Understanding the Goods and Services Tax (GST)
What is GST?
The Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based indirect tax levied on the supply of goods and services across India. It replaced a complex web of previous indirect taxes like VAT, Service Tax, and Excise Duty to create a unified national market.
Exclusive vs Inclusive GST
GST Exclusive means the given price does not include GST. You must calculate the GST amount and add it to the base price to get the final bill amount. GST Inclusive means the given price already has GST baked in. You calculate backward to extract the original base price and the tax component from the total.
CGST, SGST, and IGST
For intra-state sales (within the same state), GST is split equally into CGST (Central GST) collected by the Central Government, and SGST (State GST) collected by the State Government. For inter-state sales (between two different states), a combined IGST (Integrated GST) is collected by the Central Government.