Indian Economy: Goods and Services Tax (GST)

GST is an indirect tax introduced to replace multiple cascading taxes levied by the Central and State governments. It follows the principle of “One Nation, One Tax.”

Constitutional Background

• 101st Amendment Act: The Act that paved the way for the introduction of GST in India on July 1, 2017.
• GST Council (Article 279A): A joint forum of the Centre and the States, chaired by the Union Finance Minister.
• Tax Structure: Categorized into CGST (Central), SGST (State), and IGST (Integrated) for inter-state trade.

Key Features and Components

• Destination-Based Tax: It is levied at the point of consumption rather than the point of origin.
• Tax Slabs: The primary tax slabs are 5%, 12%, 18%, and 28%.
• Exclusions: Alcohol for human consumption and petroleum products are currently outside the ambit of GST.
• Input Tax Credit (ITC): Allows taxpayers to claim credit for taxes paid on inputs, reducing the tax burden.

Question for you: Which body has the authority to recommend the tax rates, exemptions, and floor prices for GST?

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