Question 1

What is GST and how is it calculated?

Accepted Answer

GST (Goods and Services Tax) is a unified indirect tax levied on the supply of goods and services in India. It replaced multiple indirect taxes like VAT, excise duty, and service tax in July 2017. GST is calculated on the transaction value — for exclusive pricing, GST = base price x rate/100; for inclusive pricing, the base is extracted by dividing by (1 + rate/100).

Question 2

What are the four GST rate slabs in India?

Accepted Answer

India has four standard GST rate slabs: 5% (essential goods like packaged food, footwear under ₹500), 12% (processed food, business-class air travel), 18% (most goods and services including electronics, financial services), and 28% (luxury and sin goods like cars, tobacco, aerated drinks). Some items are exempt (0%) or taxed at 3% (gold) or 0.25% (rough diamonds).

Question 3

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

Accepted Answer

CGST (Central GST) and SGST (State GST) are charged on intra-state supply — when buyer and seller are in the same state. Each is half the total GST rate. IGST (Integrated GST) is charged on inter-state supply — when buyer and seller are in different states — and equals the full GST rate. The total tax paid is the same regardless; the split determines which government receives the revenue.

Question 4

How do I know if my supply is intra-state or inter-state?

Accepted Answer

If the location of the supplier and the place of supply (where the goods are delivered or services consumed) are in the same state/UT, it is an intra-state supply attracting CGST + SGST. If they are in different states/UTs, it is inter-state supply attracting IGST. For services, the place of supply rules vary by type of service as defined under the IGST Act.

Question 5

What does GST-inclusive and GST-exclusive mean?

Accepted Answer

GST-exclusive means the listed price does not include GST — the tax is added on top. For a ₹1,000 item at 18%, you pay ₹1,180 (₹1,000 + ₹180 GST). GST-inclusive means the listed price already contains the tax — for the same ₹1,180 inclusive amount, the base price is ₹1,000 and the embedded GST is ₹180. B2B invoices in India typically show exclusive prices; MRP on consumer goods is inclusive.

Question 6

Can I claim Input Tax Credit (ITC) on GST paid?

Accepted Answer

Yes, registered businesses can claim ITC on GST paid on purchases used for taxable supplies. This reduces the net GST liability. ITC is available for CGST against CGST, SGST against SGST, and IGST against IGST (with cross-utilisation rules). Proper tax invoices and timely return filing are required. ITC is not available for certain blocked categories like motor vehicles for personal use, food and beverages, etc.

Question 7

Is GST applicable on exported goods and services?

Accepted Answer

Exports are treated as zero-rated supplies under GST. You can either export under a Letter of Undertaking (LUT) without paying GST and claim refund on input tax, or pay IGST on export and claim a refund of the IGST paid. In either case, the effective GST on exports is zero, making Indian exports competitive in global markets.

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