When was GST introduced in India?

GST came into force on 1 July 2017, after the Constitution (One Hundred and First Amendment) Act, 2016 gave both the Centre and the states the power to tax goods and services together.

What are the current GST slabs?

Since 22 September 2025 the main slabs are 5% and 18%, with 40% for luxury and sin goods. Special rates of 0%, 0.25% (rough diamonds) and 3% (gold, silver and jewellery) also apply. The old 12% and 28% slabs no longer exist.

Is GST charged on petrol and diesel?

Not yet. Petrol, diesel, crude oil, natural gas and aviation fuel are within the GST law, but GST will apply only from a date the GST Council recommends. Until then, central excise and state VAT are charged instead.

Do salaried employees pay GST on their salary?

No. Services by an employee to an employer in the course of employment are outside GST. Salary is taxed only under income tax.

Can a consumer claim back the GST paid on purchases?

No. Only registered businesses can claim input tax credit, and only on purchases used for their business. For a consumer, GST is part of the final cost.

What is GST?

Updated 11 October 2026

GST (Goods and Services Tax) is the tax you pay on almost everything you buy in India, from soap and mobile phones to restaurant meals and your phone bill. It came into force on 1 July 2017 and replaced a tangle of older taxes such as central excise, service tax and state VAT. Since 22 September 2025 most items fall into two main rates, 5% and 18%, with a 40% rate for a short list of luxury and "sin" goods.

How GST works

GST is a multi-stage, destination-based tax on value added. That sounds technical, but the idea is simple:

Multi-stage: tax is charged every time goods or services are sold, from the manufacturer to the wholesaler, the retailer and finally you.
On value added: each business deducts the GST it already paid on its purchases (called input tax credit) and pays the government only the difference. So tax is effectively paid only on the value each business adds.
Destination-based: the tax revenue goes to the state where the goods or services are consumed, not the state where they were made.

The final consumer bears the full tax. Businesses act as collectors who pass it on to the government in instalments.

Worked example. A shirt moves through three businesses, all charging 18% GST (rate chosen to keep the arithmetic easy).

The manufacturer sells it to a wholesaler for ₹1,000 plus GST of ₹180. Assuming no taxed inputs, the manufacturer pays ₹180 to the government.
The wholesaler sells it to a retailer for ₹1,200 plus GST of ₹216. It deducts the ₹180 it paid and deposits ₹216 minus ₹180 = ₹36.
The retailer sells it to you for ₹1,500 plus GST of ₹270. It deducts ₹216 and deposits ₹270 minus ₹216 = ₹54.

Total collected by the government: ₹180 + ₹36 + ₹54 = ₹270, which is exactly the GST you paid on the final price. No one paid tax on tax.

Which taxes GST replaced

Before 2017, the Centre and the states each levied their own taxes, and many of them were charged on top of each other (a "cascading" effect). GST merged most of them into one tax. The main ones it replaced were:

Central excise duty and service tax (central taxes)
Additional customs duties on imports (CVD and SAD)
State VAT or sales tax, and central sales tax (CST) on inter-state sales
Entry tax, octroi, purchase tax, luxury tax and most entertainment taxes

What is outside GST

A few important items are still taxed the old way:

Alcohol for human consumption: kept out of GST by the Constitution. States levy excise duty and VAT on it.
Petrol, diesel, crude oil, natural gas and aviation turbine fuel: legally part of GST, but GST will apply only from a date the GST Council recommends. Until then, central excise and state VAT continue, which is why fuel prices differ across states.
Electricity: not taxed under GST.
Stamp duty, property tax and road tax remain state or local levies.

Types of GST: CGST, SGST, UTGST and IGST

India has a "dual GST" because both the Centre and the states can tax the same sale:

CGST (Central GST) and SGST (State GST) are charged together, in equal halves, when the seller and the place of supply are in the same state. An 18% rate becomes 9% CGST plus 9% SGST.
UTGST replaces SGST in union territories without their own legislature, such as Chandigarh or Ladakh.
IGST (Integrated GST) is charged at the full rate on sales from one state to another, and on imports.

The total tax is the same either way. Read more in CGST, SGST and IGST explained.

GST rates at a glance

Rate	Typical items
0% (nil or exempt)	Fresh produce, UHT milk, paneer, roti and chapati, individual life and health insurance
0.25%	Rough diamonds
3%	Gold, silver and jewellery
5% (merit rate)	Soap, shampoo, toothpaste, ghee, butter, most medicines, bicycles, hotel rooms up to ₹7,500 a night
18% (standard rate)	TVs, ACs, small cars, motorcycles up to 350cc, cement, most services
40% (de-merit rate)	Larger cars, motorcycles above 350cc, aerated drinks, pan masala, cigarettes and tobacco

See the full breakdown in GST rates in 2026, or work out the tax on any price with our GST calculator.

Who decides GST rates

Rates and rules are recommended by the GST Council, a body set up under the Constitution. It is chaired by the Union Finance Minister and includes the finance ministers of every state. The Centre and states then notify the decisions. The Council's 56th meeting (September 2025) approved the move to the current 5% and 18% structure, known as GST 2.0. Its 57th meeting on 8 October 2026 made no change to rate slabs and focused on compliance, refunds and registration. Those recommendations apply only after the laws and notifications are issued.

Who pays GST and who registers

Everyone who buys taxable goods or services pays GST as part of the price. Only businesses register, collect and deposit it. Registration is generally required once annual turnover crosses ₹40 lakh for goods or ₹20 lakh for services, with lower limits in some smaller states. See GST registration for the details.

If you are a salaried employee, your salary is not subject to GST: services by an employee to an employer are outside GST. A freelancer or consultant, on the other hand, may need to register once their receipts cross the threshold. For your income itself, see what is income tax.

The official sources are the GST portal and CBIC's GST site.