The Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based indirect tax levied on the supply of goods and services in India. It is a legal framework established by the Constitution (101st Amendment) Act, 2016, which received the President's assent on September 8, 2016, and was implemented nationwide on July 1, 2017.
The GST was introduced to solve the problem of a complex, fragmented indirect tax regime and the "cascading effect" of taxes, where tax was levied on tax at multiple stages. The idea was first proposed by the Kelkar Task Force on Indirect taxes in 2000.
The mechanism operates as a dual GST, with the Centre and States simultaneously levying tax on a common base. For intra-state supply, the tax is split into Central GST (CGST) and State GST (SGST). For inter-state supply, the Centre levies the Integrated GST (IGST), which is then apportioned between the Centre and the destination State. The core feature is the Input Tax Credit (ITC) system, which allows businesses to claim credit for taxes paid on inputs, ensuring the tax is ultimately borne by the final consumer and is only on the value added at each stage.
The constitutional basis for this concurrent taxing power is Article 246A, inserted by the 101st Amendment. The GST framework is governed by the GST Council, a joint forum of the Centre and States mandated by Article 279A. GST replaced a multitude of taxes, including Central Excise Duty, Service Tax, and State Value Added Tax (VAT). While the original structure had four main slabs (5%, 12%, 18%, 28%), the GST Council has recently rationalized this to primarily two slabs: 5% for essential goods and 18% for most other goods and services, effective from September 22, 2025.