GST Explained 2025-26: Guide for Individuals & Businesses
Goods and Services Tax (GST) has transformed how taxes are collected in India, but for many individuals and small businesses it still feels confusing and intimidating. This single-page guide breaks down GST in simple language, using real-world examples, common mistakes, and practical tips so you can understand, comply, and optimize your tax position effectively.
What Is GST?
Goods and Services Tax (GST) is a destination-based, indirect tax levied on the supply of goods and services in India. It replaced multiple indirect taxes such as VAT, service tax, excise duty, to create a unified tax system.
GST Rate Slabs
| Rate | Description & Examples |
|---|---|
| 0% (Nil) | Fresh fruits, vegetables, unbranded atta, essential medicines. |
| 5% | Mass consumption items, economy air travel, railway transport. |
| 12% | Processed foods, business services, mid-range products. |
| 18% | Most Common: Professional services, IT, electronics. |
| 28% | Luxury goods, high-end cars, consumer durables. |
GST on Services
Services are fully integrated into GST. Most professional and IT-related services typically fall under the 18% slab.
- Freelancing (IT, Marketing, Design).
- Professional Services (CA, Legal).
- Digital Marketing & SEO.
- Training & Workshops.
- Same State → CGST + SGST
- Different State → IGST
- Export → Zero Rated (Refundable)
Reverse Charge Mechanism (RCM)
Under RCM, the recipient of goods/services is liable to pay GST, not the supplier.
1. Specified Categories
GTA (Transport), Legal Services by Advocates, Sponsorships.
2. Import of Services
Purchasing software/services from foreign entities (e.g., Zoom, Adobe).
GST Calculation Examples
Scenario: Product value ₹50,000 | GST 18% | Within State.
Scenario: Service value ₹80,000 | GST 18% | Different State.
Sales Tax (Output): ₹54,000
Purchase Tax (Input): ₹36,000
Common Mistakes
Ignoring turnover limits leads to penalties.
Incorrect HSN/SAC codes cause disputes.
Claiming personal expenses as business input.
Forgetting to pay tax on legal/import services.
Missed dates = Late fees + Interest.
Final Thoughts
GST transforms tax from a burden into a structured framework. With proper compliance, you can avoid cascading taxes and price competitively.
Fincado Research Team
Fact CheckedOur analysis is built on deep-dive research into RBI Benchmarks and lender-specific disclosures. We verify every interest rate and fee structure against real-world borrower approvals to ensure the highest level of accuracy for Indian home buyers.
Disclaimer: Tax laws are subject to change. Information updated as per GST Council Notifications up to 2025. Consult a tax professional for specific advice.
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Use our GST Calculator to determine inclusive/exclusive tax amounts instantly.