The three components of GST
Which tax applies depends on whether the supply crosses a state border. Getting this wrong is the single most common GST error on an invoice.
- CGST — Central GST, on supplies within a state
- SGST/UTGST — State or Union Territory GST, charged alongside CGST at the same rate
- IGST — Integrated GST on inter-state supplies and imports, at the combined rate
Who has to register
Registration is mandatory once your aggregate turnover crosses the threshold for your state and supply type. Some businesses must register regardless of turnover.
- Inter-state suppliers of goods
- E-commerce operators and most sellers on them
- Businesses liable to pay tax under reverse charge
- Casual and non-resident taxable persons
- Input service distributors and TDS/TCS deductors
Reading a GSTIN
A GSTIN is 15 characters and every part carries meaning, which is why it can be validated before you ever raise an invoice. The first two digits are the state code, the next ten are the holder's PAN, the thirteenth is the entity number for that PAN in that state, the fourteenth is 'Z' by default, and the last is a checksum.
Aggregate turnover
Thresholds are tested against aggregate turnover — all taxable, exempt, export and inter-state supplies under the same PAN, across every state, computed all-India. It excludes the GST itself. Businesses often miss registration because they measure one branch rather than the PAN as a whole.
Common questions
Can I register for GST voluntarily below the threshold?+
Yes. Voluntary registration lets you claim input tax credit and issue tax invoices, which many B2B customers require before they will buy from you. The trade-off is that you take on full return-filing obligations from day one.
Do I need separate registration for each state?+
Yes. GST registration is state-wise. If you have a place of business in more than one state you need a GSTIN for each, even though they share the same PAN.
What is the difference between exempt, nil-rated and zero-rated?+
Nil-rated supplies carry a 0% rate. Exempt supplies are outside the tax net entirely. Both block input tax credit. Zero-rated supplies — exports and supplies to SEZs — are taxed at 0% but still allow you to claim or refund the input credit, which is the crucial difference.