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TDS & Tax · GST lesson 2 of 5
Rates, registration and who must register
GST has only a few rates today. A business must register once its sales cross a limit, or earlier in some cases.
GST rates today
On 22 September 2025 a major simplification (often called “GST 2.0”) took effect. The old 12% and 28% slabs were largely removed and most goods and services moved to 5% or 18%.
| Rate | What it is mainly used for |
|---|---|
| 0% / exempt | Some basic items and services, and exports (zero-rated) |
| 5% | Essentials and mass-use items |
| 18% | The standard rate, including IT and many business services |
| 40% | Luxury and “sin” goods |
| 3% | A special low rate for gold, silver and other precious metals and jewellery |
Never guess a rate. The rate depends on the product or service code (HSN for goods, SAC for services). Look it up on the official rate schedule before invoicing. Invoices dated before 22 September 2025 may use older rates.
Who must register?
A person who supplies goods or services must register for GST when their yearly aggregate turnover goes above these limits:
| Business type | General limit | Special-category states |
|---|---|---|
| Supplying goods | ₹40 lakh | Lower, ₹10–20 lakh depending on the state |
| Supplying services | ₹20 lakh | ₹10 lakh |
If a business supplies both goods and services, check which limit applies to it. Limits and the list of special-category states can change.
Registration is needed regardless of turnover for…
- Persons making inter-state supplies of goods
- Casual taxable persons and non-resident taxable persons
- Persons who must pay GST under reverse charge (lesson 4)
- Certain e-commerce operators and some sellers through e-commerce platforms
- Foreign suppliers of online information services to people in India
Not registering when you must can lead to penalties. The list above is not complete; confirm on the GST portal.
Composition scheme: a simpler option
Small businesses can choose the composition scheme. They pay a low flat percentage of turnover and file simpler returns. The trade-offs: they cannot collect GST from customers on invoices and cannot claim input tax credit.
- Goods: turnover up to ₹1.5 crore (₹75 lakh in special-category states)
- Services: turnover up to ₹50 lakh
What you usually prepare to register
- PAN of the applicant and Aadhaar
- Proof of business (registration or incorporation papers)
- Identity and address proof and photos of owners or directors
- Address proof of the business place
- Bank statement or cancelled cheque
- A digital signature or authorised-signatory letter, where needed
Practice
- A shop that sells only goods has ₹35 lakh turnover in a normal state. Must it register? Is there any exception that could still apply?
- A freelance designer in a normal state has ₹22 lakh in service fees. What is the position?
- Why might a small trader choose the composition scheme, and what does it give up?
Show answers
1) Below ₹40 lakh, so not by turnover — unless an exception applies, such as inter-state supply of goods. 2) Above the ₹20 lakh services limit, so registration is needed. 3) Simple returns and a low flat rate; it gives up charging GST on bills and claiming input tax credit.
Check yourself
1. Which are the main GST rates after the September 2025 reform?
Most goods and services moved to 5% or 18%, with 40% for luxury and sin goods.
2. The general registration limit for a business supplying only services is…
₹20 lakh for services in most states.
3. A composition-scheme business can…
It pays a low flat rate with simpler returns, but gives up ITC and cannot charge GST separately.
4. Where do you find the rate for a product?
Rates are tied to the HSN or SAC code.
Learning material for beginners, checked in October 2026. It is not tax or legal advice. GST rates, limits and due dates change, and websites sometimes disagree on details. Always confirm on the GST portal (gst.gov.in) or with a Chartered Accountant or GST practitioner before applying anything in real work. All names and amounts in the examples are made up.