Why this matters now
GST is a perennial exam topic — its structure (CGST/SGST/IGST), the GST Council’s constitutional basis, what it subsumed and what it excludes, and its impact. It also recurs in current affairs (rate rationalisation, collections, compensation).
What is GST?
GST is a comprehensive, multi-stage, destination-based indirect tax levied on the supply of goods and services. It is collected at each stage of the value chain, with credit for taxes paid at earlier stages (input tax credit) — so the tax is effectively borne only on value added, removing the earlier “tax on tax” (cascading). It was enabled by the 101st Constitutional Amendment Act, 2016.
The dual GST structure
| Component | Levied on | By |
|---|---|---|
| CGST | Intra-state supply | Centre |
| SGST/UTGST | Intra-state supply | State / UT |
| IGST | Inter-state supply & imports | Centre (shared with states) |
Rates are arranged in slabs — chiefly 0%, 5%, 12%, 18% and 28% — with a cess on a few demerit/luxury goods. Some items remain outside GST for now: petroleum products, alcohol for human consumption and electricity.
The GST Council
The GST Council — a constitutional body under Article 279A — is the apex decision-maker on GST. It is chaired by the Union Finance Minister, with state finance ministers as members, and recommends rates, exemptions and rules. It embodies cooperative federalism (decisions need a weighted majority — Centre has one-third weight, states two-thirds).
Benefits and challenges
Benefits: a unified national market, removal of cascading, easier compliance via the GSTN portal, wider tax base and better logistics (end of inter-state check-posts). Challenges: multiple rate slabs, compliance burden for small firms, revenue concerns for states, and the exclusion of major items like petroleum.
UPSC angle
Know the CGST/SGST/IGST split, the GST Council (Art 279A, voting weights), what GST subsumed and excluded (petroleum/alcohol/electricity), and the input-tax-credit/anti-cascading logic.
Frequently asked questions
What is GST?
A comprehensive, destination-based indirect tax on the supply of goods and services, with input tax credit to avoid cascading; launched on 1 July 2017.
What are CGST, SGST and IGST?
On intra-state supplies the Centre levies CGST and the state SGST; on inter-state supplies and imports the Centre levies IGST.
What is the GST Council?
A constitutional body under Article 279A, chaired by the Union Finance Minister with state FMs, that recommends GST rates, exemptions and rules.
Which items are outside GST?
Petroleum products, alcohol for human consumption and electricity remain outside GST for now.