What is GST? (Goods and Services Tax)
GST is an indirect tax levied on the supply of goods and services in India, introduced on 1 July 2017. It replaced a complex system of central and state taxes (VAT, service tax, excise duty, etc.) with a unified, multi-stage, destination-based tax system.
GST is collected at each stage of the supply chain, with credit available for taxes paid at earlier stages (Input Tax Credit), making it ultimately a tax on the end consumer.
GST Calculation Methods
Add GST (Exclusive):
GST Amount = Original Price × GST Rate / 100
Total Price = Original Price + GST Amount
Remove GST (Inclusive):
Original Price = Total Price / (1 + GST Rate / 100)
GST Amount = Total Price − Original Price
GST Rate Slabs in India
- 0%: Essential goods — milk, eggs, fresh vegetables, salt.
- 5%: Packaged food, economy class travel, life-saving drugs.
- 12%: Processed food, mobile phones, business class air travel.
- 18%: Most services, electronics, restaurants, financial services.
- 28%: Luxury goods, automobiles, tobacco, aerated drinks.
Components of GST
- CGST: Central GST — collected by the Central Government.
- SGST: State GST — collected by the State Government (intra-state).
- IGST: Integrated GST — levied on inter-state supply of goods/services.
