Goods and Services Tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. It is paid by consumers but collected by businesses and remitted to the government. GST was introduced in India on July 1, 2017, replacing a complex web of central and state taxes.

India follows a four-tier GST rate structure: 5% applies to essential items like food staples and medicines; 12% applies to standard goods like computers and processed food; 18% is the standard rate for most goods and services; 28% applies to luxury items like cars and tobacco products. Gold and precious stones attract a special 3% rate.

For intra-state transactions (within same state), GST is split equally between CGST (Central) and SGST (State). For inter-state transactions (different states), IGST (Integrated) is levied and collected by the central government. The total GST rate remains the same regardless of the transaction type.

Small businesses with annual turnover up to ₹1.5 crore can opt for the composition scheme, paying GST at a fixed rate of 1-6% of turnover with simpler compliance requirements. These businesses cannot collect GST from customers or claim input tax credit.