Key points
- GST started on 1 July 2017, after the 101st Constitutional Amendment in 2016.
- It replaced central taxes like excise and service tax, and state taxes like VAT, CST and entry tax.
- Businesses had to migrate registrations, change invoices and move old credits through TRAN forms.
- GST has kept evolving: e-way bills (2018), e-invoicing (2020), GSTR-2B, IMS (2024) and the GST 2.0 rate reform (2025).
Why India moved to GST
Before GST, a product could be taxed many times on its way to the customer: central excise at the factory, central sales tax when it crossed a state border, VAT in each state, entry tax at the city limits, and service tax on related services. Many of these taxes couldn’t be set off against each other, so tax was charged on tax. Trucks queued at state check posts, and businesses had to deal with different rules in every state.
GST was designed to fix this with one tax on the supply of goods and services, shared between the centre and the states, with credit available at every stage.
Taxes GST replaced
| Central taxes | State taxes |
|---|---|
| Central excise duty | State VAT and sales tax |
| Service tax | Central sales tax (CST) |
| Additional customs duties (CVD and SAD) | Entry tax and octroi |
| Central surcharges and cesses on goods and services | Luxury, entertainment and purchase taxes, and taxes on lottery and betting |
Some items stayed outside GST: alcohol for human consumption, and five petroleum products (crude oil, petrol, diesel, natural gas and aviation turbine fuel). Electricity is also outside GST.
How the switch happened
- Constitutional change The 101st Constitutional Amendment Act, 2016 gave both the centre and the states the power to levy GST and created the GST Council.
- Laws and rates The CGST, IGST, UTGST and state GST Acts were passed in 2017, and the Council fixed rates in slabs of 0%, 5%, 12%, 18% and 28%, with a compensation cess on some goods.
- Migration of registrations Businesses already registered under the old laws were given provisional GST registrations and then final GSTINs.
- Launch GST went live at midnight on 1 July 2017.
- Moving old credits Businesses carried their old tax credits into GST through TRAN-1 and TRAN-2 forms.
What businesses had to change
- Invoices: new tax invoice formats with GSTINs, HSN codes and separate CGST, SGST or IGST.
- Returns: monthly returns at first, later simplified to GSTR-1 and GSTR-3B.
- Pricing: prices and MRPs adjusted for new rates, with a duty not to profit from rate cuts.
- Stock: credits on stock held on 30 June 2017 claimed through transition forms.
- Software: most businesses had to change or upgrade their billing and accounting software.
The early problems
The first months were hard. The GST portal struggled under the load, return formats changed several times, and many businesses missed transition deadlines because of technical glitches. Small businesses found monthly compliance heavy. Many of these issues were addressed over time through return simplification, extended deadlines, the composition scheme and, later, court-ordered windows to claim missed transition credit.
How GST has changed since 2017
| Year | Change |
|---|---|
| 2018 | E-way bills for movement of goods |
| 2019–20 | Higher registration limit for goods (₹40 lakh in most states) |
| 2020 | E-invoicing started for very large businesses; GSTR-2B introduced |
| 2021 | QRMP scheme for small businesses to file quarterly |
| 2022 | Credit allowed only on bills in GSTR-2B |
| 2023 | E-invoicing extended to businesses above ₹5 crore |
| 2024 | GSTR-1A and the Invoice Management System (IMS) |
| 2025 | ISD compulsory, and GST 2.0: main rates of 5% and 18%, plus 40% |
For a detailed look at the recent changes, see our GST reforms timeline and GST 2.0 guide.
Moving into GST today
The big national transition is history, but every year thousands of businesses cross the registration limit and move into GST for the first time. If that is you, read 10 things to remember when your business moves into GST.
This guide explains GST rules in simple words and reflects the law as we understand it on 28 October 2026. Rules, rates and dates change, so please confirm with your CA or the official notifications before acting on it.