GST (Goods and Services Tax)

Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based indirect tax levied on the supply of goods and services in India. Introduced on July 1, 2017, GST replaced multiple indirect taxes like VAT, service tax, excise duty, and others, creating a unified national tax system. It is collected at each stage of production and distribution, with input tax credit available to avoid cascading taxation.

GST has four rate slabs: 5%, 12%, 18%, and 28%, with essential goods (food grains, healthcare) exempt or taxed at lower rates, and luxury items (cars, tobacco) taxed at the highest rate. Businesses with annual turnover exceeding ₹40 Lakhs (₹20 Lakhs for service providers) must register for GST. For consumers, GST is embedded in the price of goods and services, making it a consumption-based tax.

Real-World Example If Rahul purchases a smartphone for ₹50,000 with 18% GST, the final price is ₹59,000. The ₹9,000 GST is collected by the seller and deposited with the government. If Rahul is a business owner, he can claim input tax credit on this purchase for business use.