GST is known as the Goods and Services Tax. It is an indirect tax which has replaced many indirect taxes in India such as the excise duty, VAT, services tax, etc. The Goods and Service Tax Act came into effect on 1st July 2017.
In other words, Goods and Service Tax (GST) is levied on the supply of goods and services. Goods and Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. After subsuming majority indirect taxes, GST is a single domestic indirect tax law for the entire country.
Type of GST:
- CGST: For intra-state sales (within the same state), collected by the central government.
- SGST: For intra-state sales (within the same state), collected by the state government.
- IGST: For inter-state sales (between different states), collected by the central government and shared
Tax rate under GST:
GST in India is levied under a multi-tier tax rate structure depending on the type of goods or services. As of now, there are four main GST tax slabs:
Standard GST Tax Rates:
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GST Rate
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Applies to
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0% (Nil rate)
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Essential items like fresh fruits, vegetables, milk, and education services
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5%
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Common necessities: packaged food, rail tickets, life-saving drugs, footwear below ₹1,000
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12%
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Processed foods, business class air tickets, cell phones (now 18%), fertilizers
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18%
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Most services, electronics, financial services, soaps, hair oil, toothpaste
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28%
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Luxury items: automobiles, ACs, washing machines, tobacco products (plus cess)
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Special Cess:
Some products like tobacco, aerated drinks, and luxury cars attract a compensation cess in addition to the 28% GST.
