Understanding GST in India: Key Features, Amendments, and FAQs for 2025

Introduction

Parliament passed the Goods and Services Tax (GST) Act on 29th March 2017 and implemented it from 1st July 2017, transforming India's indirect taxation system. GST is a comprehensive destination-based tax on the supply of goods and services, in place of different federal and state taxes with a single national market.

Understanding GST: Structure and Exclusions

GST has been designed as a single, value-added tax charged at each point of the supply chain with a strong credit mechanism to prevent double taxation. Certain items fall outside the GST charge:

Petroleum Products: petrol, diesel, aviation turbine fuel (ATF), crude oil, and natural gas.
Alcoholic Liquor: Is subject to central excise and state VAT/excise; some alcohol-based items like ethanol and hand sanitizers come under the GST umbrella.

India Types of GST

There are several components of GST:

SGST: State Goods and Services Tax
CGST: Central Goods and Services Tax
IGST: Integrated Goods and Services Tax, for inter-state sales
UTGST: Union Territory Goods and Services Tax, for union territories

SGST and CGST are retained for intra-state sales, while IGST is reserved for inter-state sales. UTGST is reserved for union territories that don't have a legislature of their own.

Key Features and Objectives of GST

The structure of the GST is defined by the following key features:

One Nation, One Tax: Unionization of taxation in India.
Dual Structure: Assessment simultaneously by the central government as well as state governments.
Destination-Based Taxation: Taxation based on the location of consumption.
Input Tax Credit (ITC): Lessens cascading taxation by allowing credit for input taxes.
Threshold Exemption: Small businesses with a turnover of below a determined level are exempted from paying GST.
Composition Scheme: Small businesses may have a compositional scheme at lower tax rates.
Online Compliance: GST Network (GSTN) provides online registration, payment, and filing provisions.
Anti-Profiteering Measures: The National Anti-Profiteering Authority (NAA) protects consumers by keeping prices fair.
Sector-Specific Exemptions: Health, education, and grains are exempted or taxed at a lower rate.
Transparency and Compliance: Enhanced record-keeping initiatives minimize tax evasion.

Recent GST Amendments for FY 2025–26

Below are significant changes from April 1, 2025:

Forced ISD Registration:

Companies with more than one GSTIN under a single PAN must register as Input Service Distributors and issue ISD invoices for shared services. GSTR-6 returns will be required.

Used Vehicles GST:

There is an 18% standard GST rate applied to the margin value on all second-hand cars, in place of the erstwhile 12%.

Hotel GST Calculation:

GST is computed on the value of actual transaction rather than the declared tariff. "Specified premises," i.e., hotels whose per-unit-per-day rate exceeds ₹7,500, charge 18% GST on restaurant services along with ITC benefits.

Biometric Authentication:

Directors of companies must provide biometric authentication at GST Suvidha Kendras from March 4, 2025. Registration must be completed within 15 days to avoid delay.

GST Waiver Scheme:
- Companies with all tax liabilities paid by March 31, 2025, may be eligible for the waiver of interest and penalty under the SPL01/SPL02 schemes.
E-Invoicing and E-Way Bill Rules:

A new set of invoices will be required from April 1, 2025. The validity of an e-way bill will be limited to invoices within 180 days, a maximum of 360 days. Additionally, businesses with an annual aggregate turnover (AATO) of more than ₹10 crore will be required to comply with a 30-day e-invoice reporting requirement.

Enhanced Portal Security:

Multi-factor authentication (MFA) is now compulsory for everyone logging in to the GST portal.

Taxes Subsumed Under GST

GST has superseded several crucial taxes, viz.:

Central Excise Duty
Service Tax
Additional Excise Duty
Additional Customs Duty (CVD)
Special Additional Duty of Customs
Value Added Tax (VAT), Central Sales Tax (CST), and Entry Tax
Entertainment Tax (with the exception of local body levies)
Luxury Tax
Lottery, Betting, and Gambling taxes

GST Council: Structure and Functions

The GST Council is established as a constitutional body under Article 279A and is headed by the Union Finance Minister with members from all states and union territories.

Key Powers of the GST Council:

Recommend GST rates, exemptions, and thresholds
Be responsible for compliance and dispute resolution mechanisms
Review and improve GST implementation
Direct the implementation of existing taxes/cesses under the GST regime

The Revenue Secretary is the Ex-Officio Secretary, and the Chairperson of the CBIC is a permanent non-voting invitee.

FAQs: GST in India 2025

Q: Is petrol and liquor within GST?
- A: No, they remain out of GST and attract central excise and state VAT/excise.
Q: What is the new GST rate for used cars?
A: Since April 1, 2025, a uniform 18% GST on the margin value is levied on all used vehicles.
**Q: What is ISD registration and who must have it?
A: Input Service Distributor (ISD) registration is now mandatory for those who have multiple GSTINs but a single PAN to enable ITC distribution for common services.
Q: What is the GST waiver scheme?
A: Bodies can have the interest and penalty waived by remitting all dues of tax payment prior to March 31, 2025, as per the SPL01/SPL02 guidelines.