GSTN and the common portal, GST on imports and exports, and the impact of GST

1. GSTN and the common portal

Section 146 of the CGST Act, 2017 lets the Government, on the Council’s recommendation, notify a Common Goods and Services Tax Electronic Portal for registration, payment of tax, furnishing of returns, computation and settlement of integrated tax, electronic way bills and other prescribed functions. The portal notified is www.gst.gov.in, run by the Goods and Services Tax Network (GSTN), a company set up in 2013 to build and operate the IT system for GST, now owned by the Central and State Governments.

• Registration: online application, PAN and Aadhaar verification, grant of GSTIN.
• Returns: GSTR-1 (outward supplies), GSTR-3B (summary return and payment), annual return, and auto-drafted statements of inward supplies (GSTR-2B) from which credit is taken.
• Payment: electronic cash ledger, electronic credit ledger and liability register for each taxpayer.
• IGST settlement: the portal computes and settles the share of the Centre and the consuming States, and cross-utilisation of credit.
• E-way bill and e-invoice systems linked to the portal; refunds, appeals and notices handled online.

GSTN is the backbone that makes a dual GST workable: thirty-odd tax administrations operate on one data set, and the matching of the supplier’s outward details with the recipient’s credit is done by the system.

2. GST on imports

• Imports are inter-State supplies. Supply of goods imported into India, till they cross the customs frontier, and supply of services imported into India are inter-State supplies (section 7(2) and (4) of the IGST Act, 2017), so IGST applies.
• Goods: IGST on imported goods is levied and collected under section 3(7) of the Customs Tariff Act, 1975, on the customs value plus customs duty, at the point when customs duty is levied under section 12 of the Customs Act, 1962 (proviso to section 5(1) of the IGST Act). Basic customs duty remains outside GST. The importer takes credit of the IGST.
• Services: IGST on imported services is generally paid by the recipient in India under reverse charge (section 5(3) of the IGST Act). Online information and database access services supplied from abroad to unregistered persons are taxed in the hands of the foreign supplier, who must register (section 14).

3. GST on exports: zero-rating

Under section 16 of the IGST Act, export of goods or services and supplies to an SEZ developer or unit are zero-rated supplies. The supply is taxable, but the credit chain is preserved so that no Indian tax is exported. The exporter may either:

• export under a bond or letter of undertaking without paying IGST and claim refund of unutilised input tax credit; or
• pay IGST on the export and claim refund of the IGST paid.

Refund procedure is in section 54 of the CGST Act, with provisional refund of 90% for zero-rated supplies. For goods, the shipping bill filed with customs is treated as the refund application once the return is filed.

4. Benefits of GST

To trade and industry.

• Removal of cascading: credit of tax on inputs and capital goods across goods and services, which was not possible when excise, service tax and VAT were separate.
• A single national market: no entry tax, octroi or check-posts; inter-State movement under an e-way bill; CST abolished for GST goods.
• Uniform law and rates across States; fewer taxes; one registration per State.
• Correction of inverted duty structures (taken further in 2025 for textiles and fertilisers).

To e-commerce. A clear legal regime for marketplaces: tax collected at source by operators under section 52, operator liability for notified services under section 9(5), and nationwide sales from one registration per State of business. Small sellers on platforms have been allowed to sell without registration within notified limits.

To the service sector. Services earlier bore service tax with limited credit and States taxed some of them again (entertainment, luxury); GST brings services into the same credit chain as goods, and the place-of-supply rules settle which State may tax.

To consumers. Lower final prices where credit is passed on, a transparent tax shown on the invoice, lower rates on essentials, and anti-profiteering provisions (section 171) when rates are cut.

To the Government. A wider base, better compliance through invoice matching, and data for enforcement.

5. Impact on GDP and inflation

• GDP: by removing cascading and internal barriers, GST lowers costs of production and logistics, encourages formalisation of small businesses that need credit to sell to registered buyers, and integrates the national market. These effects raise efficiency and so potential output. In the short run after July 2017, compliance costs and the transition affected small businesses.
• Inflation: the immediate effect of introducing a VAT-type tax is usually a one-time change in the price level, not continuing inflation. Rates on most essentials were kept nil or 5%, and many items moved to lower rates. Anti-profiteering rules aimed to make suppliers pass on rate cuts and credit gains.
• Revenue: collections have grown with the base, and the compensation arrangement protected State revenue during the first five years (see the note on IGST and compensation).

6. The 2025 restructuring of rates

At its 56th meeting on 3 September 2025, the GST Council recommended (press release of the Ministry of Finance, PIB, 3 September 2025):

• a two-rate structure: a standard rate of 18% and a merit rate of 5%, with a special de-merit rate of 40% for a few goods and services, replacing the four main slabs of 5, 12, 18 and 28%;
• exemption of individual life and health insurance policies;
• cuts on common items (toothpaste, soaps, shampoos, bicycles to 5%), on many food items to 5% or nil (UHT milk, paneer, Indian breads), on air-conditioners, TVs, small cars and motorcycles up to 350 cc and cement from 28% to 18%, on agricultural machinery and renewable energy devices to 5%, on hotel accommodation up to ₹7,500 a day from 12% to 5%, and on gyms, salons and similar services from 18% to 5%; 33 lifesaving drugs from 12% to nil;
• implementation from 22 September 2025 for services and for all goods except pan masala, gutkha, cigarettes, chewing tobacco, unmanufactured tobacco and bidi, which were to continue at existing rates with compensation cess until the loans and interest under the compensation cess account were discharged;
• process reforms, including 90% provisional refunds on inverted duty structure, a simplified registration scheme for small and low-risk businesses, and operationalising the GST Appellate Tribunal.

The GST Council’s newsletter for December 2025 records that a revised rate structure for the excluded products was notified with effect from 1 February 2026: bidi at 18%, pan masala, other tobacco products and cigarettes at 40%, and the compensation cess on those products withdrawn (Notification No. 03/2025-Compensation Cess (Rate) dated 31 December 2025).

How this is examined

January 2026 (80-mark paper) Q. 3(b): note on the impact of GST on GDP of India. February 2025 Q. 3(a) (alternative): benefits of GST to trade, industry, e-commerce and the service sector; Q. 3(b) (alternative): GSTN portal. GST on imports and exports and tax invoice are named in the syllabus. In any impact answer, mention the 2025 restructuring with its date; it shows the answer is current.