Goods and Services Tax (GST): notes for bank exams

At a glance

GST is an indirect tax levied on the supply of goods and services, collected at each stage with credit for tax already paid on inputs, so that only the value added is taxed. It replaced a web of Central and State taxes (excise, service tax, VAT, entry tax and others) with one tax shared by the Centre and States. Since September 2025 ("GST 2.0") most goods fall in two main slabs, 5% and 18%.

Key facts

Constitutional basis: 101st Constitutional Amendment Act, 2016
Came into force: 1 July 2017 (celebrated as GST Day)
Key articles: 246A (power to levy), 269A (IGST on inter-State supply), 279A (GST Council)
GST Council chair: Union Finance Minister (Nirmala Sitharaman); members include all State finance ministers
Council voting: three-fourths weighted majority; Centre has one-third of the votes, States together two-thirds
Main slabs (GST 2.0, from 22 September 2025): 5% and 18%, plus 40% for a short list of luxury and sin goods
Kept outside GST for now: alcohol for human consumption; petrol, diesel, ATF, crude oil and natural gas (until the Council decides)
IT backbone: Goods and Services Tax Network (GSTN), set up in 2013, fully government-owned
Appeals: GST Appellate Tribunal (GSTAT), under Section 109 of the CGST Act, 2017; Principal Bench in New Delhi; first President Justice (Retd.) Sanjaya Kumar Mishra; formally launched 24 September 2025

How it works

GST is destination-based: the tax goes to the State where goods or services are consumed, not where they are made.

Supply	Tax levied	Collected by
Within a State (intra-State)	CGST + SGST (or UTGST)	Centre and State, equal halves
Between States, and imports	IGST	Centre, then apportioned

Input tax credit (ITC) lets a business deduct the GST it paid on purchases from the GST it owes on sales, which removes the "tax on tax" (cascading) effect of the old system.

Dispute ladder: adjudicating officer, then first appellate authority, then GSTAT, then the High Court and Supreme Court. Before GSTAT began work, taxpayers had to go straight to High Courts, which clogged them.

States were promised compensation for any revenue shortfall for five years (to June 2022) under the GST (Compensation to States) Act, 2017, funded by a compensation cess.

Timeline

2000: Vajpayee government sets up a committee under Asim Dasgupta to design GST
2016: 101st Amendment passed; GST Council constituted
2017: GST launched on 1 July
2025: GST 2.0 approved at the 56th Council meeting (3 September); new rates from 22 September; GSTAT formally launched (24 September)

Recent developments

Oct 2026: The Ernakulam bench of GSTAT allowed Singapore Airlines a refund of about ₹45.92 lakh of GST paid on tickets cancelled during COVID-19, since the fare and tax had been returned to passengers.
1 Oct 2026: Gross GST for September 2026 was ₹2,03,521 crore, up 14.7% and the third month in a row above ₹2 lakh crore; net collections rose 18.1%.

Exam traps

GST came through the 101st Amendment (2016), not the 122nd: 122nd was the Bill's number.
The GST Council is set up under Article 279A; Article 269A deals with IGST.
Petrol and diesel are constitutionally within GST but not yet taxed under it.
GSTAT is under Section 109 of the CGST Act; GSTN is the IT company, not a tribunal.
IGST is collected by the Centre, but the State share goes to the consuming State.

Quick check

Q: Which Constitutional Amendment introduced GST? A: The 101st Amendment Act, 2016.
Q: Who chairs the GST Council? A: The Union Finance Minister.
Q: What tax applies on an inter-State supply? A: IGST.

Sources

In the news

Every time this topic has appeared in our current affairs, newest first:

26 October 2026GST Appellate Tribunal allows GST refund on cancelled air tickets
Week of 1–7 October 2026September GST collections rise 14.7% to ₹2.04 lakh crore