Understanding GST Slabs in India: A Practical Guide for Freelancers and Small Businesses

GST trips people up not because the maths is hard, but because the vocabulary is unfamiliar the first time you actually have to invoice someone. This walks through what the slabs mean, when CGST/SGST split applies versus IGST, and how input tax credit changes what you actually owe — using a real invoice as the example.

The rate slabs

Most goods and services fall into one of a small number of GST slabs, commonly 5%, 12%, 18%, and 28%, with a few categories at 0% (exempt) and a handful of luxury/sin goods taxed higher with additional cess. Most professional services — consulting, design, software, freelance work — fall under the 18% slab. Always check the current rate for your specific category on the GST portal or with your accountant, since rates for specific goods do get revised.

CGST + SGST vs. IGST — the part that confuses people

This is the single most common source of GST invoicing mistakes for small businesses:

• Intra-state sale (you and your customer are in the same state): the GST amount is split evenly into CGST (goes to the central government) and SGST (goes to the state government). An 18% rate becomes 9% CGST + 9% SGST on the invoice.
• Inter-state sale (you and your customer are in different states, or it's an export): the full amount is charged as IGST (Integrated GST) instead — no split. An 18% rate is simply 18% IGST.

The total tax paid is identical either way — it's purely about which government the money is routed to, but getting the split wrong on an invoice is a common compliance error, especially for freelancers who serve clients across multiple states and forget to switch between CGST+SGST and IGST depending on the client's location.

A worked invoice example

You're a freelance designer in Maharashtra, billing ₹50,000 for a project, GST rate 18%.

Client also in Maharashtra: CGST 9% = ₹4,500, SGST 9% = ₹4,500. Invoice total = ₹59,000.

Client in Karnataka: IGST 18% = ₹9,000. Invoice total = ₹59,000.

Same total either way — the only thing that changes is how the ₹9,000 is labelled and reported in your GST return.

Input tax credit — why your actual liability is usually lower than the invoice suggests

If you're GST-registered and you buy business inputs (software subscriptions, equipment, a co-working desk) that already had GST charged on them, you can generally claim that as input tax credit (ITC) and offset it against the GST you collect from clients. Say you collected ₹9,000 in GST from the client above, but you paid ₹2,000 in GST on business software and hardware that month — your net GST liability to pay to the government is ₹7,000, not the full ₹9,000. This is the part most new freelancers miss when they first estimate how much GST they'll owe: the number on your sales invoice is not the number you actually pay out of pocket, once eligible ITC is netted off.

Who actually needs to register

Registration thresholds depend on your state and whether you supply goods or services — commonly ₹20 lakh annual turnover for services (₹10 lakh in some special-category states) and ₹40 lakh for goods, though these thresholds are revised periodically and vary by state. If you're near the threshold, it's worth checking the current limit directly on the GST portal rather than relying on a remembered number, since this is exactly the kind of detail that changes.

Calculate it quickly

Use our India GST calculator to add or remove GST from an amount at any slab rate — useful for quoting clients a round number that already includes GST, or reverse-calculating the pre-tax amount from a GST-inclusive invoice you've received.

This guide is for general understanding, not tax advice. GST rates, thresholds, and rules change periodically — confirm current figures on the official GST portal or with a qualified tax professional before filing.