Know All the Salient Features of GST in India

The Goods and Services Tax (GST), launched in India on July 1, 2017, marked a revolutionary shift in the country’s taxation system. Often dubbed “One Nation, One Tax,” GST replaced a tangled web of indirect taxes with a unified, consumption-based tax framework. For business owners, taxpayers, and curious learners alike, understanding the salient features of GST is key to navigating its impact on commerce, compliance, and daily life.

In this detailed guide, we’ll unpack everything you need to know about the salient features of GST as it stands in 2025. From its dual structure and tax slabs to input tax credit and e-invoicing, we’ll cover the essentials with clarity and depth. Whether you’re a small business owner, a professional, or just someone keen to learn, this 3000+ word blog post will equip you with a thorough understanding of GST’s core components. Let’s dive in!

What is GST and Why Does It Matter?

Before exploring the salient features of GST, let’s define it. GST is a multi-stage, destination-based indirect tax levied on the supply of goods and services across India. Enacted under the Constitution (101st Amendment) Act, 2016, it subsumed taxes like VAT, excise duty, service tax, and octroi into a single system administered by the GST Council—a joint body of central and state governments.

Why does GST matter? It simplifies taxation, reduces cascading (tax-on-tax), boosts transparency, and aligns India with global tax practices. Its salient features are the pillars that make this possible, impacting businesses, consumers, and the economy at large.

Salient Features of GST: A Detailed Breakdown

Here are the standout characteristics that define GST in India, explained in an easy-to-digest format.

1. One Nation, One Tax

What It Means: GST unifies India’s fragmented tax system into a single, nationwide framework, eliminating multiple state and central taxes.
Impact: Businesses no longer juggle varying tax rates or compliance rules across states. For example, a product moving from Delhi to Tamil Nadu now faces a consistent GST rate, not a mix of VAT, CST, and entry taxes.
Significance: Promotes seamless trade, reduces logistics costs, and fosters economic integration.

2. Dual GST Structure

What It Means: GST operates under a dual model—Central GST (CGST) and State GST (SGST)—for intra-state supplies, and Integrated GST (IGST) for inter-state supplies.
- CGST: Collected by the central government.
- SGST: Collected by the state government.
- IGST: Managed by the Centre but apportioned between Centre and states.
Impact: Ensures both levels of government retain fiscal autonomy while taxing the same transaction.
Example: A ₹1,000 sale within Maharashtra might attract 9% CGST (₹90) and 9% SGST (₹90), totaling 18%. A sale from Maharashtra to Gujarat incurs 18% IGST (₹180).

3. Destination-Based Taxation

What It Means: GST is levied at the point of consumption, not production—unlike earlier origin-based taxes like excise duty.
Impact: The tax revenue goes to the state where goods or services are consumed, benefiting consuming states (e.g., Uttar Pradesh) over producing states (e.g., Gujarat).
Significance: Encourages equitable revenue distribution and aligns with economic fairness.

4. Multi-Stage Taxation

What It Means: GST applies at every stage of the supply chain—manufacturing, wholesaling, retailing, and final sale—but with a credit mechanism to avoid double taxation.
Impact: Each participant pays tax only on the value they add, claiming credit for taxes paid earlier (Input Tax Credit).
Example: A manufacturer pays ₹50 GST on raw materials and charges ₹70 GST on the finished product. They remit only ₹20 (₹70 – ₹50) to the government.

5. Input Tax Credit (ITC)

What It Means: Businesses can offset GST paid on inputs (purchases) against GST collected on outputs (sales), eliminating the cascading effect.
Conditions: ITC is available only if suppliers file returns and invoices match via GSTN (GST Network).
Impact: Reduces overall tax burden, lowers product costs, and encourages compliance.
Example: A retailer paying ₹18 GST on stock can claim ITC when selling at ₹36 GST, remitting only ₹18 net.

6. Multiple Tax Slabs

What It Means: GST features tiered rates—0%, 5%, 12%, 18%, and 28%—plus a cess on luxury/sin goods (e.g., tobacco, aerated drinks).
- 0%: Essentials like milk, fresh vegetables.
- 5%: Necessities like tea, coffee.
- 12% & 18%: Standard goods/services (e.g., electronics, restaurant services).
- 28%: Luxury items (e.g., cars, ACs).
Impact: Balances affordability for essentials with higher taxation on luxuries.
Significance: Reflects India’s socio-economic diversity but adds complexity compared to a single-rate system.

7. Threshold Exemption

What It Means: Businesses with an annual turnover below ₹40 lakh (₹20 lakh for special category states) are exempt from GST registration (except for inter-state suppliers).
Impact: Small traders and startups benefit from reduced compliance burdens.
Update (2025): Proposals to raise thresholds to ₹50 lakh are under discussion by the GST Council.

8. Composition Scheme

What It Means: Small businesses with turnover up to ₹1.5 crore (₹75 lakh in special states) can opt for a simplified tax scheme with fixed rates (e.g., 1% for traders, 5% for restaurants).
Impact: Lowers tax liability and compliance (quarterly returns instead of monthly).
Limitation: No ITC eligibility under this scheme.

9. Online Compliance via GSTN

What It Means: The GST Network (GSTN) is a digital platform for registration, return filing (e.g., GSTR-1, GSTR-3B), payments, and ITC reconciliation.
Impact: Streamlines processes, reduces paperwork, and enhances transparency.
Significance: India’s shift to a tech-driven tax system, with over 1.3 crore registered taxpayers by 2025.

10. E-Invoicing System

What It Means: Mandatory for businesses with turnover above ₹10 crore (lowered from ₹500 crore in 2020), e-invoicing generates real-time Invoice Reference Numbers (IRNs) via the GST portal.
Impact: Reduces tax evasion, ensures invoice authenticity, and automates ITC matching.
Update (2025): Proposals to extend it to ₹5 crore turnover businesses are pending.

11. Reverse Charge Mechanism (RCM)

What It Means: The recipient pays GST instead of the supplier in specific cases (e.g., unregistered suppliers, certain services like legal fees).
Impact: Widens tax net, ensures compliance in unorganized sectors.
Example: A company hiring an unregistered vendor pays GST directly to the government.

12. Anti-Profiteering Clause

What It Means: Businesses must pass on GST rate reductions or ITC benefits to consumers, enforced by the National Anti-Profiteering Authority (NAA).
Impact: Prevents price hikes despite tax savings, protecting consumers.
Significance: Ensures GST benefits reach the end user, though NAA’s role has diminished by 2025.

13. Exports Zero-Rated

What It Means: Exports of goods and services are taxed at 0%, with exporters eligible for ITC refunds on inputs.
Impact: Boosts India’s export competitiveness (e.g., IT services, textiles).
Process: File LUT (Letter of Undertaking) or pay IGST and claim refunds.

14. Uniform Tax Administration

What It Means: GST applies uniformly across India, with standardized procedures for registration, returns, and refunds.
Impact: Reduces compliance complexity for multi-state businesses.
Significance: Aligns with the “One Nation” vision, though state variations persist.

Benefits of the Salient Features of GST

The salient features of GST deliver tangible advantages:

Simplified Taxation: Replaces 17+ indirect taxes with one cohesive system.
Cost Reduction: ITC and destination-based taxation lower production and logistics costs.
Transparency: Online processes and e-invoicing curb tax evasion.
Economic Growth: Unified markets boost trade and GDP (estimated 1–2% growth post-GST).
Consumer Relief: Anti-profiteering and lower tax incidence on essentials benefit end users.

These features collectively reshape India’s tax landscape.

How GST Works: A Practical Example

Let’s illustrate the salient features of GST with a supply chain example:

Manufacturer:
- Buys raw materials: ₹10,000 + 18% GST (₹1,800).
- Sells to wholesaler: ₹15,000 + 18% GST (₹2,700).
- Net GST paid: ₹900 (₹2,700 – ₹1,800 ITC).
Wholesaler:
- Buys from manufacturer: ₹15,000 + ₹2,700 GST.
- Sells to retailer: ₹18,000 + 18% GST (₹3,240).
- Net GST paid: ₹540 (₹3,240 – ₹2,700 ITC).
Retailer:
- Buys from wholesaler: ₹18,000 + ₹3,240 GST.
- Sells to consumer: ₹22,000 + 18% GST (₹3,960).
- Net GST paid: ₹720 (₹3,960 – ₹3,240 ITC).
Consumer:
- Pays ₹25,960 (₹22,000 + ₹3,960 GST).
- Total GST to government: ₹2,160 (₹900 + ₹540 + ₹720).

This demonstrates multi-stage taxation, ITC, and revenue sharing (CGST + SGST or IGST).

Challenges of GST Features

Despite its strengths, the salient features of GST pose challenges:

Multiple Slabs: Complexity in classification and frequent rate changes confuse taxpayers.
Compliance Burden: Small businesses struggle with monthly filings and tech adoption.
ITC Restrictions: Delays in matching or supplier non-compliance block credits.
State Disparities: Revenue-sharing disputes linger despite IGST.
E-Invoicing: Technical glitches and costs deter smaller firms.

The GST Council continues addressing these via reforms.

Evolution of GST Features (2017–2025)

Since its launch, the salient features of GST have evolved:

2017: Initial rollout with four slabs and high compliance demands.
2019: E-invoicing introduced for large firms; rates rationalized (e.g., 28% slab reduced).
2021: Turnover threshold for e-invoicing lowered to ₹50 crore.
2023: Simplified returns (e.g., QRMP scheme for quarterly filing).
2025: Proposals for a three-slab system and broader e-invoicing under review.

These updates reflect GST’s adaptability to economic needs.

Comparison: GST vs. Pre-GST Taxes

Aspect	Pre-GST	GST
Taxes	VAT, excise, service tax, etc.	Single GST (CGST, SGST, IGST)
Structure	Origin-based, cascading	Destination-based, ITC-enabled
Slabs	Varied by state and product	Uniform 0%, 5%, 12%, 18%, 28%
Compliance	Manual, state-specific	Online via GSTN
Threshold	Lower, inconsistent	₹40 lakh (₹20 lakh special states)

GST’s features clearly streamline taxation.

Tips for Leveraging GST Features

For Businesses

Maximize ITC: File returns on time to claim credits.
Opt for Composition: If eligible, reduce compliance load.
Adopt Tech: Use GST software for e-invoicing and returns.
Stay Updated: Monitor GST Council announcements for rate changes.

For Consumers

Check Invoices: Ensure GSTIN and tax breakup are listed.
Report Profiteering: Use helplines if prices don’t reflect tax cuts.
Understand Rates: Know which goods fall under lower slabs.

Real-Life Impact of GST Features

Online insights reveal GST’s reach:

A Bengaluru retailer noted a 15% cost drop due to ITC, passing savings to customers.
A Gujarat exporter praised zero-rated exports for doubling their overseas sales.
Small traders on forums complain of initial tech struggles but value the composition scheme.

These stories highlight GST’s transformative power.

Future of GST Features in 2025

As of March 21, 2025, the salient features of GST are poised for refinement:

Slab Rationalization: Talks of merging 12% and 18% into a single rate.
Tech Integration: AI-driven GSTN upgrades for faster refunds.
Inclusivity: Higher thresholds to ease small business burdens.
Green Taxation: Potential GST incentives for eco-friendly products.

GST continues evolving to balance simplicity and revenue.

Frequently Asked Questions (FAQs) About Salient Features of GST

1. What is the main feature of GST?

It’s a unified, destination-based tax replacing multiple indirect taxes.

2. How many tax slabs does GST have?

Five: 0%, 5%, 12%, 18%, and 28%, plus cess on luxury/sin goods.

3. Who benefits from Input Tax Credit?

Businesses at every supply stage, reducing their net tax liability.

4. Is GST mandatory for small businesses?

No, those below ₹40 lakh turnover (₹20 lakh in special states) are exempt unless supplying inter-state.

5. Where can I check GST updates?

Visit gst.gov.in or follow GST Council announcements.

Conclusion: Unlock the Power of GST Features

The salient features of GST—from its dual structure to ITC and e-invoicing—form the backbone of India’s modern tax regime. As of March 21, 2025, GST continues to simplify taxation, empower businesses, and benefit consumers despite its complexities. Whether you’re filing returns or buying essentials, understanding these features helps you navigate this system with confidence.