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GST Guide for Indian Businesses 2026: Slabs and ITC

A complete 2026 GST guide: how to calculate GST, the 5, 12, 18, and 28 percent slabs, IGST vs CGST and SGST, input tax credit, and HSN codes explained.

CE Calculatorpro.io Editorial Team

Published February 15, 2026

GST in India: A Complete Guide for 2026

Goods and Services Tax (GST) replaced over a dozen central and state taxes in India since its launch in July 2017. Understanding GST isn't optional for business owners — filing incorrectly or missing input tax credits can cost your business lakhs of rupees.

This guide explains everything: the GST structure, tax slabs, how to calculate GST correctly, and how to claim Input Tax Credit (ITC).

Quick Calculation: Use our free GST Calculator to instantly calculate GST-inclusive or GST-exclusive prices with full IGST/CGST/SGST breakdown.

The 4 GST Tax Slabs (2026)

GST operates on a 4-tier tax structure:

Slab	Rate	What's Included
Essential	0%	Unprocessed food grains, fresh vegetables, milk, education, healthcare
Basic	5%	Packaged foods, transportation, mobile services, small restaurants
Standard	12%	Business class air travel, butter, cheese, processed foods, mobile phones
Standard Plus	18%	Most services, electronics, computers, capital goods (most common)
Luxury/Sin	28%	Cars, tobacco, aerated drinks, luxury goods, gambling

Note: Some items carry additional cess on top of 28% GST — notably tobacco, aerated drinks, and large vehicles.

IGST vs. CGST + SGST: What's the Difference?

GST is split based on whether the transaction is within a state or across states:

CGST + SGST (Intra-state transactions):

Both Central GST and State GST are charged
Each is half the total GST rate
Example: 18% GST = 9% CGST + 9% SGST

IGST (Inter-state transactions):

Integrated GST is charged as a single tax
Goes to the central government, which distributes to destination state
Example: 18% GST = 18% IGST

Rule of thumb: If buyer and seller are in the same state → CGST + SGST. Different states → IGST.

How to Calculate GST: The Formulas

Adding GST to a price (exclusive to inclusive):

GST Amount = Original Price × (GST Rate / 100)
Total Price = Original Price + GST Amount

Example: ₹10,000 product with 18% GST

GST Amount = ₹10,000 × 0.18 = ₹1,800
Total = ₹10,000 + ₹1,800 = ₹11,800

Removing GST from a price (inclusive to exclusive):

Original Price = Total Price / (1 + GST Rate/100)
GST Amount = Total Price - Original Price

Example: You paid ₹11,800 for something with 18% GST — what was the base price?

Original = ₹11,800 / 1.18 = ₹10,000
GST Amount = ₹11,800 - ₹10,000 = ₹1,800

Input Tax Credit (ITC): How to Recover GST You've Paid

ITC is the mechanism that prevents the cascading of taxes. If you're a GST-registered business, you can offset the GST you paid on purchases (input tax) against the GST you collect on sales (output tax).

ITC Example:

You buy raw materials paying ₹18,000 GST
You sell finished goods collecting ₹30,000 GST
Net GST liability = ₹30,000 − ₹18,000 = ₹12,000 (payable to government)

ITC Eligibility Rules:

You must be GST registered
Tax invoice must be available
Goods/services used for business (not personal use)
Supplier must have filed their GST return and paid the tax
Claim within the specified time limit (usually by the annual return of that FY)

ITC is NOT available on:

Personal expenses
Travel/entertainment for non-business purposes
Purchases from unregistered suppliers

GST Registration: When Is It Mandatory?

Business Type	Registration Threshold
Goods supplier (most states)	Turnover > ₹40 lakhs/year
Service provider	Turnover > ₹20 lakhs/year
Special category states	₹10 lakhs (goods) / ₹10 lakhs (services)
E-commerce operators	Mandatory regardless of turnover
Inter-state suppliers	Mandatory regardless of turnover

Voluntary registration: Below-threshold businesses can register voluntarily to access ITC benefits — often beneficial if you have significant B2B transactions.

HSN Codes: Finding the Right GST Rate

Every product has an HSN (Harmonized System of Nomenclature) code that determines its GST rate. For services, SAC (Service Accounting Code) serves the same purpose.

How to find your HSN code:

GST portal: gst.gov.in → HSN Search
CBIC website: cbic.gov.in → GST → HSN Rate Finder
Use the CBE/CBR lookup tools

Getting the HSN code wrong leads to paying wrong rates and ITC complications. When in doubt, consult a tax professional or GST practitioner.

GST Return Filing: Key Dates

Return	Who Files	Due Date
GSTR-1	All regular taxpayers (outward supplies)	11th of next month
GSTR-3B	All regular taxpayers (summary return + payment)	20th of next month
GSTR-4	Composition taxpayers	30th April (annual)
GSTR-9	Annual return (turnover > ₹2 crore)	31st December

Missing filing deadlines attracts late fees: ₹50/day (₹25 CGST + ₹25 SGST) for regular returns, or ₹200/day for annual returns, subject to a maximum cap.

Frequently Asked Questions

Most services attract 18% GST. Key exceptions: Essential services (healthcare, education) are exempt (0%). Transportation services: 5% (rail), 0-18% depending on type. Restaurant services: 5% (non-AC, no alcohol license), 18% for premium restaurants. Financial services: 18%. Telecom: 18%. Construction services: 18% (5% for affordable housing). Always verify the specific SAC code for your service. You can verify any GSTIN (GST Identification Number) on the GST portal at gst.gov.in → Search Taxpayer. Enter the 15-digit GSTIN to verify registration status, business name, and state. Always verify your supplier's GSTIN before accepting invoices to ensure your ITC claims are valid. The composition scheme is a simplified compliance option for small businesses (turnover up to ₹1.5 crore for goods, ₹50 lakhs for services). Composition taxpayers pay a flat lower rate (1% for traders, 5% for restaurants, 6% for service providers) and file returns quarterly instead of monthly. The trade-off: they cannot collect GST from customers or claim ITC, limiting it to B2C businesses. Under RCM, the recipient of goods/services pays GST instead of the supplier. This applies when: buying from unregistered dealers, importing services, receiving specified services (GTA, legal services, etc.). The buyer must self-assess, pay the tax, and can then claim ITC on the same. Keep separate records for RCM transactions as they require specific reporting in GSTR-3B. Yes, on stock held on the date of registration. You can claim ITC on opening stock (goods) as of the registration date. For services, ITC is generally not available on pre-registration invoices. Claim within 30 days of obtaining registration. Maintain detailed inventory records with purchase invoices to support your ITC claim.

Sources & References

The figures, formulas, and guidance behind this GST Calculator Guide for Indian Businesses 2026: All Slabs, IGST, CGST & SGST Explained draw on authoritative primary sources. For verification and further reading: