What GST is and who pays it
Goods and Services Tax (GST) is India's tax on the supply of goods and services. Since 1 July 2017 it has replaced 17 central and state taxes and 13 cesses. Alcohol for human consumption stays outside it.
Each registered seller charges GST and deducts the GST it paid on purchases, so tax falls only on the value added at each step. The final buyer pays it all in the price.
CGST, SGST and IGST: which one applies
Within a state, the bill shows Central GST (CGST) and State GST (SGST), each at half the rate. Union territories without a legislature charge UTGST instead of SGST.
Between states, and on imports, the bill shows Integrated GST (IGST) at the full rate. At 18%, an in-state bill shows 9% CGST plus 9% SGST and an interstate bill shows 18% IGST. The total is the same.
Adding or removing GST in rupees
Multiply to add GST and divide to remove it. Taking 18% off ₹1,180 gives ₹212.40, which is wrong: the GST was 18% of ₹1,000, not of ₹1,180.
Adding 18% to ₹1,000 gives ₹180 of GST and a gross price of ₹1,180, or ₹90 CGST and ₹90 SGST. Working back, ₹1,180 × 100 ÷ 118 is ₹1,000, so the GST inside is ₹180.
Amounts round to the nearest paisa, half up. When GST is an odd number of paise, CGST takes the extra paisa: 18% on ₹10.05 is ₹1.81, split as ₹0.91 CGST and ₹0.90 SGST.
- GST = net price × rate ÷ 100
- Gross price = net price + GST
- Net price = gross price × 100 ÷ (100 + rate)
GST slabs as of November 2026
Since 22 September 2025, after the GST Council's 56th meeting, GST has two main rates, 5% and 18%, plus a special 40% rate for luxury and sin goods. The 12% and 28% slabs are gone, and most tobacco moved to 40% on 1 February 2026.
- Nil: UHT milk, packaged paneer, roti and paratha, individual life and health insurance
- 5%: toothpaste, soap, butter, ghee, bicycles, tractors, hotel rooms up to ₹7,500 a night
- 18%: TVs, air conditioners, cement, small cars, motorcycles up to 350 cc
- 40%: pan masala, tobacco, aerated drinks, mid-size and large cars, yachts, betting and lotteries
- Special rates: 3% on gold, silver and jewellery; 0.25% or 1.5% on diamonds and precious stones
Input tax credit in brief
Input tax credit (ITC) lets a registered business subtract the GST paid on business purchases from the GST it collects. A shop that buys stock for ₹1,000 plus ₹180 GST and sells it for ₹1,500 plus ₹270 GST pays ₹90, the tax on its ₹500 margin.
Exempt supplies earn no credit, and some lower rates come without it: goods transport agencies charge 5% without credit or 18% with it. Consumers cannot claim ITC.