How Consumption Tax Works in India

India's Goods and Services Tax (GST) replaced multiple indirect taxes in July 2017. It has a four-tier structure: 5% (essentials), 12% (standard goods), 18% (most services and manufactured goods), and 28% (luxury and demerit goods).

GST is a destination-based tax split between the Centre (CGST) and State (SGST) for intra-state transactions, or collected as IGST for inter-state transactions. Fresh food, healthcare, and education are exempt.

Input tax credit allows businesses to offset GST paid on purchases against GST collected on sales.

Data source: https://cbic-gst.gov.in

Last verified: 2026-04-25