India's GST: A Unified Tax System
The Goods and Services Tax, introduced on 1 July 2017, replaced VAT, excise duty, service tax, and several other levies with a single destination-based consumption tax. For retailers, GST simplified compliance in theory — but the multiple return types, HSN code requirements, and monthly filing obligations create real administrative work.
Registration Thresholds
GST registration is mandatory if your aggregate annual turnover exceeds:
- ₹40 lakh for goods suppliers in most states (₹20 lakh in special category states)
- ₹20 lakh for service providers (₹10 lakh in special category states)
Special category states include Manipur, Mizoram, Nagaland, Tripura, and others in the northeast. Businesses below the threshold may register voluntarily to claim input tax credits.
GST Rates for Common Retail Categories
India uses a multi-rate structure: 0%, 5%, 12%, 18%, and 28%.
- 0%: Fresh fruits, vegetables, milk, eggs, bread, unprocessed cereals
- 5%: Packaged food, sugar, coffee, tea, edible oil, footwear under ₹1,000
- 12%: Processed food, butter, ghee, cheese, mobile phones under ₹12,000
- 18%: Most manufactured goods, electronics, restaurant services, hair care products
- 28%: Luxury goods, tobacco, aerated drinks, high-end electronics
The Composition Scheme
Small businesses with aggregate turnover up to ₹1.5 crore (₹75 lakh for special category states) can opt for the Composition Scheme. Instead of charging GST and filing multiple returns, they pay a fixed percentage of turnover:
- 1% for traders (0.5% CGST + 0.5% SGST)
- 2% for manufacturers
- 5% for restaurants not serving alcohol
The composition scheme is simple but has limitations: you cannot collect GST from customers, cannot claim input tax credits, and cannot make inter-state sales.
GST Returns for Regular Taxpayers
Regular GST registrants must file:
- GSTR-1: Outward supplies (sales) — monthly by 11th or quarterly
- GSTR-3B: Summary return with tax payment — monthly by 20th
- GSTR-9: Annual return — by 31 December of the following year
Input Tax Credit (ITC)
ITC allows you to reduce your GST liability by the GST you already paid on purchases. A retailer buying stock for ₹1,18,000 (including ₹18,000 GST at 18%) can offset that ₹18,000 against the GST collected on sales. This prevents the cascading tax-on-tax effect of the old system.
To claim ITC, the supplier must have filed their GSTR-1 reporting the sale to you. Your POS system must generate invoices with correct GST numbers, HSN codes, and tax breakdowns — all of which OneScale handles automatically.
HSN Code Requirements
Every product must be tagged with an HSN (Harmonised System of Nomenclature) code. Businesses with turnover above ₹5 crore must use 6-digit codes; others may use 4-digit codes. Your POS system should store and print HSN codes on invoices automatically.
