Key Milestones in the History of GST in India

• 1st April 2021 - HSN (Harmonized System Nomenclature) codes: Every registered person must mention HSN codes on tax invoices. The number of digits required depends upon the aggregate annual turnover in the preceding financial year.

Turnover in Preceding Financial Year	No. of Digits
Up to Rs. 5 crore	4 Digits (optional on B2C invoices)
More than Rs. 5 crore	6 Digits
Exports and specified goods	8 Digits

These requirements (Notification 78/2020 - Central Tax) have been effective from 1st April 2021. All tax invoices must be GST compliant and carry the prescribed HSN code details.

• Rates of interest under GST: Interest applies on delayed payment of tax and on wrongly availed credit. The rate on wrongly availed and utilised input tax credit was reduced from 24% to 18% retrospectively by the Finance Act, 2022. The current rates are:

Sections	The rate of Interest p.a.
Failure to pay tax under Section 50(1)	18%
Input tax credit wrongly availed and utilised under Section 50(3)	18%
Interest on refunds withheld in an appeal given later under Section 54(12)	6%
Interest on delayed refunds under Section 56	6%
Interest on refunds ordered in an appeal under Provision to section 56	9%

• October 2020 to August 2023 - E-invoicing: Electronic invoicing was introduced for B2B supplies in October 2020 for businesses with turnover above Rs. 500 crore, and the threshold was lowered in phases. Since 1st August 2023, e-invoicing is mandatory for all taxpayers with aggregate turnover above Rs. 5 crore.
• 1st January 2021 - QRMP scheme: The Quarterly Return Monthly Payment scheme allowed taxpayers with turnover up to Rs. 5 crore to file GSTR-1 and GSTR-3B quarterly while paying tax monthly, with the Invoice Furnishing Facility (IFF) for passing on credit.
• 2021-2022 - Simpler audits and tighter credit: The mandatory GST audit by a CA/CMA was abolished and replaced with a self-certified reconciliation statement (GSTR-9C) for turnover above Rs. 5 crore. Input tax credit was restricted to invoices appearing in the auto-drafted statement GSTR-2B.
• 1st January 2022 - E-commerce changes: Food delivery and other e-commerce operators became liable to pay GST on restaurant services supplied through their platforms under Section 9(5).
• 3rd September 2025 - GST 2.0 approved: The 56th GST Council meeting approved a next-generation rate rationalisation, abolishing the 12% and 28% slabs and introducing a 40% rate for select sin and luxury goods.
• 22nd September 2025 - GST 2.0 in force: The rationalised structure took effect: most goods and services now fall under two main slabs of 5% and 18%, with 40% on select sin and luxury goods and special rates of 3% and 0.25% continuing for gold, precious metals and stones.

The Current GST Rate Structure (from 22 September 2025)

Under the GST 2.0 reform approved by the 56th GST Council meeting, the earlier four-slab structure was rationalised. The rates applicable today are:

• 0% (exempt): Essential items such as unbranded food grains, fresh fruit and vegetables, milk, education and healthcare services, and several daily essentials moved to nil rate under GST 2.0.
• 5% (merit rate): Mass-consumption and merit goods and services, including many packaged foods, footwear and apparel within prescribed values, and other daily-use items that earlier fell in the 12% slab.

This structure has been effective from 22nd September 2025.

• 18% (standard rate): The standard rate for most other goods and services, including items such as televisions, air conditioners, small cars and cement that earlier attracted 28%.
• 40% (de-merit rate): A special higher rate on select sin and luxury goods such as pan masala, tobacco products, aerated and caffeinated drinks, high-end cars, yachts and private aircraft.
• 3% and 0.25% (special rates): Gold, silver and other precious metals continue at 3%, while rough diamonds and precious stones attract 0.25%.
• Outside GST: Alcohol for human consumption and five petroleum products (crude oil, petrol, diesel, natural gas and aviation turbine fuel) remain outside GST and continue under state VAT/excise; electricity and real estate (other than construction services) also stay outside.
• E-commerce operators: Operators continue to pay GST themselves under Section 9(5) on notified services supplied through their platforms — passenger transport by cab or motorcycle, accommodation services, housekeeping services and restaurant services.

GST Today: Key Facts

• Under GST, the main tax rates are 5% and 18%, with a 40% rate on select sin and luxury goods (effective 22 September 2025).
• Petroleum products like crude oil, petrol, diesel, natural gas and Aviation Turbine Fuel, and alcohol for human consumption, are not covered under GST.
• GSTR-1 and GSTR-3B must be filed monthly (or quarterly under the QRMP scheme for turnover up to Rs. 5 crore), along with the annual return GSTR-9.
• Registration is mandatory when aggregate turnover exceeds Rs. 40 lakh for goods or Rs. 20 lakh for services (Rs. 20 lakh / Rs. 10 lakh in special category states), and in specified cases such as inter-state supply regardless of turnover.
• On notified goods and services, GST is paid by the recipient under the Reverse Charge Mechanism.
• At the time of supplying goods or services, the supplier has to issue a tax invoice to the customer; businesses with turnover above Rs. 5 crore must generate e-invoices through the Invoice Registration Portal.
• On interstate transactions, IGST is levied. For intrastate transactions, CGST and SGST are levied. For Union Territory transactions, UTGST is levied.
• GST applies at the time of supply, as GST is based on supply.
• Taxpayers with aggregate turnover up to Rs. 5 crore must mention a 4-digit HSN code on B2B invoices (optional for B2C), while those above Rs. 5 crore must mention 6 digits. For exports, 8-digit HSN codes are required.