Goods and Services Tax

The Goods and Services Tax (GST) is India's unified indirect tax on the supply of goods and services, introduced by the Constitution (One Hundred and First Amendment) Act, 2016, which inserted Article 246A (concurrent taxing power for Union and States), Article 269A (levy and apportionment of inter-State GST), and Article 279A (establishing the GST Council). It came into force on 1 July 2017 and subsumed central levies such as central excise duty, service tax and additional customs duties, alongside state levies including Value Added Tax, octroi, entry tax, luxury tax and entertainment tax. GST is a destination-based, value-added consumption tax operating through a seamless input-tax-credit chain, designed to eliminate the cascading "tax-on-tax" effect of the earlier regime. Petroleum products, alcohol for human consumption, and electricity remain outside its ambit as of 2026.

Structurally, GST follows a dual model: on intra-State supplies, the Centre levies CGST and the State levies SGST (or UTGST in Union Territories); on inter-State supplies and imports, the Centre levies IGST under Article 269A, with revenue apportioned to the destination State. The principal rate slabs are 0%, 5%, 12%, 18% and 28%, with a compensation cess on demerit and luxury goods such as tobacco and automobiles. Compliance is administered through the GSTN (Goods and Services Tax Network) portal, with mechanisms including the e-way bill for goods movement and e-invoicing for larger taxpayers. The GST Council, chaired by the Union Finance Minister with all State Finance Ministers as members, recommends rates, exemptions and threshold limits; under Article 279A(9), decisions require a three-fourths majority of weighted votes, the Centre holding one-third and States collectively two-thirds.

The reform's legislative scaffolding comprises the CGST Act, IGST Act, UTGST Act and GST (Compensation to States) Act, 2017, the last guaranteeing States compensation for revenue shortfall at a notional 14% annual growth for five years (to June 2022). The Supreme Court in Union of India v. Mohit Minerals (2022) held that GST Council recommendations are persuasive and not binding on legislatures, affirming cooperative-federalism flexibility. The 52nd–55th GST Council meetings addressed rate rationalisation and the establishment of the GST Appellate Tribunal (GSTAT). By 2026, debate centres on rationalising the multiple slabs—possibly merging the 12% and 18% rates—and on the inclusion of petroleum and electricity, both of which States resist owing to revenue autonomy concerns.

For the UPSC examination, GST is a high-yield topic spanning General Studies Paper II (federalism, constitutional amendments, the GST Council as a federal institution) and General Studies Paper III (mobilisation of resources, indirect taxation, fiscal federalism). Prelims questions commonly test the specific articles (246A, 269A, 279A), the dual structure (CGST/SGST/IGST), items outside GST, and the Council's voting arithmetic. Mains answers should weigh GST's gains—a unified national market, reduced cascading, formalisation of the economy—against criticisms of slab complexity, compliance burden on small enterprises, and the erosion of State fiscal autonomy. Candidates should link GST to broader themes of cooperative and competitive federalism and to recommendations of the Kelkar Task Force and the 13th Finance Commission, which championed a single national GST.