Why this matters now
GST is the most-tested indirect-tax reform in UPSC. The Acts implement the 101st Amendment’s constitutional architecture: dual GST (CGST + SGST + UTGST + IGST), Input Tax Credit (ITC), 5-slab rate structure, GST Council, e-way bill, compensation cess, and the SC’s Mohit Minerals (2022) ruling on Council recommendations.
Dual GST structure
| Tax | Levied by | On |
|---|---|---|
| CGST (Central GST Act 2017) | Centre | Intra-state supplies of goods and services |
| SGST (State GST Acts 2017) | Each State | Intra-state supplies (same transaction as CGST) |
| UTGST (UT GST Act 2017) | Centre (for UTs without legislature) | Intra-UT supplies in Andaman, Chandigarh, Dadra & Nagar Haveli + Daman & Diu, Lakshadweep, Ladakh |
| IGST (Integrated GST Act 2017) | Centre | Inter-state supplies + imports/exports. Apportioned to Centre + States as per GST Council. |
Rate slabs, ITC, returns
- Five-slab structure: 0% (essentials, MFP, fresh produce), 5% (transport, common-use), 12% (processed food, ayurvedic medicine), 18% (most services, electronics), 28% (luxury, sin goods).
- Cess on top of 28% for luxury/sin goods (tobacco, aerated drinks, large cars, coal) — GST Compensation Cess funds the State revenue-loss compensation till March 2026 (extended for borrowing repayment).
- Input Tax Credit (ITC): registered taxpayer credit of GST paid on inputs against GST liability on outputs — the chain breaks the cascading-tax effect.
- Outside GST: petroleum (crude, petrol, diesel, ATF, natural gas), alcohol, electricity — states’ revenue cushion.
- Returns: GSTR-1 (outward), GSTR-3B (summary monthly), GSTR-9 (annual). Composition scheme for small taxpayers up to Rs 1.5 crore.
- E-way bill: mandatory for movement of goods worth >Rs 50,000 inter-state since April 2018.
Mohit Minerals (2022) — Council recommendations not binding
In Union of India v. Mohit Minerals Pvt Ltd (19 May 2022), the SC held that GST Council recommendations are NOT binding on the Centre or States — they have only persuasive value. Parliament and State Legislatures are competent to legislate on their own. This was a major federalism ruling. The case itself struck down IGST on ocean freight (on CIF imports).
Other landmark issues: petroleum inclusion debate (ongoing in GST Council); rate rationalisation by GoMs (Group of Ministers); fake invoicing crackdown; e-invoicing for B2B above Rs 5 crore turnover from August 2023.
UPSC angle
Know CGST/SGST/UTGST/IGST Acts 2017 — operationalise 101st Constitutional Amendment, rolled out 1 July 2017 midnight Parliament; dual GST = Centre + State both levy on intra-state, Centre alone on inter-state (IGST) apportioned by GST Council; 5 slabs 0/5/12/18/28% + cess on luxury/sin; Input Tax Credit (ITC) breaks cascading; petroleum/alcohol/electricity outside GST; Compensation Cess till March 2026 (borrowing repayment extension); GSTR-1/3B/9 returns; e-way bill from April 2018 for >Rs 50,000 inter-state; Mohit Minerals (19 May 2022) GST COUNCIL RECOMMENDATIONS NOT BINDING (persuasive only) on Centre/States, struck IGST on ocean freight.
Frequently asked questions
What did the GST Acts of 2017 do?
They operationalised the 101st Constitutional Amendment, implementing CGST + SGST + UTGST + IGST as India’s unified indirect-tax system from 1 July 2017.
Are GST Council recommendations binding?
No — the SC in Mohit Minerals (2022) held they have only persuasive value; Parliament and State Legislatures may legislate independently.
Which products are outside GST?
Petroleum products (crude, petrol, diesel, ATF, natural gas), alcohol for human consumption, and electricity.
Until when is the Compensation Cess in force?
Originally till June 2022; extended to March 2026 for repaying COVID-era borrowings made to compensate states.