GST in India FAQ
A goods and services tax (GST) took effect in India on July 1, 2017.
The GST is an indirect tax throughout India. It replaces other taxes and levies that are applied by the central and state governments, including Value Added Tax (VAT), Central Sales Tax, Excise Duty, and Commercial Tax, among others.
Talk to a tax consultant to make sure your business is registered and compliant with the GST.
On this page
- Do I need to register for GST?
- What's the difference between IGST, CGST, and SGST?
- Where can I learn more about the different GST categories?
- How should I set up my taxes?
- How can I make sure my tax settings are correct?
- Why aren't I seeing the tax rates I expect?
- How do I set an HSN code on my products?
- Does Shopify provide a GST-compliant bill?
Do I need to register for GST?
It depends. In general, GST registration is mandatory if your business meets any of the following conditions:
- Your turnover in a financial year exceeds Rs 20 lakhs (Rs 10 lakhs for North Eastern and hill states).
- Your business is registered under an earlier law, such as Service Tax or VAT.
- You are involved in inter-state supply of goods.
- You sell on online marketplaces.
This is not a complete list. Talk to a tax consultant to learn whether you need to register.
What's the difference between IGST, CGST, and SGST?
For orders within the state where your business is located, you need to pay Central GST (CGST) to the central government and a State GST (SGST) to your state government. For orders outside the state where your business is located, a single tax called Integrated GST (IGST) is payable to the central government.
You can't set multiple tax line items in Shopify, but you can set up your taxes so that you're charging the sum of SGST and CGST for sales of goods in the state where your business is located.
Where can I learn more about the different GST categories?
For information about the GST categories, refer to the website of the Central Board of Excise and Customs.
How should I set up my taxes?
The tax rate differs depending on the type of product, so a specific rate can't be set automatically. Instead, Shopify sets some defaults that you must update depending on your specific needs.
|Shopify tax setting||Tax type||Default tax amount||Tax behavior|
|Regions - All states except Karnataka||IGST||18%||instead of 9% federal tax|
|Regions - Karnataka||SGST||9%||added to 9% federal tax|
Use the default tax rates as a starting point to set up your taxes.
For example, suppose you're based in the state of Maharashtra, where a 28% GST applies. To charge the correct tax percentages, make the following changes to the default tax settings:
- Set the Country tax rate to 14%.
- In the Regions section, for all states except Karnataka and Maharashtra, set the IGST tax rate to 28%.
- For Karnataka:
- Set the tax rate to 28%.
- Change the tax name to IGST.
- Set the tax behavior to instead of 14% federal tax.
- For Maharashtra:
- Set the tax rate to 14%.
- Change the tax name to SGST.
- Set the tax behavior to added to 14% federal tax.
To apply different rates to different types of products, you can create hidden collections for each tax category and assign your products to these collections, and then override the tax rates for each collection.
How can I make sure my tax settings are correct?
Shopify helps to automate your taxes, but doesn't remit or file your taxes for you. It's your responsibility to check with local tax authorities or a local tax professional to ensure that you're charging the correct rates.
When you know what you should charge and you've entered your tax rates, you can perform some test orders to ensure that taxes are being charged correctly. To learn more, refer to Placing a test order.
Why aren't I seeing the tax rates I expect?
There are a few different settings that might affect the way taxes are charged to your customers. If you're not seeing the results that you expect, then review the following:
- If regional taxes aren't being charged, then check to make sure you haven't introduced any settings that would prevent this. If a customer is set to be tax exempt, then no tax is charged on their orders. If a product is set to be tax exempt, then no tax is charged for that product.
- If the tax being charged is too high, then make sure that your regional tax rates have the right setting for their behavior. Most of the states in your store are set by default to instead of, so that only the base tax percentage for that state is used. Tax behaviors such as added to and compounded on top of increase the amount of tax applied. To learn more, refer to Make sure that taxes aren't duplicated.
- If you set your products to include tax in the price, then it might appear that tax has not been charged. This setting charges your customers exactly the price you have listed for that product, and then calculates what portion of that price is tax. To learn more, refer to Include taxes in product prices.
How do I set an HSN code on my products?
You can use the HS tariff code for products to store the HSN code. This field is in the Shipping section of the product page.
This field requires that codes have at least 6 digits. If you want to use shorter HSN codes, then add your HS codes as Metafields or product tags.
Does Shopify provide a GST-compliant bill?
No. Shopify doesn't create a GST-compliant bill. To create a GST-compliant bill, use a local third-party GST invoicing service or an app from the Shopify App Store.