• It is a joint forum of the Centre and the states, set up by the President as per Article 279A (1) of the amended Constitution.
• It came into force after the 122nd Constitutional Amendment Bill was passed by both Houses of Parliament in 2016.
• Members
  • It includes the Union Finance Minister (chairperson) and the Union Minister of State (Finance) from the Centre.
  • Each state can nominate a minister in-charge of finance or taxation or any other minister as a member.
• Functions
  • Merges multiple indirect taxes (e.g., VAT, excise, service tax) into a single unified tax.
  • Prevents the "tax on tax" effect by allowing input tax credit across goods and services.
  • Simplifies compliance for businesses through a single tax system and online filing.
  • Ensures consistency in tax rates across states, promoting a common national market.
  • Expands the tax base by bringing more sectors under the tax net.
  • Makes Indian goods more competitive internationally by exempting exports from GST.
  • Encourages transparency with real-time tracking of transactions through the GSTN (Goods and Services Tax Network).
  • Reduces logistical costs by eliminating state border check-posts and ensuring smoother movement of goods.

About Goods and Service Tax (GST)

• It was introduced through the 101st Constitution Amendment Act, 2016 with the slogan of ‘One Nation One Tax’.
• It is one of the biggest indirect tax reforms in the country.
• It has subsumed indirect taxes like excise duty, Value Added Tax (VAT), service tax, luxury tax etc.
• It is essentially a consumption tax and is levied at the final consumption point.
• Tax Structure under GST
  • Central GST to cover Excise duty, Service tax etc,
  • State GST to cover VAT, luxury tax etc.
  • Integrated GST (IGST) to cover inter-state trade.
  • IGST per se is not a tax but a system to coordinate state and union taxes.
  • It has a 4-tier tax structure for all goods and services under the slabs- 5%, 12%, 18% and 28%.