: zero-rated supply with or without payment of IGST. HelloBooks selects the right treatment automatically from the customer's GST registration type.
Are HSN/SAC codes mandatory on every invoice?
From 1 April 2021, HSN/SAC codes are mandatory on all B2B and export invoices. Number of digits depends on aggregate turnover: up to ₹5 crore — 4 digits on B2B (HSN optional on B2C); above ₹5 crore — 6 digits on all invoices. Eight digits are required for notified chemicals and exports. See the dedicated HSN/SAC page for the current matrix.
More on India compliance
HSN & SAC Codes for GST Invoices
How HSN (goods) and SAC (services) codes work, how many digits to print, and how HelloBooks fills them automatically.
Read hsn & sac codesGST E-Invoicing: IRN, QR & IRP Workflow
Turnover thresholds, the IRN/QR lifecycle, the 24-hour cancellation window, and how HelloBooks pushes invoices to the IRP.
Read e-invoicingE-Way Bill Rules, Distance Limits & Cancellation
When an EWB is required, validity periods by distance, Part A vs Part B fields, and the HelloBooks generation flow.
Read e-way billGSTR-1, 3B, 2B & 9 Returns: Filing Guide
What each return covers, the due dates and late fees, and how HelloBooks builds them from your books.
Read gstr returnsAuthoritative sources
GST rules change frequently. Always verify the current position with the official GSTN sources below before filing.
- GST Portal — gst.gov.inOfficial GSTN portal for registration, returns, and payments.
- CBIC GST — cbic-gst.gov.inCentral Board of Indirect Taxes & Customs — Acts, rules, notifications, and circulars.
- E-Invoice Portal — einvoice1.gst.gov.inInvoice Registration Portal (IRP) for IRN generation and e-invoice schema.
- E-Way Bill Portal — ewaybillgst.gov.inNational e-way bill portal for EWB generation, cancellation, and verification.
Run all of this on autopilot in HelloBooks
Indian GST, e-invoicing, e-way bills, and GSTR returns are built into the free plan. No add-on, no per-invoice charge.