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CA Intermediate · Taxation

GST in India - An Introduction for CA Inter Taxation

GST in India is a destination-based, multi-stage tax on supply of goods and services, in force since 1 July 2017 under a dual model of CGST, SGST/UTGST and IGST. To answer questions, name the tax replaced, the constitutional article, the levying authority and the GST Council's role, then give the reason.

What this chapter covers

This chapter is the foundation of Section B of Paper 3. It explains why India moved to GST, how the Constitution allows both the Centre and the States to tax supplies, and how the four taxes (CGST, SGST, UTGST, IGST) fit together. It ends with the GST Council and the key features of the law.

The content is mostly conceptual. You will not do heavy calculations here. But every later chapter builds on it: levy and charge, place of supply, input tax credit and registration all assume you know which tax applies and who collects it.

The law is the CGST Act, 2017 and the IGST Act, 2017. Read this chapter as the map of the whole GST section. If the map is clear, later chapters feel like details on a route you already know.

The chapter is short, so it is one of the cheapest to master in Section B. It feeds MCQs directly, since questions on the constitutional articles, the types of GST, the Council's composition and the taxes subsumed are easy marks when you have the facts ready. It also supports written answers in later chapters, where you must explain why CGST and SGST, or IGST, apply to a transaction. A weak grasp here causes errors that repeat across the whole section.

GST in India - An Introduction: topics in the order to study them

  1. 1Indirect Taxes Before GST and Need for GSTStart with the problems of the old system, such as cascading of taxes and multiple levies, because they explain every design choice in GST.
  2. 2Constitutional Framework of GSTNext learn the legal basis, the Constitution (101st Amendment) Act, 2016, because the model in the next topic rests on these articles.
  3. 3GST Model and Structure: CGST, SGST, UTGST, IGSTWith the constitutional power clear, you can see which tax is levied on which supply and who collects it.
  4. 4GST Council and Key Features of GST LawFinish with the body that runs the system and the features that sum up the law, which also work as a revision of the earlier topics.

How to prepare GST in India - An Introduction

Treat this as a concept chapter. Aim for clear understanding first, then fast recall of facts.

  1. Read about the old system and list the main indirect taxes that GST subsumed, split into Central and State taxes. Note what cascading of taxes means, with a simple example in rupees of tax charged on tax.
  2. Learn the constitutional provisions as a short list: Article 246A (power to make GST laws), Article 269A (IGST on inter-State supplies), Article 279A (GST Council) and Article 366(12A) (definition of goods and services tax). Write one line of meaning against each.
  3. Draw a simple chart of the dual GST model. For an intra-State supply, show CGST plus SGST (or UTGST). For an inter-State supply or import, show IGST. Practise saying who collects each.
  4. Memorise the GST Council: who chairs it, who the members are, the quorum (one-half of the total number of members of the Council, Article 279A(3)), and the voting rule (Article 279A(9): decisions need at least three-fourths of the weighted votes of members present and voting, with the Centre holding one-third and all States together two-thirds).
  5. List the items kept outside GST or given special treatment. Alcohol for human consumption is outside GST, because the definition in Article 366(12A) excludes it. Crude petroleum, high speed diesel (HSD), motor spirit (petrol), natural gas and aviation turbine fuel (ATF) are within the GST framework under Article 366(12A), but GST is not yet levied on them until the Council recommends a date. Until then, the earlier indirect taxes (Central excise or other Central levies, and State VAT) continue to apply to them. Which of these applies depends on the product, so do not say that every one of the five bears both.
  6. Attempt MCQs on each topic, then write two or three short answers in a provision, explanation and conclusion format. Check each fact against your notes.

Common mistakes in GST in India - An Introduction

  • Mixing up the constitutional articles, for example linking Article 279A to IGST.

    Fix: Pair each number with a one-line purpose: 246A power to legislate, 269A inter-State IGST, 279A Council, 366(12A) definition.

  • Saying that CGST and SGST apply to inter-State supplies.

    Fix: Ask first whether the supply is intra-State or inter-State. Intra-State means CGST plus SGST or UTGST. Inter-State means IGST.

  • Treating UTGST as applicable to every Union territory.

    Fix: Remember that UTGST applies only to Union territories without a legislature: Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu, Chandigarh and Ladakh. Union territories with a legislature (Delhi, Puducherry, Jammu and Kashmir) are covered by SGST.

  • Stating the Council's voting rule loosely, such as 'majority of members' or wrong weights, or forgetting the quorum.

    Fix: Learn the voting rule as one sentence (Article 279A(9)): three-fourths of weighted votes of members present and voting, Centre one-third, all States together two-thirds. Add that the quorum is one-half of the total number of members (Article 279A(3)).

  • Writing that GST already applies to petroleum products, or that petroleum products are fully outside GST in the same way as alcohol.

    Fix: Treat them differently. Alcohol for human consumption is outside GST under Article 366(12A). Crude petroleum, HSD, petrol, natural gas and ATF are within the GST framework under Article 366(12A), but GST is not yet levied on them until the Council recommends a date. Until then, the earlier indirect taxes (Central excise or other Central levies, and State VAT) continue to apply to them. Do not claim that each of the five bears both.

  • Describing the old system's problem as just 'too many taxes'.

    Fix: Name the specific problem: cascading of taxes, lack of seamless credit between goods and services, and multiple State and Central levies. Give a brief example.

Last-day revision: GST in India - An Introduction

  • GST is a destination-based tax on consumption, levied on supply of goods and services, and it came into force on 1 July 2017.
  • The model is dual GST: both the Centre and the States levy tax on the same supply.
  • Intra-State supply: CGST (Centre) plus SGST (State) or UTGST (Union territory without legislature). UTGST applies to Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu, Chandigarh and Ladakh. Union territories with a legislature (Delhi, Puducherry, Jammu and Kashmir) are covered by SGST.
  • Inter-State supply and imports: IGST, levied and collected by the Centre.
  • Article 246A gives Parliament and State Legislatures power to make GST laws.
  • Article 269A deals with IGST on inter-State supplies, which the Centre collects and shares.
  • Article 279A provides for the GST Council, and Article 366(12A) defines goods and services tax.
  • The GST Council is chaired by the Union Finance Minister and includes Union and State ministers in charge of finance or taxation.
  • The quorum of the Council is one-half of the total number of its members (Article 279A(3)).
  • Council decisions need three-fourths of weighted votes of members present and voting; the Centre has one-third weight and the States two-thirds (Article 279A(9)).
  • GST subsumed central excise, service tax and several State levies like VAT, and reduces cascading through input tax credit.
  • Alcohol for human consumption is outside GST. Crude petroleum, HSD, petrol, natural gas and ATF are within the GST framework (Article 366(12A)), but GST is not yet levied on them until the Council recommends a date; the earlier indirect taxes (Central excise or other Central levies, and State VAT) continue to apply to them, depending on the product.

GST in India - An Introduction practice questions

GST in India - An Introduction in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

GST in India - An Introduction: frequently asked questions

How much time should I give to GST in India - An Introduction?

Usually a short block of study is enough, because the chapter is conceptual. Do one careful reading, one revision with a chart of the dual GST model, and a round of MCQs. Spend the saved time on calculation-heavy chapters later in Section B.

Do I need to memorise all the taxes GST replaced?

You should know the main ones and be able to sort them into Central and State taxes. Central excise, service tax and State VAT are the core. Listing them correctly helps in both MCQs and short explanations.

Is the GST Council a constitutional body?

Yes. It is established under Article 279A of the Constitution, as inserted by the 101st Amendment. It makes recommendations to the Union and the States on matters such as rates, exemptions and model laws.

Which law should I use for this chapter?

Use the CGST Act, 2017 and the IGST Act, 2017 as the base, along with the constitutional provisions covered in the chapter. Section B of Paper 3 is based on these two Acts.