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TDS & Tax · GST lesson 1 of 5
GST basics: what it is and who collects it
GST is the tax added to most things we buy. Here is what it is, who really pays it, and what CGST, SGST and IGST mean.
What is GST?
GST stands for Goods and Services Tax. It is an indirect tax on the supply of goods and services in India. It started on 1 July 2017 and replaced several older taxes such as excise duty, VAT and service tax.
When you buy a packet of biscuits or pay for a haircut, the price often includes GST. The shop or salon collects it from you and passes it to the government. So the final customer bears the tax, and the business is the collector.
Tax on the value added
GST is charged at each step of a supply chain, but a business can take credit for the GST it already paid on its purchases (you will learn this as input tax credit in lesson 4). In effect, each business pays tax only on the value it adds.
Three kinds of GST
| Type | When it applies | Who receives it |
|---|---|---|
| CGST — Central GST | Sale within one state | Central government |
| SGST — State GST (UTGST in Union Territories without a legislature) | Sale within one state | State (or UT) government |
| IGST — Integrated GST | Sale between two states, and imports | Central government, which shares with the destination state |
Same sale, two ways
A trader sells goods worth ₹50,000 that carry 18% GST (fictional example).
- Customer in the same state: 9% CGST (₹4,500) + 9% SGST (₹4,500) = ₹9,000 tax. Total bill ₹59,000.
- Customer in another state: 18% IGST = ₹9,000 tax. Total bill ₹59,000.
The total tax is the same. Only the split and the receiver change.
GSTIN: the business's GST number
A registered business gets a GSTIN, a 15-character number, one for each state where it is registered. In simple terms it contains the state code, the business's PAN and a few other characters. You will see it on every tax invoice.
Who runs GST?
- The GST Council (Centre and states together) decides rates and rules.
- The GST portal (gst.gov.in) is where businesses register, file returns and pay tax.
GST and TDS: how they differ
| TDS (Part 1) | GST (Part 2) | |
|---|---|---|
| Kind of tax | Income tax, collected in advance | Tax on supply of goods and services |
| Who bears it finally | The person whose income it is (credit against their tax) | The final customer |
| Who handles it | The payer deducts and deposits | The seller collects and deposits |
| Identification | PAN and TAN | GSTIN |
A business can deal with both on the same invoice. In lesson 3 you will see how they meet.
Check yourself
1. GST is best described as…
GST is an indirect tax on the supply of goods and services.
2. A sale of ₹50,000 at 18% GST within one state. How much is CGST?
18% splits into 9% CGST and 9% SGST. 9% of ₹50,000 is ₹4,500.
3. Which tax applies to a sale between two states?
Inter-state supplies attract IGST.
4. Who finally bears GST?
Businesses collect GST, but the final customer bears it.
Learning material for beginners, checked in October 2026. It is not tax or legal advice. GST rates, limits and due dates change, and websites sometimes disagree on details. Always confirm on the GST portal (gst.gov.in) or with a Chartered Accountant or GST practitioner before applying anything in real work. All names and amounts in the examples are made up.