Goods and Services Tax (GST) is India's unified indirect tax system, introduced on July 1, 2017. It replaced a complex web of central and state taxes including VAT, Service Tax, Central Excise, Entry Tax and Octroi. GST operates on the principle of 'one nation, one tax', creating a seamless national market.
GST is a destination-based tax — it's levied at the point of consumption, not production. This ensures that the revenue flows to the state where the goods or services are ultimately consumed, creating a fair distribution among states.
GST Tax Slabs
- 0%: Essential goods — food grains, milk, eggs, vegetables
- 5%: Basic necessities — packaged food, life-saving drugs, transport
- 12%: Processed food, business class air travel
- 18%: Most goods and services — IT services, restaurants, electronics
- 28%: Luxury goods — premium cars, tobacco, aerated drinks