How does GST in India work?
GST is a tax credit mechanism where tax is levied on goods and services at each point of sale or provision of service. Under this tax regime, the business providing goods or services can claim an input credit of tax paid (i.e. input GST) for purchasing the goods or procuring the service.
India has a dual GST system, which means both Central and State taxes are collected at the point of sale. All goods and services, barring a few exceptions, are subject to GST.
The Indian GST rate differs for varying goods and services and is split up into five different rates: 0%, 5%, 12%, 18% and 28%. Some exceptions to this are petroleum products, alcoholic drinks and electricity, which are taxed separately by individual state governments as per the previous tax system.