Scope and assumptions
Explains India's GST generally; launched 1 Jul 2017, replacing state VAT/service tax. Current slabs (post 22 Sep 2025) are 0 / 5 / 18 / 40%. CGST+SGST intra-state, IGST inter-state.
Quick navigation
- Slabs overview → gst-india-percentage
- How to calculate → calculate-gst-india
- What falls in each slab → gst-slabs-india
- The calculator → Percentage Calculator
Why a 2017 law still makes headlines in 2026
India's GST launched on 1 July 2017 as the biggest tax reform in the country's history — one nationwide tax replacing a web of state VATs and service taxes. It stays in the news because the slabs keep moving, most recently the 22 Sep 2025 simplification to 0 / 5 / 18 / 40%. Understanding GST starts with what it is, how the centre and states split it, and the current rates.
1. The short definition
GST (Goods and Services Tax) is India's national indirect tax on the supply of goods and services, charged as a percentage of the price at each sale. It launched on 1 July 2017, replacing a tangle of state VATs, excise, and service tax with one system.
Key idea: GST is a consumption tax — the final customer bears it, while registered businesses collect and remit it (and claim input credit on GST they already paid).
2. The central/state split
India is a union of states, so GST revenue is shared:
| Sale type | How the slab is collected |
|---|---|
| Intra-state | CGST (central) + SGST (state) — e.g., 18% = 9% + 9% |
| Inter-state | IGST (integrated, central) at the full rate |
The combined rate the buyer pays is the same; only who keeps the revenue differs.
3. Current slabs (post-2025 reform)
After the 22 Sep 2025 simplification, the consumer-facing slabs are 0% (exempt), 5%, 18%, and 40% (demerit/luxury). The old 12% and 28% slabs were removed. See gst-slabs-india for what falls where.
4. GST vs the old VAT
| GST (2017+) | Old state VAT | |
|---|---|---|
| Scope | Nationwide, goods + services | State-by-state, mostly goods |
| Rate | Unified slabs (5/18/40) | Varied by state |
| Input credit | Full chain credit | Limited |
GST's big win was removing cascading "tax on tax" across state borders.
5. Common mistakes
- Thinking GST is one federal rate only — it is shared CGST/SGST or IGST.
- Using pre-2025 slabs (12%/28%) — removed on 22 Sep 2025.
- Confusing exempt (0%) with "no filing" — returns are still required.
- Mixing it with the old VAT — GST replaced it in 2017.
Who pays, who collects
| Role | What happens |
|---|---|
| Final customer | Pays the full slab in the price |
| Registered business | Collects and remits to government |
| Government | GST Council sets, CBIC administers |
Rate-by-rate example
| Item | Slab | Customer pays |
|---|---|---|
| Book | 0% | printed price |
| Packaged food | 5% | price × 1.05 |
| Smartphone | 18% | price × 1.18 |
| Cigarettes | 40% | price × 1.40 |
Quick reference
| You want to… | Do this |
|---|---|
| Know the slabs | 0 / 5 / 18 / 40% (post-2025) |
| Understand the split | CGST+SGST or IGST |
| Confirm rates | CBIC / GST Council |
| Avoid error | Don't use old 12% / 28% |
FAQ
Q: What is GST in India? A national indirect tax on goods and services, charged as a percentage of price, launched 1 Jul 2017.
Q: What is CGST, SGST, IGST? CGST + SGST for intra-state sales, IGST for inter-state; together they make the slab rate.
Q: What are the current GST slabs? 0% exempt, 5%, 18%, and 40% (demerit/luxury), after the 2025 reform.
Q: When did GST replace VAT? 1 July 2017.
Q: Is there still a 28% GST? No — removed on 22 Sep 2025; most such goods moved to 18%.
Q: Who runs GST? The GST Council sets policy; CBIC administers it (https://cbic-gst.gov.in/).
Q: Does the final customer pay the full slab? Yes — the combined slab rate is on the bill; the split is just for revenue sharing.
Q: What is taxed at 40%? Tobacco, cigarettes, aerated drinks, and large/luxury cars.
Sources: CBIC / GST India (https://cbic-gst.gov.in/); GST Council (https://gstcouncil.gov.in/); 2025 slab simplification effective 22 Sep 2025.
Disclaimer: GST structure and slabs are set by the GST Council and change. Informational only, not tax advice. Confirm on the official CBIC / GST Council sites or with a tax professional.
Sources and references
- CBIC / GST Indiahttps://cbic-gst.gov.in/
- GST Councilhttps://gstcouncil.gov.in/