Goods & Service Tax (GST)
Jul 2025|🔴Needs Update|20 min read|42 entries
Key Takeaway
he Goods and Services Tax (GST) stands as a landmark tax reform in India, fundamentally transforming the nation's indirect tax structure.
T(35)
| Item | Detail |
|---|---|
| ☰Table of ContentsBasic FactsGST Day | July 1 |
| Introduced | July 1, 2017 |
| Type of Tax | Destination-based, Indirect Tax |
| Applicable on | Supply of goods and services |
| Levied from | Manufacturers, Retailers & Consumers |
| Implemented by | Both Central and State Governments |
| Aim | To reduce tax evasion, simplify the tax structure, promote ease of doing business, and enhance tax compliance |
| First Country in the World where the concept of GST evolved | Canada |
| First Country in the World to implement GST | France (1954) |
| Global Adoption | More than180 countriesin the world have implemented GST or a similar value-added tax system |
| Country with the Highest GST Rate in the world | India. (>28%).2nd– Argentina (27%)3rd– UK (20%).GST was First Proposed in India in– 2000 |
| Father of GST in India | Atal Bihari Vajpayee |
| The Real Architect of India’s GST | Azim Dasgupta |
| First Committee to study the model of GST in India | Asim Dasgupta Committee |
| First person to introduce the concept of GST in the Indian Parliament | P. Chidambaram (2005) |
| Constitutional Amendment for GST | A Separate List,Article 246A, was inserted into the Constitution |
| The task force that proposed the idea of a nationwide GST | Kelkar Task Force on indirect tax (2000; report submitted in 2003) |
| First State in India to ratify GST | Assam (August 12, 2016).2nd– Bihar.3rd– Jharkhand.GST introduced in Jammu & Kashmir with effect from– July 8, 2017Form of GST practiced in India– Dual GST (separate GSTs for the central and state governments) |
| Other countries that use the Dual GST system | Canada & Brazil |
| Types of GSTs in India | 4.CGSTSGSTIGSTUTGSTFour Tier Structure of GST in India  (tax slabs)– 0%, 5%, 12%, 18% & 28% |
| After the introduction of GST, supplies to SEZ (Special Economic Zone) units are | 0%.GST Threshold Limit –Goods– Rs 40 lakhs & Rs 20 lakhs |
| Services | Rs 20 lakhs &Â Rs 10 lakhs |
| Brand Ambassador of GST | Amitabh Bachchan |
| Punishment for non-payment of GST | Can include imprisonment up to 5 years for serious offenses like tax evasion |
| First chairman of the Empowered Committee | Dr. Azim Dasgupta* |
| Only Keralite who has served as the chairman of the Empowered Committee of State Finance Ministers on GST | K.M. Mani.It has been largely superseded by the GST Council since the formal implementation of GST on July 1, 2017.GST Bill MilestonesFirst Introduced in Parliament– 2014 (as the 122nd Constitution Amendment Bill)* |
| First introduced in Lok Sabha on | December 19, 2014 |
| Rajya Sabha passed the GST Bill on | August 3, 2016Lok Sabha passed the GST Bill(after Rajya Sabha's amendments) on – August 8, 2016Presidential Assent– September 8, 2016Officially inaugurated on– June 30, 2017 (a midnight session in Parliament)Inaugurated by – Pranab Mukherjee (then President of India) & Narendra Modi (Prime Minister of India)Came into effect on– July 1, 2017GST CouncilThe Council is aconstitutional body and a joint forum of the centre and the states, responsible for key decision-making and ensuring the smooth functioning of the tax system |
| Headquarters | New DelhiFirst Chairperson of the GST Council – Arun Jaitley |
| Current Chairperson of the GST Council | Nirmala Sitharaman* |
| Constitutional Basis | Under Article 279A of the Constitution |
| The first meeting of the GST council was held on | 22nd & 23rd September, 2016 |
| CompositionChairperson | Union Finance Minister |
| Members | Union Minister of State for Finance/Revenue & State Finance Ministers or any other Minister nominated by each state governmentNo. of members in the GST Council –33 members |
| Depending on the nature of the transaction (intra-state or inter-state) and the type of territory (state or union territory), they are as follows:CGST (Central GST) | collected by theCentral Governmenton intra-state transactions.SGST (State GST)– levied by theState Governmenton intra-state supplies)UTGST (Union Territory GST)– Union Territory Goods and Services Tax (levied by Union Territories on intra-Union Territory supplies)IGST (Integrated GST)– imposed oninter-state trade, imports into India & exports from India (even though exports are zero-rated). It is collected by theCentral Governmentand then revenue is apportioned between the Centre and the destination state as per the provisions laid out under the IGST Act, 2017.In essence:Intra-state transactions:CGST + SGST (or CGST + UTGST for specific Union Territories)Inter-state transactions (and imports/exports):IGSTGST Composition Scheme / Composite GSTThe GST Composition Scheme (often referred to as 'composite GST') is a simplified tax option for small taxpayers in India.It allows eligible businesses to pay GST at a lower, fixed percentage of their turnover, significantly reducing their compliance burden and simplifying tax filings compared to regular GST |
☰Table of ContentsBasic FactsGST Day
July 1
Introduced
July 1, 2017
Type of Tax
Destination-based, Indirect Tax
Applicable on
Supply of goods and services
Levied from
Manufacturers, Retailers & Consumers
Implemented by
Both Central and State Governments
Aim
To reduce tax evasion, simplify the tax structure, promote ease of doing business, and enhance tax compliance
First Country in the World where the concept of GST evolved
Canada
First Country in the World to implement GST
France (1954)
Global Adoption
More than180 countriesin the world have implemented GST or a similar value-added tax system
Country with the Highest GST Rate in the world
India. (>28%).2nd– Argentina (27%)3rd– UK (20%).GST was First Proposed in India in– 2000
Father of GST in India
Atal Bihari Vajpayee
The Real Architect of India’s GST
Azim Dasgupta
First Committee to study the model of GST in India
Asim Dasgupta Committee
First person to introduce the concept of GST in the Indian Parliament
P. Chidambaram (2005)
Constitutional Amendment for GST
A Separate List,Article 246A, was inserted into the Constitution
The task force that proposed the idea of a nationwide GST
Kelkar Task Force on indirect tax (2000; report submitted in 2003)
First State in India to ratify GST
Assam (August 12, 2016).2nd– Bihar.3rd– Jharkhand.GST introduced in Jammu & Kashmir with effect from– July 8, 2017Form of GST practiced in India– Dual GST (separate GSTs for the central and state governments)
Other countries that use the Dual GST system
Canada & Brazil
Types of GSTs in India
4.CGSTSGSTIGSTUTGSTFour Tier Structure of GST in India  (tax slabs)– 0%, 5%, 12%, 18% & 28%
After the introduction of GST, supplies to SEZ (Special Economic Zone) units are
0%.GST Threshold Limit –Goods– Rs 40 lakhs & Rs 20 lakhs
Services
Rs 20 lakhs &Â Rs 10 lakhs
Brand Ambassador of GST
Amitabh Bachchan
Punishment for non-payment of GST
Can include imprisonment up to 5 years for serious offenses like tax evasion
First chairman of the Empowered Committee*
Dr. Azim Dasgupta
Only Keralite who has served as the chairman of the Empowered Committee of State Finance Ministers on GST*
K.M. Mani.It has been largely superseded by the GST Council since the formal implementation of GST on July 1, 2017.GST Bill MilestonesFirst Introduced in Parliament– 2014 (as the 122nd Constitution Amendment Bill)
First introduced in Lok Sabha on
December 19, 2014
Rajya Sabha passed the GST Bill on
August 3, 2016Lok Sabha passed the GST Bill(after Rajya Sabha's amendments) on – August 8, 2016Presidential Assent– September 8, 2016Officially inaugurated on– June 30, 2017 (a midnight session in Parliament)Inaugurated by – Pranab Mukherjee (then President of India) & Narendra Modi (Prime Minister of India)Came into effect on– July 1, 2017GST CouncilThe Council is aconstitutional body and a joint forum of the centre and the states, responsible for key decision-making and ensuring the smooth functioning of the tax system
Headquarters
New DelhiFirst Chairperson of the GST Council – Arun Jaitley
Current Chairperson of the GST Council*
Nirmala Sitharaman
Constitutional Basis
Under Article 279A of the Constitution
The first meeting of the GST council was held on
22nd & 23rd September, 2016
CompositionChairperson
Union Finance Minister
Members
Union Minister of State for Finance/Revenue & State Finance Ministers or any other Minister nominated by each state governmentNo. of members in the GST Council –33 members
Depending on the nature of the transaction (intra-state or inter-state) and the type of territory (state or union territory), they are as follows:CGSTÂ (Central GST)
collected by theCentral Governmenton intra-state transactions.SGST (State GST)– levied by theState Governmenton intra-state supplies)UTGST (Union Territory GST)– Union Territory Goods and Services Tax (levied by Union Territories on intra-Union Territory supplies)IGST (Integrated GST)– imposed oninter-state trade, imports into India & exports from India (even though exports are zero-rated). It is collected by theCentral Governmentand then revenue is apportioned between the Centre and the destination state as per the provisions laid out under the IGST Act, 2017.In essence:Intra-state transactions:CGST + SGST (or CGST + UTGST for specific Union Territories)Inter-state transactions (and imports/exports):IGSTGST Composition Scheme / Composite GSTThe GST Composition Scheme (often referred to as 'composite GST') is a simplified tax option for small taxpayers in India.It allows eligible businesses to pay GST at a lower, fixed percentage of their turnover, significantly reducing their compliance burden and simplifying tax filings compared to regular GST
* Time-sensitive data — verify for latest information
Items exempted from GST
Some essential goods and services are exempt from GST to ensure that basic needs remain affordable for all sections of society.
Alcohol for human consumption (States retain control over alcohol taxation).Petroleum products (Crude oil, Petrol, Diesel, Natural Gas, ATF (aviation fuel) – currently outside GST)ElectricityBasic food items like fresh fruits, vegetables, milk, eggs, etc.Healthcare and educational servicesTobacco Products
The advantages of GST are as follows(7)
| Item | Detail |
|---|---|
| This ensures no loss or gain in revenue after transitioning to GST.It is a weighted average of the previous indirect tax rates collected by both the Centre and States, adjusted for the tax base and exemptions. The RNR helps maintain fiscal stability during tax reform.In 2015, theThirteenth Finance Commissionunder Dr. Vijay Kelkar estimated the RNR between 15% | 15.5% |
| TheArvind Subramanian Committee (2015)estimated the RNR to be around 15%, with a recommended standard GST rate of17 | 18%. In essence, RNR ensures the shift to GST remains revenue-neutral for the government |
| Under the GST regime, goods are classified under the HSN Code.HSN Code Requirement | Businesses with an aggregate turnoverup to Rs. 5 crore are required to use4-digitHSN codes |
| SideNotes:Indirect Tax | the tax levied on goods and services that is collected by an intermediary (like a seller) and then passed on to the final consumer through the price of the product or service |
| The first country to implement a modern VAT/GST system | France |
| Gift Tax | Introduced in 1958 |
| Sin Tax | an excise tax specifically levied on certain goods or services that are considered harmful to individuals or societyapplied to tobacco, sugary drinks, pan masala and gambling |
This ensures no loss or gain in revenue after transitioning to GST.It is a weighted average of the previous indirect tax rates collected by both the Centre and States, adjusted for the tax base and exemptions. The RNR helps maintain fiscal stability during tax reform.In 2015, theThirteenth Finance Commissionunder Dr. Vijay Kelkar estimated the RNR between 15%
15.5%
TheArvind Subramanian Committee (2015)estimated the RNR to be around 15%, with a recommended standard GST rate of17
18%. In essence, RNR ensures the shift to GST remains revenue-neutral for the government
Under the GST regime, goods are classified under the HSN Code.HSN Code Requirement
Businesses with an aggregate turnoverup to Rs. 5 crore are required to use4-digitHSN codes
SideNotes:Indirect Tax
the tax levied on goods and services that is collected by an intermediary (like a seller) and then passed on to the final consumer through the price of the product or service
The first country to implement a modern VAT/GST system
France
Gift Tax
Introduced in 1958
Sin Tax
an excise tax specifically levied on certain goods or services that are considered harmful to individuals or societyapplied to tobacco, sugary drinks, pan masala and gambling