GST for Small Business in India: The Complete 2026 Guide

Everything a small business, trader or distributor in India needs to know about GST in 2026 — the GST 2.0 slabs, who must register, how to raise a compliant invoice, and how to file returns — with a linked rate guide for every major product category.

Goods and Services Tax (GST) is the single indirect tax that replaced VAT, service tax, excise and a dozen other levies across India. If you run a shop, trade, distribute, manufacture or provide services, GST touches almost every invoice you raise and every purchase you make. This guide is the map: it explains how GST works in 2026 after the GST 2.0 reform, who has to register, how to issue a valid tax invoice, and how to file your returns — and it links out to a detailed rate guide for every major product category.

Quick answer (2026): GST now runs on a simplified two-slab structure — 5% and 18% — plus a 40% rate for luxury and sin goods and 0% for exempt items. Most goods and services fall in 5% or 18%.

How GST works: CGST, SGST and IGST

GST is a destination-based tax charged at each stage of the supply chain, with credit for the tax already paid on inputs (Input Tax Credit, or ITC). For a sale within the same state, the tax splits into CGST (central) and SGST (state) in equal halves. For a sale across states, a single IGST is charged. As a registered business you collect GST from your customers, deduct the GST you paid to your suppliers, and pay the difference to the government.

Intra-state sale (same state): CGST + SGST, split equally (e.g. 18% = 9% CGST + 9% SGST).
Inter-state sale (different states): IGST, at the full rate (e.g. 18% IGST).
Input Tax Credit (ITC): the GST you paid on business purchases is offset against the GST you collected on sales — you only pay the net.

GST 2.0 rate slabs (2026)

The GST 2.0 reform that took effect on 22 September 2025 collapsed the old 5/12/18/28% structure into two main slabs, with a special higher rate for demerit goods. These are the slabs in force in 2026:

Slab	Applies to (broadly)
0% (exempt / nil)	Unbranded food staples, fresh produce, most education & healthcare, many life-saving drugs
5%	Essentials & mass-use items — packaged food, medicines, footwear, small appliances, apparel below the threshold
18%	Standard rate — most goods and services, electronics, professional services
40%	Luxury & sin goods — tobacco, aerated drinks, high-end cars, other demerit items

Rates vary by the exact product, its value and sometimes its packaging/branding. Always confirm against the specific category guide below and the current HSN notification before billing.

GST rate by product — detailed guides

The exact rate, HSN code and any conditions depend on what you sell. We keep a dedicated, up-to-date rate guide for every major category — pick yours:

GST registration: who needs it

GST registration is mandatory once your turnover crosses the threshold, and voluntary below it. Registering lets you collect GST, claim ITC, and sell on marketplaces and to other businesses that need your GSTIN.

Goods: registration is generally required once aggregate turnover crosses ₹40 lakh (₹20 lakh in special-category states).
Services: the threshold is generally ₹20 lakh (₹10 lakh in special-category states).
Compulsory regardless of turnover: inter-state suppliers of goods, e-commerce sellers, and those liable under reverse charge.
Composition scheme: small taxpayers under the turnover limit can opt for a flat, simplified rate with lighter compliance (but cannot claim ITC or make inter-state sales).

GST invoicing: what a valid tax invoice needs

A GST tax invoice is what lets your buyer claim ITC, so it must carry a defined set of particulars under Rule 46 — a consecutive serial number, your GSTIN and the buyer's GSTIN where registered, HSN/SAC codes, the taxable value, and the correct CGST+SGST or IGST split. Getting the format right is not optional; a defective invoice blocks your customer's credit.

GST returns, e-invoicing and e-way bills

Every registered business files periodic returns — GSTR-1 (outward supplies) and GSTR-3B (summary and payment) — and, above certain turnover thresholds, must generate e-invoices (with an IRN and QR code) and e-way bills for the movement of goods. Filing on time keeps your ITC flowing and avoids late fees and interest.

Free GST tools

Run the numbers instantly — every tool below is free, works in your browser and needs no signup:

How KukBook handles GST for you

KukBook is GST billing and accounting software built for Indian SMBs: it creates, prints and shares GST-compliant invoices, applies the right CGST/SGST/IGST split automatically, prepares your GSTR-1 and GSTR-3B return data, and generates e-invoices and e-way bills from the same billing data — so you never re-key. Accounting (KukBook) is free to start for one company and one user; you add more apps, users or companies as you grow.

General information only, not tax advice. GST rates, thresholds and rules change through notifications and council decisions — verify the current position for your specific goods/services with the CBIC notification or a professional before acting. Last reviewed: September 2026.