What is Goods and Service Tax (GST)? It is a unified indirect tax system in India that applies to the supply of goods and services. The Indian government launched GST on 1st July 2017 to replace multiple indirect taxes like VAT, excise duty, and service tax.
Instead of paying various taxes at each stage of production or supply, now there is one tax system – GST.
🧱 Types of GST in India
Understanding the types of Goods and Services Tax helps you know where your tax goes:
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CGST (Central GST): Collected by the central government on intra-state sales
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SGST (State GST): Collected by the state government on the same intra-state sale
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IGST (Integrated GST): Collected by the central government on inter-state sales
This structure simplifies taxation across India while ensuring revenue sharing between states and the Centre.
📊 Example of Goods and Services Tax in Action
Suppose you purchase a laptop for ₹40,000 in Delhi. The GST rate is 18%. Here’s how it breaks down:
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CGST = ₹3,600 (9%)
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SGST = ₹3,600 (9%)
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Final amount paid = ₹40,000 + ₹7,200 = ₹47,200
The seller collects this GST and deposits it with both the central and state authorities.
This example shows how Goods and Services Tax replaces earlier layered taxes, bringing clarity and consistency.
GST Registration – Here
🎯 Why GST Matters for India
The introduction of GST offered many benefits:
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It removed the burden of multiple taxes on the end customer
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It simplified compliance and filing for businesses
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It reduced the cascading effect of taxation (tax on tax)
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It made the Indian market more competitive and unified
🧾 Conclusion
To summarize, Goods and Services Tax (GST) is a major reform in India’s indirect tax system. It not only made taxation easier but also improved transparency and efficiency across sectors. Knowing What is Goods and Service Tax (GST) helps individuals and businesses stay compliant and aware of their financial responsibilities.