GST stands for Goods and Services Tax. It's a form of indirect tax applied in India on the supply of goods and services. Here's a breakdown of what GST is:

  • Comprehensive: It replaces a large number of indirect taxes previously levied, like VAT, excise duty, service tax, etc. (think of it as streamlining many taxes into one).
  • Multi-stage: GST is charged at each stage of value addition, from manufacturing to final sale.
  • Destination-based: The tax is paid at the final point of consumption, not at each stage of production or distribution.

In simpler terms, GST is a single tax levied on the value added to goods and services at each stage of their production and sale. It aims to create a simpler and more efficient tax system for India.


The Goods and Services Tax (GST) is a major tax reform implemented in India on July 1st, 2017. It replaced a complex web of indirect taxes like VAT, excise duty, service tax, and others with a single unified tax. This was a significant step towards a simpler and more efficient tax system.


  • Simplified Tax Structure: GST eliminates multiple taxes, reducing compliance burden and streamlining processes for businesses.
  • Reduced Cascading Effect: No more "tax on tax," potentially lowering production costs and making products cheaper for consumers.
  • Input Tax Credit: Businesses can claim credit for GST paid on purchases, improving cash flow and profitability.
  • Unified Market: Creates a single national market with smoother movement of goods and services across states, benefiting businesses looking to expand.
  • Increased Transparency: Online filing and credit system improves tax transparency and reduces tax evasion.


In India, the Goods and Services Tax (GST) is a single, unified tax levied on the supply of goods and services. However, for administrative purposes, the GST is broadly categorized into four main types:

  1. Central Goods and Services Tax (CGST): This tax which is collected by the Central govt on an intra-state supply of goods and services within a state boundary. The CGST rate is typically equal to half of the total GST rate applicable on a particular good or service.
  2. State Goods and Services Tax (SGST): This tax is collected by the state government on the intra-state supply of goods and services within its borders. Similar to CGST, the SGST rate also constitutes half of the total GST rate.
  3. Integrated Goods and Services Tax (IGST): This tax applies to the inter-state supply of goods and services (between two or more states). Unlike CGST and SGST, the entire GST burden falls under IGST. The IGST rate is typically equal to the combined rate of CGST and SGST that would have been levied if the transaction happened within a single state.
  4. Union Territory Goods and Services Tax (UTGST): This tax applies to the supply of goods and services within a Union Territory (UT) without a legislative assembly. UTGST functions similarly to SGST, levied by the central government on behalf of the UT administration. The UTGST rate and SGST rate is generally the same in neighbouring states.

Here's a table summarizing the different types of GST:

Types of GST

Applicability On

Levied By



Intra-state supply of goods and services within a state

Central Government

Sale of furniture within a state


Intra-state supply of goods and services within a state

State Government

Restaurant service availed within a state


Inter-state supply of goods and services (between states)

Central Government

Transportation of goods from one state to another


Supply of goods and services within a Union Territory (UT) without a legislative assembly

Central Government (on behalf of UT administration)

Sale of clothing within a UT

Important Points:

  • The concept of CGST and SGST ensures that both the central and state governments receive their share of tax revenue from the supply of goods and services.
  • IGST simplifies tax administration for inter-state transactions by eliminating the need for separate taxes levied by origin and destination states.
  • UTGST caters to the specific needs of Union Territories which are without a legislative assembly.


A Deep Dive: The Multifaceted Impact of GST on Indian Businesses

The Goods and Services Tax (GST), implemented in India in 2017, stands as a landmark reform with far-reaching consequences for businesses. While the overarching goal was to streamline the tax system and boost economic growth, the impact on businesses has been multifaceted, presenting both opportunities and challenges. This comprehensive analysis delves deeper into the data-driven impact of GST across various business segments.

Reduced Compliance Burden: A Boon for Efficiency

One of the most significant advantages of GST is the simplification of tax compliance. Replacing a complexity of indirect taxes with a single system has demonstrably reduced the administrative burden for businesses as well as individuals:

  • Time Saved: A 2019 study by the National Council of Applied Economic Research (NCAER) revealed a 21% reduction in the time businesses spend on tax compliance post-GST. This translates to significant cost savings and allows businesses to allocate resources towards core activities.
  • Streamlined Processes: Businesses no longer need to navigate a complex web of tax authorities and regulations. The single GST framework simplifies compliance procedures, reducing the risk of errors and penalties.
  • Technological Support: The online GST filing system promotes transparency and efficiency. Businesses can electronically file returns, claim input tax credits, and track transactions, minimizing paperwork and manual errors.

However, the impact on compliance burden varies across business sizes:

  • Large Businesses: Established organizations with dedicated tax departments are better equipped to handle the complexities of GST filing and record-keeping. They can leverage technology and in-house expertise to navigate the new system efficiently.
  • Small and Medium Businesses (SMBs): Limited resources can pose a challenge for SMBs. The initial investment in GST compliance software and training for staff can be a hurdle. Additionally, navigating the intricacies of the system can be time-consuming for smaller businesses lacking dedicated tax professionals.

Data suggests a positive trend for larger businesses, with a 2020 Confederation of Indian Industry (CII) survey indicating that 72% of businesses felt the compliance burden had decreased under GST. However, addressing the challenges faced by SMBs through simplified compliance procedures and readily available support mechanisms remains crucial.

Improved Cash Flow: A Boost for Working Capital

The input tax credit mechanism, a core feature of GST, allows businesses to claim credit for taxes paid on purchases. This significantly impacts cash flow:

  • Working Capital Improvement: A 2018 report by the Reserve Bank of India (RBI) showed a 15% increase in working capital for businesses due to the input tax credit mechanism. This allows businesses to retain more cash for investments, expansion, or day-to-day operations.
  • Reduced Inventory Holding: A 2019 study by the Centre for Monitoring Indian Economy (CMIE) said that an average inventory holding period for businesses are decreased by 2 days post-GST. This clearly says that businesses optimizing inventory levels due to improved cash flow and reduced tax burden on purchases.

Overall, the data indicates a positive impact on cash flow, with the potential for further benefits depending on industry-specific dynamics.

Enhanced Competitiveness: A Path to Growth

The elimination of cascading effects under GST has the potential to enhance business competitiveness:

Reduced Costs: Prior to GST, taxes were levied on previously taxed amounts, inflating production costs. The input tax credit mechanism under GST can potentially lead to lower production costs for businesses, making them more competitive in the market.

  • Logistics Efficiency: Removal of inter-state tax barriers allows for smoother movement of goods across the country. This can lead to reduced transportation costs and faster delivery times, giving businesses a competitive edge.
  • Wider Market Reach: The unified GST market allows businesses to expand their reach without facing tax hurdles at state borders. This can open up new markets and customer segments, promoting national economic integration.


A 2020 World Bank report suggests that GST could potentially lead to a 2% increase in India's GDP by reducing cascading effects and improving logistics efficiency. Additionally, a 2018 study by the National Institute of Public Finance and Policy (NIPFP) found that GST might contribute to a 1.5% reduction in overall business costs.

However, the impact on competitiveness can vary based on:

  • Industry Dynamics: Businesses in sectors with high pre-GST tax burdens or those reliant on efficient logistics stand to gain a greater competitive advantage under GST.

GST Registration Process for Businesses and Individuals in India

The Goods and Services Tax (GST) registration process is mandatory for businesses exceeding a specific turnover threshold or involved in certain types of supplies. Here's a detailed breakdown of the registration process for both businesses and individuals:

For Businesses:


  • Businesses with a turnover exceeding ₹40 lakh (₹20 lakh for certain states) in a financial year need to register for GST.
  • Businesses making interstate supplies, regardless of turnover, must register for GST.
  • Ecommerce marketplace operators supplying through their platform also require GST registration.

Registration Process:

  1. Gather Documents:
    • PAN Card of the business
    • Aadhaar Card of the authorized signatory
    • Proof of business registration (certificate of incorporation, partnership deed, etc.)
    • Address proof for the place of business (electricity bill, property tax receipt)
    • Bank account statement or cancelled cheque with account holder name and IFSC code
    • Digital Signature Certificate (DSC) (required for certain types of businesses)
    • Authorization letter or board resolution for the authorized signatory (if applicable)
  2. Visit the GST Portal:
    • Access the official GST portal at
    • Click on "Services" and then select "Registration."
    • Choose "New Registration" and select the "Taxpayer" category.
  3. Fill Out the Application Form:
    • Enter your PAN card details and verify using OTP received on your registered mobile number and email address.
    • Fill out the online application form (Form REG-01) with details like business name, constitution, address, bank account information, and authorized signatory details.
    • Upload scanned copies only for required documents.
  4. Verification and Approval:
    • Once submitted, the application will be verified by GST authorities.
    • Upon successful verification, a provisional registration certificate (PRC) will be issued electronically.
    • Within 15 days of receiving the PRC, you need to submit original documents for verification at the designated GST office.
    • On successful verification of original documents, the final GST registration certificate (GSTIN) will be issued electronically.

For Individuals (Limited Cases):

Individuals are generally not required to register for GST. However, there are specific scenarios where registration might be necessary:

  • Agents supplying on behalf of a taxable person (e.g., commission agent, selling agent)
  • Individuals liable to pay tax under reverse charge mechanism (specific situations defined under GST law)
  • Individuals making online inter-state supplies of taxable services (e.g., online courses, digital downloads) exceeding ₹20 lakh in a financial year

The registration process for individuals is similar to businesses, but the required documents may vary depending on the specific reason for registration.

Additional Points to Consider:

  • Different types of GST registration might be available depending on the nature of your business (e.g., regular taxpayer, casual taxpayer, composition taxpayer).
  • Consider seeking professional guidance from a tax consultant to ensure a smooth registration process and compliance with GST regulations.
  • The GST portal offers tutorials and FAQs to help with the registration process.

Article written by 

Tamjeed Ahmad, an intern at Corpzo